Chapter 5
Cash availability and payment services
Checking accounts
Borrowing
Credit cards, cash loans
money market fund
A combination savings-investment plan in which the deposit holder (brokerage firm) invests your money in a variety of financial instruments
credit unions
user-owned, nonprofit, cooperative financial institution
check-cashing outlets
charge high fees (sometimes 2 or 3 percent) just to have a paycheck or government check cashed. offer private postal boxes, utility bill payment, prepaid debit cards
Banks and other financial institutions offer services in four main categories:
-Savings -Cash availability and payment services -Borrowing -Investments and other financial services
check writing procedure
1) record the date, (2) write the name of the person or organization receiving the payment, (3) record the amount of the check in figures, (4) write the amount of the check in words (checks for less than a dollar should be written as "only 79 cents," for example, and cross out the word dollars on the check), (5) sign the check, (6) note the reason for payment.
deposit institutions
Include commercial banks, savings & loan associations, mutual savings banks, and credit unions.
asset management account
also called a cash management account or a wealth management account provides a complete financial services program for a single fee.
mutual savings banks are owned by
depositors
time deposit
include money in savings accounts and certificates of deposit
life insurance
includes investment options, savings alternatives, providing for dependents
trust
is a legal agreement that provides for the management and control of assets by one party for the benefit of another.
savings and loan associations
most of these organizations offer financial services comparable to a bank
commercial banks
offer the entire range of banking services, such as checking and savings accounts, loans, and financial advice
the interest rates charged by pawnshops are regulated by:
the state
high cost financial services typically include:
payday loans, pawn shops, check cashing outlets, rent to own centers
Savings
Selection of a savings plan is commonly based on the interest rate earned, liquidity, safety, and convenience, which are discussed later in the chapter.