Consumer Ed: Banking

Types of Banks

-There's many banks such as: international, state, full-service banks -Commercial banks: are often called full-service banks because of their many services. You can buy checking or savings accounts and buy special kinds of checks. -Electronic banking: automated teller machines (are machines that make deposits, withdrawals, and other transactions), automatic transfer of funds (transfer funds from your account), and online banking (allows you to communicate with your bank by sending and receiving electronic messages via telephone).

Credit

-allows you to buys good and services now and pay for them later -creditor: may be a business or individual that makes credit available by loaning money. -good credit risk: creditors issue credit to people who are most likely to pay them back (making regular on time payments, own a car or home, living in same community for a period of time) -the more you charge or borrow, the more interest youre likely to pay -collateral: is something of value held by the creditor in case you are unable to repay the loan

Credit card

-allows you to withdrawal funds from your checking account without writing a check -a check card resembles a credit card -check cards bear the name of a credit card company such a VISA or MasterCard, it's used like a credit card, but purchases are deducted directly from your checking account

Commerical Banking

-are often called full-service banks because of their many services. -you can open a checking or savings account and buy special kinds of checks. -you can also buy U.S. Saving Bonds, take out a loan, and rent safe-deposit boxes. -the money is safe because it is insured by the Federal Deposit Insurance Corporation (insures banks, savings, and loan associations for deposits $100,000/person).

ATM

-are remote computer terminals that customers use to make deposits, withdrawals, and other types of transactions

Writing a Check

-date including month, day, and year -name of payee: person, business, or organization receiving check -amount of the check in numbers(write as closely to dollar sign as possible) -amount of the check in words -purpose of the check -your signature

Credit Unions

-differs from a commercial bank and a savings and loan association in that the services are for its members only. -share a common bond -Usually charge lower interest rates on loans and offer higher interest rates on savings -offer checking accounts that are insured by the Nation Credit Union Association

Balancing/reconciliation

-each time you receive a bank statement, you will need to make sure your record of deposits and withdrawals agrees with your bank record -make sure you keep records of each transaction in your checkbook register

Certification of Deposit

-if you have money to deposit for a set period of time, you might want to buy a CD -the CD pays a higher rate of interest because it requires you to commit your money for a specific period of time -a minimum deposit it usually required and there is a set annual rate of interest

FDIC (Federal Deposit Insurance Institute)

-is a governing agency that insures banks and saving and loan associations for deposits up to $100,000 per account.

Bank Statement

-is a record of the checks, deposits, and chargers on your account for a specific period of time.

Mutual Savings Banks

-is s company that collects money from a number of investors and invests that money in security

Credit Rating

-is the creditors evaluation of a persons willingness and ability to pay debts -look for good credit risk

Savings and Loan Associations

-provide many of the same services offered by commercial banks -focus more on savings plans for investors and mortgage loans for home buyers. checking accounts that are insured by the FDIC up to $100,000

Checks and Checking Account

-safe place to keep cash -easy way to withdrawal cash -convenient method of payment -detailed record of transactions -establishes credit rating -regular budget account: you are charged a fee for every check you write and/or monthly service charge -minimum balance account: requires you to keep a minimum amount of money in the account at all times to avoid paying a service charge.

Check Endorsement

-to deposit, cash, or pay a check to someone you must endorse it first -this means you must sign your name o the back of the check along the left end -must match name on front of check

Postdating

-to write a future date on (a document), as on a check to prevent it being paid until then

Overdraft

-when you exceed your balance -the bank chargers a fee each time you overdraw your account and also be charged a fee by the person receiving the overdrawn check -if you overdraw several times, your finicial institute may report you at the local credit reporting agency which can cause you to have a low credit rating