PFin - Ch 5 - Banking Procedures

debit card

A bank card that allows the account holder to make purchases and to withdraw cash from an account at an ATM

stop payment

A bank service that directs the bank not to honor a check you wrote or lost

cashier's check

A check issued by the bank against bank funds

bounced check

A check that is returned by the bank for non-sufficient funds (NSF); also called a bad check

postdated check

A check written with a date that will occur in the future

checking account

A demand deposit that allows the account holder easy access to the money and allows checks to be written on the account

savings account

A demand deposit that has some restrictions as to how quickly or easily you can get your money

certificate of deposit

A deposit of money set aside for a fixed amount of time at a fixed interest rate

U.S. savings bond

A discount savings bond issued by the U.S. government

Rule of 72

A math formula that calculates how long it will take for money earning a set rate of interest to double

checkbook register

A record in which transactions of a checking account (checks, other withdrawals, deposits, and fees) are kept

money market account

A savings option that pays the current market rate of interest on the money deposited and may have restrictions on withdrawals

endorsement

A signature or instructions written on the back of a check authorizing a bank to cash or deposit the check

money order

A type of check used to pay bills or make a payment for which the money is guaranteed

check

A written order to a bank to pay the stated amount to the person or business named on the check from a certain account

monetary policy

Actions taken by the Federal Reserve to influence money and credit conditions in the economy in an effort to affect employment levels and prices

principal

An amount of money that is set aside (saved or invested) on which interest is paid

prime rate

The interest rate that banks charge to their most creditworthy business customers, such as corporations

federal funds rate

The rate at which banks can borrow money from the excess reserves of other banks

discount rate

The rate banks are charged to borrow money from the Federal Reserve

compound interest

Interest that is earned on both principal and interest previously earned on savings

deposit

Money added to a checking, savings, or other financial account

automatic withdrawal

Money deducted from an account and electronically transferred to another party

automatic deposit

Money electronically added to a checking or savings account; no currency or paper checks are involved