How Does
How Does Banking Relate to Math?
Contributor
By eHow Contributing Writer
Keeping Track
-
Mathematics and banking are closely connected. Extensive math is involved in keeping track of the money in a bank. Needless to say, mathematical precision is essential. Banks handle substantial sums of money. Any inaccuracies in math can create huge negative ramifications. Everyone from the tellers at your local bank branch to banking executives must have a firm grasp of math skills in order to do their jobs. Mathematic skills are needed to insure the money is coming from and going to the correct places.
Transactions
-
When someone deposits or withdraws money from a bank, more math is involved to calculate the total in their accounts. Again, precision and accuracy is key. If a bank employee accidentally puts too much money into someone's account, it will cost the bank money. If an employee puts too little into someone's account, it can greatly damage the bank's image. The same goes for withdrawals. The amount taken from the account must match the amount the client withdrew from the account. Accurate math is essential to all transactions; extensive record keeping insures mathematic accuracy. The math is repeatedly checked and rechecked.
Accumulating Interest
-
Savings and checking accounts have a wide variety of different interest rates depending on the account type. Interest is calculated and added to a person's account at regular intervals, depending on what their account type dictates. Calculating interest is done using percentages. In each interest period, the set percentage is added to a person's account.
Money market accounts also accumulate interest at set intervals. This interest rate, however, varies greatly to correspond to the changing markets, and thusly involves more complex mathematics.
Loans
-
Loans involve complex mathematics. First, the bank needs to calculate how high of a loan it should give you and how much you will be paying each month for the loan. Calculating this requires consideration of a wide variety of factors ranging from how long the loan is for to how strong your credit history is.
Mathematics and Banking
-
Mathematics and banking are tightly linked. Banking requires constant use of mathematics. Often times, complex formulas are necessary to compute interest and loans. Not only does banking require extensive math skills, it also requires intense precision and accuracy. Banking and mathematics are inexorably intertwined.
eHow Article: How Does Banking Relate to Math?
