Other Bank Services

Trusts. A trust arrangement exists when a bank provides safekeeping and management of funds for individuals, estates or institutions such as pension funds. The bank’s job is to administer the money entrusted to it wisely and for the benefit of the owner. The bank receives a fee for managing these funds.

Currency exchange. Banks can buy and sell foreign currencies for their own benefit or for their clients. Importers, exporters and travelers are major users of these services. Even domestic travelers may purchase travelers’ checks issued by banks.

Safekeeping. Many banks rent safety deposit boxes in their vaults to persons seeking a safe and secure place for their valuables.

Credit cards. Some banks derive significant revenues from operating bankcard programs. There is usually an annual fee to use the credit card, and the consumer pays interest on the unpaid balance. Merchants pay a fee to the bank as well.

Letters of Credit. Banks may aid commerce by writing letters of credit. In these documents, the bank guarantees one party (such as sellers) that payment will be made if certain conditions are met (such as the delivery of merchandise). Letters of credit are common when goods are bought or sold abroad. There is a fee for providing this letter of credit.

Investments. Banks are permitted to buy U.S. government bonds for their own accounts. Banks may make money in trading such bonds and from the interests paid by the government to the holders of such securities.

Consulting. A growing business for banks is to give advice to other businesses. Especially significant in recent years is the assistance provided to firms involved in corporate mergers.

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