EPF Banking

Federal Reserve Structure

-Board of Governors: 7 members who are appointed by the president and confirmed by the Senate for a 14 year ter

Overdraft Protection

Allows you to cover checks or withdrawals up to a specified amount if you have insufficient funds in the account.

Overdraft

Amounts withdrawn from your account beyond the money the account held

Money Market Account

An FDIC account that offers benefits of both savings and checking accounts (high interest, checking writing) but requires a high minimum balance.

HIGHER RATES =

DECREASES THE MONEY SUPPLY Higher rates make money more expensive because it cost more to borrow it.

Savings Account

Earns interest although the return is low; funds can be held for any length of time; entire amount deposited can be withdrawn at any time.

Electronic funds transfer (EFT)

Uses a computer-based system that enables you to transfer money from one account to another in lieu of writing a check or exchanging cash.

ATM

a bank machine that gives out cash from your account and accepts deposits around the clock.

The Fed lowers the reserve requirement for banks

banks will place more money into circulation.

To reduce the money supply:

bonds are sold by the FED to the public

To expand the money supply:

buy US government securities

Credit Union

created for its members (common bond - employment for the same firm) who are its depositors and borrowers.

Board of Governors

executive board of the FED that makes major monetary policy decisions

Checking Account

highly liquid account; can withdraw any time you wish; earns little or no interest.

Checking Account

An account which allows the holder to write checks against deposited funds.

LOWER RATES =

INCREASES THE MONEY SUPPLY Lower rates make money cheaper because it cost less to borrow it.

Federal Deposit Insurance Corporation (FDIC)

Independent agency of the U.S. government that protects customers from the loss of any deposit if the financial institution fails. The FDIC insures money up to $250,000

Non-sufficient funds

Lack of money in an account to pay a payment.

Statement

Monthly document sent by the financial institution that lists your account balance at the beginning of the period and the end of the period; includes checks deposits, deductions, and fees.

Bank Statement

Monthly printout from your bank that shows all transactions in your accounts.

Credit Union

Not for profit financial institution that is owned entirely by it's members.

Restrictive Endorsement

Notation that specifies what is to be done with the check; limits any further negotiation of the check.

Payee

Person, company, or organization to whom a check is written.

Debit Card

Plastic card used to deduct money from a checking account almost immediately primarily to pay for purchases; also known as a check card.

Goals of Monetary Policy

Price stability, high employment, stability of financial markets and institutions, economic growth

Endorse

Signing the back of a check, authorizing the check to be exchanged for cash or deposited.

Automatic Teller machine ATM

Specialized computer used by bank customers to manage their money (get cash, make deposits, check balances).

Federal Reserve

The central bank of the U.S. banking system

Federal Reserve

The central banking system in the United States which consists of the twelve regional banks, the Federal Reserve Board, and the Federal Open Market Committee.

Reconciling

The process of comparing the bank balance and check register so that they show the same amount.

reserve requirement ratio (RRR)

This is the percentage of their deposits that member banks must keep available in a Federal Reserve Bank.

Withdrawal

To remove money from a bank account.

Liquidity

how easy to convert an account to cash

The Fed increases the reserve requirements

takes money out of the circulation.

Bank

A business that receives deposits and make loans.Also called financial institutions because they deal mainly with money

Forged Check

A check signed by someone else other than who is specified on the check without that person's permission.

Bad Check

A check written against an account with insufficient funds to cover it.

Direct Deposit

A deposit of money by a payer directly into a payee's bank account

Bank

A financial institution that handles money, including keeping it for saving or commercial purposes

Deposit Slip

A form that contains an account holder's information and allows money to be deposited into the correct account.

Check Register

A register where you list all bank transactions including deposits, checks, debit card purchases, ATM withdrawals, and bank fees.

Check

A written order instructing the bank to pay a certain amount of money to another person or business.

Direct Deposit

An automatic deposit of a paycheck without having to take a physical check to the bank.

Deposit slip

An itemized slip showing the exact amount of paper money, coin, and checks being deposited to a particular account.

Balancing a Checking Account

Calculations that are made to determine the difference between the payments from, and the deposits to, a checking account.

Debit Card

Directly attached to a checking account, and can be used with a PIN to pay for items at a store

Main Functions of the Federal Reserve

Makes sure our banks are sound and safe. Provide financial (money) and payments services for banks and government Is responsible for promoting a healthy economy using monetary tools.

Deposit

Money deposited in a bank or financial institution.

Interest (savings)

Money paid to you by the financial institution when you deposit funds there.