There are three kinds of banking institutions commonly used. In one kind all the money deposited is available at any moment through a check or checks drawn against the account. In large cities such banks now very generally require a standing deposit of $100 or $200, and if this is drawn on they charge for carrying the account, usually $1 a month. The banks in smaller places rarely make this requirement. But in either, any or all of the money may be drawn at any time without warning.
The second type is the Trust Company, which receives money and holds it at the call of the depositor (on check) like the first type of bank, but pays a low monthly interest (not often more than 2%) on the deposit if this reaches some minimum, which may be as low as $100. In other words, if a man's balance in that bank has not fallen below $400 during a given month, at the end of that month (at 2%) .67 interest will be added to the account. The money advantage of such an arrangement in many cases is more evident when one remembers that the $200 minimum of the large bank means a loss of $8 a year interest that a savings bank deposit of that amount would bring.
The savings bank is the third type, for deposits that are not subject to withdrawal by check. The depositor has no checks and can get money from his account only by presenting at the bank the slip receipt that it requires. Savings banks may by law require thirty days notice of withdrawal of deposits, but this right is rarely exercised. The bank pays interest - from 3% to 4%, according to the bank - on all money that has been in the bank six months at the time of the payment of semiannual interest.
For those whose income is very irregular, the savings bank is almost indispensable. Workers in seasonal trades, where there is employment for some weeks, no work for a similar period, and a repetition of this process through the year, can deposit regularly weekly when the pay is coming in, and withdraw a regular amount weekly when there is no pay. In this way the small account - or any part of it carried for the half-year period of the bank - is drawing interest, and when the need is desperate, the account can be entirely closed, and all the money used, without any loss to the depositor. This method of providing for periods of unemployment is unquestionably the safest, and careful calculation will add to the account regularly during periods of earning enough to keep the worker or the family in the non-earning periods. If such provision is not made, it is hard to resist the temptation to have a little fling while the money is coming in and be left with too little to pay for food and rent when the wages stop. Many families depending on commissions irregularly paid, or even on stories or pictures sold at intervals, would do well to adopt this method.
There are great advantages in having a checking account, on any income large enough to allow it. This should be carried in addition to the savings bank account when the income, even if irregular, is large enough to warrant it. How large that is must depend on whether the bank requires the $200 or $300 minimum, whether marketing of all kinds is done under conditions that make checks useful or desirable, and other personal conditions. The check returned to the bank and then to the depositor is the best of receipts, and it is the growing habit of large retail business houses to return no other receipt unless especially requested. This is a considerable saving in postage, in envelopes and in labor for such a concern as a large department store, and such a saving means a lessened overhead cost, and is eventually an advantage to the customer. Checks are easy to handle and to file, being of uniform size, and occupy little room. Wherever money must be sent by mail, they provide a safe and easy way of sending. The security and the economy of time and labor that a checking account gives are usually well worth the cost of carrying one. But although this cost does not appear on the expense card it should not be forgotten. If the bank requires a minimum of $200 the cost of carrying the account may be calculated as 4% on $200, (which one could get from a savings bank and still have the cash easily available) that is, $8 a year. On the other hand, there is a credit advantage in carrying the checking account, as payment by check is preferred by any firm carrying weekly or monthly charge accounts, and the possession of a bank account gives a certain financial standing to the individual. Whether the cost is worth the advantages in a given case is a question to be decided by the family or individual. Yet there are few who having once established a checking bank account are willing to give it up. Savings Bank Account. The depositor receives a bank-book, in which all deposits and withdrawals are entered. To deposit money he fills out a regular slip provided by the bank and presents this at the proper window of the bank, with his book. He need not go in person, but may send some one else with book and slip or send both by registered mail. The latter is often necessary when the bank is in another town. The bank official (teller) retains the slip and writes the deposit in the bank-book, returning this to the customer. To withdraw money a slip is also provided, and must be presented with the book in the same way. Money can be withdrawn by mail, as it is deposited, the bank in that case sending the amount in a check or draft
Interest on savings bank accounts is credited semi-yearly, and entered in the depositor's bank-book when he leaves it for the purpose. January 1 and July 1 are the usual dates on which to credit this. This should be remembered in making out income tax returns, as the interest credited must be reported as income, and it is credited to the depositor on the bank ledgers as soon as it is payable.
Checking Accounts. To open an account the prospective depositor calls at the bank, accompanied by some one known at the bank or by a letter of introduction from another bank. If the latter is made as "introducing John M. Jones, whose signature is written below" and Mr. Jones writes his name at the bottom of the sheet before presenting the letter, the introduction is satisfactory identification. But the bank must be sure that the individual is what he represents himself to be, and to be offended by a request for proof of identity as if the matter were a personal one, is a mark of inexperience and misapplied sensitiveness.