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How Does

How Does Banking Relate to Math?

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By Mer
eHow Contributing Writer
Article Rating: (7 Ratings)

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Keeping Track
1. 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
2. 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

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3. 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
4. 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
5. 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.

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