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Do Banks Get Suspicious of Cash Deposits?

Reading Time: 3 minutes The answer to the question “Do banks get suspicious of cash deposits” depends on several factors. To give you a definitive answer, we must first look at general banking practices regarding the security and integrity of financial transactions.  Banks and financial institutions must report cash deposits above a certain amount to the IRS. The specific amount is $10,000 or more. So, do banks get suspicious of cash deposits? They do if an individual makes a cash deposit of $10,000 or more within a certain time frame.  Due to the amount in question, there’s a term individuals, and business owners must be aware of – the $10,000 rule. The $10,000 rule was created in 1970 with the Bank Secrecy Act, and the amount was adjusted in 2002 with the Patriotic Act.  The rule is self-explanatory, but there are nuances involved. Let’s dive deeper into the rule to see what it means to individuals and business owners making cash deposits.  How Big Of A Deposit Can You Make Without Raising Alerts? Individuals can make cash deposits below $10,000 within a certain time frame to avoid raising suspicion by their banks. The $10,000 amount applies to one-time cash deposits and multiple-time cash deposits. Individuals can exceed the $10,000 threshold if the amount is spread beyond a given time frame. The same applies to withdrawals of $10,000 or more.  A common misconception is that the rule only applies to cash deposits and withdrawals. The 2002 Patriot Act adjusted the rule to include investment securities.  Explaining the $10,000 Rule The $10,000 rule, also known as the Currency Transaction Report (CTR) rule, is a regulation set by the Financial Crimes Enforcement Network (FinCEN), a U.S. Department of the Treasury Bureau. According to this rule, any cash deposit, withdrawal, exchange, or transfer involving more than $10,000 in a single transaction or in multiple related transactions within single or several business days must be reported by the bank to FinCEN. When a cash deposit of $10,000 or more is made, banks are required to file a Currency Transaction Report (CTR) with FinCEN, which includes details such as the depositor’s name, social security number or tax identification number, date of birth, address, and other transaction-related information. This is done to detect and prevent money laundering, terrorist financing, and other illegal activities. It is also worth mentioning that banks can report suspicious transactions exceeding $5,000 in rare cases. But for such a transaction to be reported, it must fulfill certain criteria.  Will Businesses Making Deposits Larger Than $10,000 Be Reported? The answer is yes. Even businesses that primarily receive cash for services or products must report deposits exceeding $10,000. Such transactions must be reported on an IRS 8300 form. Business owners risk prosecution if they fail to report transactions exceeding $10,000 on an 8300 form.  The time frame for cash payments of over $10,000 in one or multiple transactions is twelve months. This means that if a business received $5,000 in two separate transactions from the same individual within twelve months, the business and the person paying must provide the details for the form.  What to Do Not to Raise Red Flags by the Bank? If you need to make a cash deposit that exceeds $10,000, there are certain steps you can take to ensure that your transaction does not raise red flags at the bank: Be honest and upfront with your bank about the nature and source of the cash deposit. Proper documentation and explaining the legitimate reasons behind the deposit can help alleviate suspicions. Ensure that you provide all the required information, such as your name, social security number or tax identification number, date of birth, address, and other transaction-related details, accurately and completely as requested by the bank. Maintain records of all cash transactions, including the source of the funds, the purpose of the deposit, and any relevant business or customer information. This can help establish the legitimacy of the transaction if any questions arise in the future. Conclusion Banks have regulations to detect and prevent money laundering, terrorist financing, and similar illegal financial activities. While individuals and businesses can make cash deposits of any amount, deposits exceeding $10,000 may raise suspicion at banks and trigger the filing of a Currency Transaction Report (CTR).  Therefore, it’s important to be transparent and provide accurate information to the bank when making large cash deposits to avoid raising red flags. By following proper procedures and maintaining records, individuals and businesses can ensure smooth and legitimate transactions with their banks. FAQs

Banking vs Accounting: Understanding the Key Differences

Reading Time: 4 minutes The vast and diverse world of finance offers numerous career options for those interested in crunching numbers. Among the most popular and lucrative career choices are banking and accounting. Although both professions are related to finance and money management, they are distinct in their roles, responsibilities, and required skills.  Understanding the differences between banking and accounting is crucial for individuals considering these career paths in the future. Our article will delve into the key differences in the banking vs accounting debate to help you determine which career path is right for you. What is Banking? Banking refers to managing money for individuals, businesses, or governments. Bankers perform several roles in the modern banking system, including accepting deposits, providing loans, and other financial services.  Banks are important institutions in the economy as they are tasked with facilitating the flow of money and ensuring its safety. Therefore, individuals working in banking have a set of responsibilities. But what does a career in banking look like? A career in banking can mean anything from working as a financial analyst, loan officer, investment banker, and branch manager. Banking requires individuals to have strong analytical skills, the ability to work under pressure, and exceptional communication skills. In addition, bankers must be able to turn complex financial matters and concepts into easily digestible information for their clients.  What is Accounting?  Accounting is the process of recording, classifying, and analyzing financial transactions to provide accurate financial information. The main objective of accounting is to ensure the accuracy and integrity of financial statements. Accountants play a vital role in organizations, helping them make informed decisions and comply with regulatory requirements. Careers in accounting include positions such as bookkeepers, auditors, tax accountants, and financial analysts. Working in accounting requires strong attention to detail, the ability to work with numbers, and excellent analytical skills. Banking vs Accounting: The Key Differences It’s important to lay out the key differences in the banking vs accounting debate to understand both industries and career paths. Let’s do that. Key Difference #1: Job Responsibilities While both banking and accounting deal with finance, they have different job responsibilities. Banking professionals focus on managing money, lending, and investments while accounting professionals focus on financial reporting, analysis, and compliance. Key Difference #2: Required Skills Banking and accounting require different skills. Banking professionals must have excellent communication skills, the ability to work under pressure, and strong analytical skills. On the other hand, accounting professionals require strong attention to detail and the ability to work with numbers while also having excellent analytical skills. Kye Difference #3: Education and Certification  One similarity in a sea of differences in banking vs accounting is the requirement of a bachelor’s degree. With that said, both career paths require a bachelor’s degree in different specializations.  A bachelor’s degree in finance, economics, or business administration is typically required to pursue a career in banking. Banking professionals may also need licenses or certifications to work in specific roles, such as investment banking or financial planning.  On the other hand, a bachelor’s degree in accounting, finance, or business administration is typically required to pursue an accounting career. Like bankers, accountants may also need to obtain certain certification, such as a Certified Public Accountant (CPA) or Chartered Accountant (CA), to work in specific roles. Key Difference #4: Work Environment  Another difference between banking vs accounting is in their work environment. Banking professionals may work in various settings, including banks, investment firms, and financial planning firms. They may work long hours and be required to travel frequently. Accounting professionals may work in accounting firms, corporations, or government agencies. During tax season, it’s not uncommon for accountants to spend long hours in the office crunching numbers to ensure the accuracy and compliance of financial records.  Banking vs Accounting – Which Career Path Is for You?  That brings us to the question many of you are asking. Choosing between banking and accounting ultimately depends on your interests, skills, and career goals. Despite both professions operating in the finance industry, they are entirely different. So how do you know which career path is right for you? If you enjoy working with people, have strong communication skills, and are comfortable working in a fast-paced environment, banking may be the right choice for you. On the other hand, if you are detail-oriented, enjoy working with numbers, and have a passion for financial reporting and analysis, accounting may be the right choice for you. Conclusion The banking vs accounting debate helps readers understand the work requirements and responsibilities. One of the best ways to analyze this debate is by looking at what makes both careers so different.  Banking and accounting are two popular career paths in the finance industry. Although they share certain similarities, they differ in their job responsibilities, required skills, education and certification, and work environment. By understanding the key differences between banking and accounting, you can decide which career path is right for you.

What Is Book to Bill Ratio?

Reading Time: 3 minutes Book to bill ratio represents the number of orders booked to the amount billed. A book-to-bill ratio is handy when determining a company’s ability to fulfill orders quickly. In modern business, all kinds of metrics measure how successful a company is. Each metric points to a different performance chart that ultimately points to how well an organization is going. Book-to-bill is one of the more commonly-used metrics in all stages of development. The metric directly points to how fast companies execute orders. The faster orders are shipped, the higher revenue for the period. We should emphasize that a book-to-bill ratio of orders applies only for a specific period. Once the period finishes, the company will implement additional book-to-bill ratios for the following period. The metric is most commonly used in the technology industry and subsequent sectors. By analyzing the book-to-bill ratio in a particular technology sector, we can determine the strength of the specific industry. Investors also use a book-to-bill ratio to determine if the company is worth investing in. A successful or high ratio of orders shipped points to a robust business model with increased customer demand. How To Calculate the Book-to-Bill Ratio? Book-to-bill is a standard metric to understand a sector’s or industry’s supply and demand. Companies that operate in more volatile industries can measure the supply and demand for their products by calculating a book-to-bill ratio. Here is the formula. Book to Bill = Orders Receives / Orders Shipped A book-to-bill ratio has three outcomes. It can be one, less than one, and greater than one. If the book-to-bill ratio is one, a company has successfully booked and billed orders for the period. If the ratio is lower than one, it means there is weaker demand for the period. However, if the ratio is greater than one, there is strong demand since the company is receiving more orders than it can bill. Here are a few examples to help you understand better the book-to-bill ratio. Example One: Book-To-Bill Ratio Is One Company A has booked 1000 orders for the period. At the same time, the company has managed to bill all 1000 orders. Using the before-mentioned formula, we can see that 1000/1000 is one. This is the best-case scenario for companies that look for stability, as it means they can successfully meet the supply and demand for their products. However, a book-to-bill ratio of one isn’t the most favorable outcome for businesses. Example Two: Book-To-Bill Ratio Is Less Than One Company B has booked 1000 orders, but the number of orders shipped and billed for the period is 1200. This can happen when the company ships and bills outstanding orders from the previous month. In that case, the book-to-bill ratio measures 1000/1200 = 0.83. This is a strong indicator that there’s more supply than demand for the product. Company B books $0.83 for every $1 billed for the period. A book-to-bill ratio less than one is a declining ratio. Example Three: Book-To-Bill Ratio Is Greater Than One Company C has booked 1200 orders for one quarter. However, in the same quarter, the company only managed to ship 1000 orders. Using the book-to-bill formula, we can see that 1200/1000 = 1.2. A book-to-bill ratio greater than one indicates strong demand. This means a company must find ways to start scaling the orders coming. Otherwise, it will fail in supplying the demand for its products. A company must strive for a book-to-bill ratio of one or very close to the one. Since a book-to-bill ratio greater than one indicates strong demand for its products, it also means the company must find a way to meet the demand with adequate supply. Conclusion A book-to-bull ratio is a performance metric that measures a company’s business model. A weak ratio, or ratio less than one, is the worst possible outcome for companies as it indicates greater supply over demand. Businesses should strive for a book-to-bill ratio of one or greater than one. Both ratios indicate that a company fulfills orders successfully and there’s enough demand for its product.

The Best 5 Payoneer Alternatives For Freelancers and Businesses in 2022

Reading Time: 7 minutes It’s no secret that freelancers and businesses search for Payoneer alternatives to continue operating within their spheres. But why is this sudden shift in needing an alternative payment system? Payoneer was the holy grail of the freelance and business world. However, as of February 1st, 2022, Payoneer updated its TOS (terms of service) and expanded the list of prohibited transactions. In Payoneer’s statement, you can see which transactions the company deems illegal. The list includes basic transactions that long-standing members have been doing for years.  So naturally, people were shocked when Facebook groups started spamming with calls for help due to funds being frozen or outright accounts terminated due to violation of the TOS.  The sudden change in Payoneer’s behavior was met with disappointment and anger among the wider community. So that’s why we’re here to tell you all about the best 5 Payoneer alternatives freelancers and businesses can use. But first, let’s explain what Payoneer is for those who don’t know. What Is Payoneer, and What’s Their Business Model? Payoneer is an international payment platform where anyone can send and receive payments for goods and services. The service launched in 2005 and became available in most countries where other payment platforms weren’t. Freelancers and businesses who operate online adopted Payoneer immediately.  As of 2005, the team has worked tirelessly to make Payoneer available to everyone. It supports more than 150 currencies, with members being able to open balances for each specific currency.  More so, Payoneer allows users to order physical and virtual cards to pay in-store, online, and make ATM withdrawals. Members can also send or receive money to anyone with a Payoneer account. Freelancers can send invoices, and businesses can pay for their services. The Payoneer ecosystem was one of the best in the online payment world. But if it is one of the best, why is the business and freelance community looking for Payoneer alternatives?  If you read the previous section, balance freezing and account terminations are common after February 2022. So you would panic if that happened to you. So that brings us to the topic of our article. What are the best Payoneer alternatives for freelancers and businesses? Stick around as we’ll get into that. Best 5 Payoneer Alternatives  Below is a quick rundown of the best Payoneer alternatives for freelancers and businesses in 2022. The list includes the following: We’ve also included a table that lays out the most relevant information freelancers and businesses need to determine which Payoneer alternative works best for them. PayPal Send and receive international paymentsSubscriptions and recurring paymentsBusiness integration featuresFree and easy setupAUD, GBP, USD, JPY, CAD, EUR High transaction fees for US sellers Stripe Send and receive international paymentsSubscriptions and recurring paymentsBusiness integration featuresAUD, GBP, USD, JPY, CAD, EUR High transaction fees for US businesses Razorpay Send and receive paymentsLow transaction feesPayPal cross-platform capability Available Only in India and INR (Indian Rupees) Skrill Send and receive international paymentsSupports 3,000+ banks worldwideBusiness integration featuresAUD, GBP, USD, JPY, CAD, EUR No subscriptions and recurring payments Wise Send and receive international paymentsAutomatic currency conversionTransparent fees AUD, GBP, USD, JPY, CAD, EUR Only bank to bank transfersCurrency conversion fees With that said, let’s jump into the list. PayPal Many consider PayPal the best online payment system in the world. PayPal is a well-known name in the community, and you’ve probably heard about it. PayPal is a Payoneer competitor in many respects, hence why there is an ongoing Payoneer vs. PayPal debate in the community.  What makes PayPal one of the best Payoneer alternatives, and one of the best Payoneer competitors, is that you can easily send and receive payments. Recurring payments and subscription payments are also made possible through PayPal. But what makes PayPal so impressive is that it is the most widely-used payment system in the world. Plenty of apps that pay instantly use PayPal as a means for users to withdraw funds. As such, there are many proven ways to earn PayPal money instantly.  To sum up the Payoneer vs. PayPal debate, here’s what freelancers and businesses need to know about the prominent Payoneer competitor:  PayPal Advantages PayPay Drawbacks Stripe Stripe is yet another global brand in the online payment community. Unlike PayPal and Payoneer, Stripe enables businesses to create discounts & coupons. It’s a feature that sets Stripe apart from the rest of the competition. This feature is a core reason why many online businesses prefer Stripe over Payoneer, and why many are actively choosing Stripe. Here is a summary of why Stripe is a worthy Payoneer alternative and competitor:  Stripe Advantages Stripe Drawbacks Razorpay Razorpay emerged as a surprising alternative to Payoneer for non-US freelancers and businesses. The payment platform is the preferred option for the Indian markets. Although not as popular as some other payment platforms, Razorpay gives users access to a quick and reliable payment system with cross-platform capabilities. Considering the Indian market preference for Razorpay over Payoneer, here is what you need to know about this particular Payoneer alternative: Razorpay Advantages Razorpay Drawbacks Skrill Skrill is an excellent Payoneer alternative and one of the few apps like PayPal. The payment system is a combination of both Payoneer and PayPal. Users can send and receive payments directly to their Skrill account, bank account, and use the app’s card to make in-store or online purchases. Users can also send and receive payments by providing their email addresses. So usability is an excellent feature on Skrill. Just like Payoneer and PayPal, Skrill is a global payment system that both businesses and freelancers can use. Here is a rundown of what makes Skrill one of the best Payoneer alternatives: Skrill Advantages Skrill Drawbacks Wise (Former TransferWise) Wise rebranded from TransferWise some time ago. But users should know that the online payment platform and its features and capabilities stayed the same. Wise is an excellent Payoneer online platform alternative as it operates as an online payment platform where freelancers and businesses can send and receive payments for goods and services. Funds can be transferred to your

10 Proven Ways To Earn PayPal Money Instantly

Reading Time: 7 minutes If you want to earn PayPal money instantly, know that there are at least ten proven ways to do so. PayPal is one of the most popular online payment systems that operate globally. As of 2021, PayPal has more than 392 million active users. With PayPal, you can perform tasks on other platforms and get paid for your time. Since platforms use PayPal as a payment system, you can sign up to these platforms and earn free PayPal money. By the end of this article, you will know the ten proven ways to earn PayPal money instantly. So with all that said, let’s start. Earn PayPal Money Instantly By Completing Online Surveys Online surveys are, by far, the easiest way to earn PayPal money instantly. Most of you are familiar with online survey sites like Swagbucks and Survey Junkey. Both sites allow cash withdrawals through PayPal, but there’s also the option to get paid through gift cards. To earn PayPal money through online surveys, you need to sign up to these sites. Depending on your geographical location, you can earn anywhere between $50 and $300 each month by completing surveys. Swagbucks and Survey Junkey give you more ways to earn free PayPal money. But you can also perform other tasks to earn free PayPal money. Tasks like watching videos, playing games, and shopping give you more options to earn PayPal money. Due to the popularity of survey websites, many are actively signing up for game apps that pay instantly to PayPal. While Swagbucks and Survey Junkey are the two most popular online survey sites, you can also sign up for other survey sites such as PrizeRebel, Inbox Dollars, Branded Surveys, etc. Earn PayPal Money By Taking Freelance Jobs It’s natural to assume that many freelance websites would have PayPal as an option to withdraw money. However, freelancing doesn’t give you free PayPal money. You can sign up to these platforms and join the growing gig economy.   The two most popular freelancing platforms are Upwork and Fiverr. Both incorporate PayPal as a payment system, and you can do all kinds of freelance work. Popular ideas include copywriting, digital marketing, graphics design, web development, software development, SEO, etc. If you have a talent for some of these, you can easily earn PayPal money instantly. The wonderful thing about freelancing is that you can turn it into a full-time job. If you’re good at it, you can ditch your low-salary job and get paid through PayPal doing something you love. Earn PayPal Money By Selling Products Launching your very own eCommerce store presents a life-changing opportunity. Not only is eCommerce one of the fastest-growing trends, but eCommerce sales worldwide surpassed $5.5 trillion in 2022.  The reason why eCommerce is so big in 2022 is down to the shift in consumer behavior. Statista says that 56% of consumers prefer online shopping. The reasons they give are down to convenience and prices.  But another reason why eCommerce is growing is that consumers have more ways to pay for items. PayPal presents an alternative to established payment methods. eCommerce stores can easily set up a PayPal payment terminal and start making money. And you can do that as well. If you have a talent for crafting or an idea worth selling, you can launch an eCommerce store and start earning PayPal money. Popular product ideas include selling artwork, crafts, and customized graphics, or you can give the dropshipping model a try. Regardless, selling products online has never been easier. What’s more important is that getting paid for those products has never been easier thanks to PayPal.   Earn PayPal Money Instantly By Buying Stuff Online  If selling products isn’t your thing, how about getting paid by spending money? In 2022, there are so many ways to get paid free PayPal money. And this method is indeed free! To make sense of what this means, we have to look at the growing trend of apps that pay instantly through PayPal. One of the most popular of these apps is Ibotta. Ibotta is an app that helps you with grocery shopping online. But there’s a twist. You can shop for groceries online and get paid via PayPal. Ibotta’s business model is close to genius. The cashback app partners with supermarkets and grocery stores to help bring their inventory online. For every purchase you make, Ibotta rewards you with a cashback. All you need to do is scan the receipt using the app.  If you really want to adopt Ibotta as your go-to grocery shopping buddy, you can refer friends and earn even more money. And the best part about it? You get paid via PayPal! Ibotta and similar cashback apps that pay instantly, such as Rakuten, give you even more ways to earn free PayPal money. Earn PayPal Money Instantly By Playing Games This is probably the method that most gamers are reading about in 2022. What better way for gamers to earn PayPal money than to do what gamers do – play games.  Similar to survey websites and apps, some apps let you play games and get paid real PayPal money. One of the most popular apps that allow you to earn PayPal money instantly by playing games is MistPlay.  MistPlay’s motto is “Disvoer, Play, Cashout.” Simple enough, you earn PayPal money instantly by discovering games and playing them. It’s that easy. There are no twists or turns with MistPlay. You download MistPlay on your smartphone and start earning free PayPal money. While there are plenty of other apps that do the same, we’d like to give a special mention to Lucktastic, Wealth Words, and AppNana. If you want the entire list, make sure to check out our guide on the 15 best PayPal games that pay real money in 2022. Earn PayPal Money Instantly By Browsing Websites Now, hear us out. You won’t be browsing websites as much as you’ll be asked to give your opinions about them. But the fun part is that you don’t need to be a

6 Best Banks For Digital Nomads

Reading Time: 5 minutes The single greatest deterrent for people looking to work remotely is not knowing the best banks for digital nomads. Most hurdles remote workers need to overcome involve: interest, currency exchange rates, and withdrawal fees. The fact of the matter is that many global banks have unreasonable charges for international withdrawals and offer little to no benefits for digital nomads. Moreover, due to the variables which affect digital nomads, having a digital nomad finance plan can make a significant difference. As a result, the process of selecting the right banking option becomes that much more important. To help ease the selection process, we have compiled our list of the six best banks for freelancers, remote workers, and digital nomads. But first, you have to be familiar with the criteria behind our list. Nomadic Rubric Remote work is often unpredictable, but the craftiest of digital nomads will use three crucial variables to their advantage. These are the things you need to consider to save money as a digital nomad: Your citizenship will affect more than just your remote work finance. To put it simply, remote workers should always check the eligibility criteria for their chosen bank. They should also consider annual fees and withdrawal fees because they can chip away at your earnings. The last parameter – interest, ties in with savings. As savings accounts are most affected by interest rates, digital nomads should be aware of their bank of choice’s regulations regarding interest. Now that you know the criteria behind both the most successful digital nomads and our list, you are ready to decide on a bank. The six best banks for digital nomads are N26, Charles Schwab, STACK, Revolt, PayPal, and Payoneer. N26 – A European Nomad’s Best Bet The German-based bank should be the first choice for European digital nomads. While it is considered to be one of the best banks for freelancers from Europe, most Americans would want to consider a different option because the bank’s policies are tailored to Europeans. The bank offers exclusively online services, which makes it easy for digital nomads to keep track of their remote work finance. As long as the nomad’s residential address has been approved by N26, the bank’s services become almost immediately available. N26 offers 24/7 customer support, zero foreign transaction fees, and virtually no annual fees. You can also keep track of your digital nomad finance plan through your expenses and spending habits. In addition, as long as you keep your balance under € 50,000, you are eligible for fee-free deposits. Keep in mind that withdrawal fees for non-Europeans are significantly higher and, therefore, make the bank a less favorable option for some. Charles Schwab – America’s Number One The number of digital nomads originating from the United States has increased significantly. According to Project Untethered’s statistics on digital nomads, the number of nomads from the States went from 4.8 million (2018) to 15.5 million (2021) over the last three years. That is all the more reason for remote workers to know their best banking bet – Charles Schwab. Schwab offers many benefits over other banks aiming to accommodate remote workers. For example, their debit cards work at the majority of ATMs around the globe. On top of that, at the end of each month, Schwab provides you with a complete refund on fees racked up from ATMs compatible with Schwab cards. Even more enticing is that Schwab offers free travel insurance and emergency assistance. Travel insurance is unnecessary for digital nomads, but most opt for it as a safety precaution. The only downside to Schwab is that their services are exclusively for American citizens and direct cash deposits are not an option. STACK – Canadian Exclusivity STACK does not fit the definition of the term bank, as it is more of a reloadable debit card. Nevertheless, this reloadable debit card offers a lot of noteworthy services. The best way to save money is a digital nomad is to avoid unnecessary fees. This ties in with the fact that STACK offers no foreign transaction fees and no ATM fees when you use a compatible machine. Besides, STACK users who are not concerned with additional fees can withdraw money from any ATMs worldwide. Other stack users can also transfer money to you free of charge and vice versa. The reason why STACK is considered exclusively Canadian is that you can only deposit Canadian currency on the card. That, and the fact that you cannot deposit money without visiting a Canadian post office or bank. Revolt – The High Earner’s Choice The main reason why Revolt is the best when it comes to high earners is the Annual Percentage Yield. Most banks aimed towards digital nomads offer little to no APY. In contrast, Revolt’s APY is around 0.07%, which is a lot more than most banks offer. Revolt, however, offers more than just a worthwhile APY. First of all, there is no limit on their in-network withdrawals. Additionally, their in-network withdrawals are free. Second of all, anyone using Revolt’s banking services can also hold and transfer money in over 30 currencies. Lastly, the only downside to Revolt is that some of their perks are locked behind upgrade plans and monthly fees. Regardless, the benefits are worth the small fees ($9.99 – $16.99 per month). PayPal – Stability and Trust Few banking options for digital nomads have withstood the test of time. PayPal, luckily, is one of those few. If you are looking for the best online checking account, PayPal might not be for you. If, however, you are looking for a trustworthy banking option – you have found the right one. PayPal boasts a diverse array of users and over 20 accepted currencies. It is also considered one of the best banks for freelancers because there are no annual fees to keep your account open. You can also open a personal and business account. Most digital nomad finance tips are based on the idea of avoiding unnecessary fees. Even though

What Is Base Rate? Simply Explained

Reading Time: 3 minutes A base rate is a banking term that leaves people confused. What is it? What does a base rate represent? How is it calculated? Those are all questions that people ask but have difficulties finding answers to. Well, if you’re interested in what a base rate is, then you’re in the right place. What Is A Base Rate? A base rate is an interest that a country’s central bank charges to commercial banks. You can think of it as an interest rate that every bank pays whenever taking a loan from a central bank. You might think that a base rate is something that doesn’t concern consumers. But it’s absolutely important to understand that the base rate oftentimes depends on the state of a country’s economy. If the economy is bad, the base rate will be higher. A more thriving economy means a central bank can give more favorable rates to commercial banks. In turn, the commercial bank will give more favorable rates to consumers. How Does Base Rate Affect Consumers? Given what we said earlier, no consumer wants a high base rate. Commercial banks will adjust their interest rates based on the central bank’s base rates. So a worst-case scenario would be a high base rate. With that said, these two terms aren’t connected. A commercial bank might still keep its interest rates the same even if the base rate increases. But that would be damaging for the commercial bank’s finances. The higher the base rate, the more expensive loans will become for consumers. As also mentioned previously, a higher base rate suggests that a country is in a poor economy. Higher interest rate loans become more expensive to maintain, which leaves consumers having to pay more. It’s a vicious cycle where the only good outcome is for the base rate to be much lower. After the 2008 financial crisis, central banks decided to keep the base rate low. This, in turn, helped stimulate the economy since banks could offer more favorable loans. So we know the correlation between base and interest rate in regards to loans. But what about interest-based accounts? Consumers with interest-rate savings account benefit from the opposite. If the base rate is low, then they see a lower return on interest payments. But if the base rate is much higher, the consumers will see greater returns. So a good personal finance tip is to open up an interest-based savings account when the base rate is higher. How Is the Base Rate Set? With all that said, how do central banks set the base rate? As mentioned previously, a commercial bank doesn’t have to set the interest rates based on the base rate. But considering that each country has multiple different commercial banks, these establishments will monitor each other’s interest rates and set theirs accordingly. So even if a particular bank offers much lower interest rates, they will be outperformed by the banks with higher rates. Each country’s monetary policy affects the overall banking system. This system is influenced by a couple of factors, such as the total reserve requirements, the total buying and selling of securities, and more. These factors are called market-based factors. Other factors are inflation-based and volatile-based. Commercial banks use a lot of these factors to determine their interest rates. However, since the goal is to maximize profits for shareholders, they will usually turn to the base rate when the base rate is higher. Consumers and businesses, on the other hand, want lower interest rates. So borrowing money when inflation is high is a good way to achieve that. But inflation is a double-edged sword. Ideally, consumers get the best rates when the commercial bank is motivated to lend money.