Banks are financial institutions that take deposits
and engage in lending and operate for a profit Banks offer checking accounts and savings accounts to the general public Two types of banks: Commercial/Retail Banks and Investment Banks Most banks are regulated by the national government or the central bank Credit Union Member owned financial co-operative. These institutions are created and operated by its members and profits are shared amongst the owners. For example: a workplace, church, employee union, neighborhood
Credit Unions offer checking and savings
accounts to members FDIC An account that meets the requirements to be covered or insured by the Federal Deposit Insurance Corporation (FDIC) The different accounts that can be FDIC insured include, checking, savings, certificates of deposit, and money market deposit accounts. Accounts that DON’T qualify safe deposit boxes, investment accounts (stocks, bonds, etc.), mutual funds, life insurance, etc. NCUA: NCUA – National Credit Union Administration Insures each account in a federal credit union up to $100,000 per account. Checking Accounts A checking account is an account held at a financial institution that allows for withdrawals and deposits.
Checking account records provide proof that you
paid bills and help you keep track of spending
Very liquid, can be withdrawn using checks,
ATM’s, and debit cards, along with other methods. Bounced Check A bounced check is slang for a check that cannot be processed because the writer has insufficient funds.
Also known as a rubber check, dishonored
check, or a bad
A bounced check usually returns to the writer
along a penalty for non sufficient funds. Simple Interest Simple interest means that you only earn interest on your initial deposit
Called simple because the interest doesn’t
compound
Always based on the original principal, so
interest on interest is not included How to Calculate Simple Interest: I = Prt I = Interest owed
P = Principal (or initial sum)
r = Interest rate written as a decimal
t = Number of time periods since loan began
Compound Interest Compound interest allows you to earn interest not only on your initial deposit but also on the interest you earn as you go along
Interest on interest
Can also work against you if you have a loan or
credit card that charges a high rate of interest and has compounding interest Compounding Interest Video Debit Cards A debit card is a card that deducts money directly from a consumer’s checking account ot pay for a purchase.
Eliminate the need to carry cash and physical checks
Don’t allow the user to go into debt unlike credit
cards
Usually have purchase limits
Reconciling a Bank Statement This is used so that you don’t forget checks, cash withdrawals, and purchases while using your checking account If you forget to record a transaction you may overdraw your account which results in fees (bounced check) This allows you to monitor your spending, and how much money is in your account ATM Automated Teller Machine
An ATM is an electronic banking outlet
which allows customers to complete basic transactions without the aid of a branch representative or teller Stop Payment Fee A request made to a financial institution to cancel a check or payment that has not been processed yet
A stop payment order is issued by the account
holder and can only be enacted if the check or payment has not already been processed by the recipient Bank Endorsement An endorsement by a bank for negotiable instrument such as a bankers acceptance or time draft, that assures the counterparty that the bank will stand behind the obligations of the creator of the instrument Direct Deposit Electronic funds that are deposited directly into your bank account rather than through a paper check common uses of a direct deposit include income tax refunds and pay checks Cyber Banking Also known as internet banking
Pay bills, view transactions, transfer funds
between accounts
Benefits: convenient, low or no acct fees, quick
access to info, savings on postage and checks Automated Payments A money transfer scheduled on a predetermined date to pay a recurring bill. Automatic bill payments are routine payments made from a banking, brokerage or mutual fund account to vendors