The balance in the bank draws interest every day of the month. Hence the balance is given for Sundays and other banking holidays though the balance cannot possibly be changed on such days.

In the case of an account drawing no interest the balance is posted only when deposits or withdrawals are made. See page 376.

461. Simplified Account for No Interest on Daily Balances. - A very large number of bank accounts are small personal accounts in which only a few deposits and withdrawals are made each month and in which the balance is small. No interest is paid on these balances and hence the form of the account may be simplified.

1. Copy the above account and fill in the daily balances. Arrange cash accounts like the above and carry out the balances: 2. W. R. Smith: Balance Jan. 1, $1260.40. Deposits: Jan. 3, $94.60; Jan. 14, $106.20; Jan. 26, $49.80; Jan. 31, $200. Withdrawals were: Jan. 3, $260; Jan. 4, $139.20; Jan. 5, $27.80; Jan. 13, $49.60; Jan. 18, $23.50; Jan. 24, $57.40; Jan. 31, $194.20. Find balance Feb. 1.

3. R. S. Edwards: Balance Aug. 1, $1921.45. Deposits: Aug. 1, $27.16; Aug. 8, $121.45; Aug. 10, $246.53; Aug. 20, $548.16; Aug. 25, $1575.91. He withdrew as follows: Aug. 5, $111.46; Aug. 9, $124.95; Aug. 15, $93.71; Aug. 24, $250.17; Aug. 29, $981.42. Find balance Sept. 1.

CHAPTER XXXI

SAVINGS ACCOUNTS

462. Savings Banks.-Certain banks receive money and pay a low rate of interest, with the understanding that the money cannot be withdrawn by means of checks. Such banks are called Savings Banks.

Savings banks are required to invest their funds in high grade first mortgages or other "gilt edge securities. This insures safety to the depositors and also compels a low rate of interest. The rate paid by savings banks in the United States varies from 3% to 5%.

463. Amount Required to Start Savings Account. — Savings banks will usually receive very small deposits on savings, but to start an account a deposit of at least one dollar is usually required.

464. Pass Book. The depositor is given a pass book in which all deposits, withdrawals, and interest credits are recorded. The pass book therefore shows the condition of the account at any time. 465. Interest Term. Interest Days. Interest Days. - Savings banks compute interest quarterly or semiannually. The dates of computing interest are called interest days, and the time between successive interest days is the interest term. In case interest is computed semiannually, Jan. 1 and July 1 are usually interest days, and in case interest is computed quarterly, Jan. 1, April 1, July 1, and Oct. 1 are interest days.

466. Amount on which Interest is Computed. Interest is usually computed on the lowest credit balance during the preceding interest term, but no interest is paid on a fractional part of a dollar. In some cases deposits made before the 10th or 15th of the first month of the interest term draw interest for the entire term.

467. Interest Compounded. If the interest is not withdrawn when due, it is added to the principal and draws interest. That is, savings banks compound interest semiannually or quarterly.

468. Banks May Demand Notice of Withdrawal. The law usually permits savings banks to require a notice of from 30 to 60 days before money can be drawn from a savings account, but in normal times savings deposits may be withdrawn on demand. However, the amounts deposited from day to day tend to balance the amounts withdrawn, so the bank does not need to keep very much cash on hand. As fast as deposits accumulate they are invested in proper securities.

Interest is paid on all deposits up to the fifteenth of the first month of the interest term.

WRITTEN EXERCISES

From each of the following sets of data make out a savings account: 1. Deposits: Dec. 12, 1915, $10; Jan. 7, 1916, $20; Jan. 27, $10; Feb. 1, $10; March 6, $15; May 1, $10; June 25, $50; July 10, $125; Aug. 6, $15; Nov. 5, $50; Dec. 23, $100. Withdrawals: Jan. 25, $15; April 3, $10; June 7, $15; Aug. 28, $25; Nov. 24, $35. balance Jan. 1, 1917, interest at 3% compounded quarterly.

Find

2. Deposits: May 7, $200; July 5, $300; Sept. 4, $150; Oct. 2, $500. Withdrawals: Aug. 1, $50; Nov. 3, $75; Dec. 20, $100. Interest at 4% compounded quarterly. Find balance Jan. 1.

469. Postal Savings. The postal saving system was established in the United States, Jan. 3, 1911. In the beginning forty-eight postal savings banks were established, one for each state and territory. In six months the number had grown to 500.

Postal savings certificates are issued in denominations of $1, $2, $5, $10, $20, $50, $100. These bear the name of the depositor, the number of his account, the date issued, the name of the depository office and the date on which interest begins.

Interest at 2% is computed annually upon each certificate separately. Fractional parts of a year must be disregarded and deposits bear interest from the first day of the month next following the deposit.

EXERCISES

1. If a man deposits $15 each month in a postal savings banks for four years, what amount will he have to his credit at the end of that period?

2. If a school boy deposits $5 a month in a postal savings bank for five years, what amount will he have to his credit at the end of the five years?

Postal savings banks usually serve two other functions besides receiving deposits. These are: (1) the providing of annuities and the writing of life insurance: (2) serving their customers as agents in purchasing government securities.

DRILL IN FUNDAMENTALS

Find the interest on the following and check results: