Personal finance 5.2
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Loans and Trusts Financial institutions also make loans to finance the purchase of cars, homes, vacations, home improvements, and other items. Banks can also provide advice for estate planning and trusts. In addition, banks can act as trustees of estates for minors and others. A trustee is a person or an institution that manages property for the benefit of someone else under a special agreement.
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Money Orders Some banks sell money orders to people who do not wish to use cash or do not have a checking account. A money order is like a check, except that it can never bounce. There is a charge for purchasing a money order. It can cost from 50 cents to $5 or more, depending on the amount of the money order. You also can purchase money orders through the post office and local merchants.
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Notary Public Services A notary public verifies a person's identity, witnesses the person's signature on a legal document, and then "notarizes" the signature as valid. Financial institutions typically have at least one person on their staff who is a notary public. This person provides notary services for account holders, usually without charge. For noncustomers, however, there is typically a small fee of $10 or less.
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A stop-payment order is a request that the bank not honor a specific check. The usual reason for stopping payment is that the check has been lost or stolen. By issuing a stop-payment order, the check writer can safely write a new check, knowing that the original check cannot be cashed if it is found and presented to the bank. Most banks charge a fee for stopping payment on a check.
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Automated Teller Machines (ATMs) Many banks provide ATMs for their customers. At an ATM, you can make cash withdrawals (using your debit card) from your checking or savings account. Using a Visa or MasterCard, you can receive a cash advance electronically. To use 24-hour ATMs, you must have a card that is electronically coded. You also must know your personal identification number (PIN), which usually is some combination of numbers and letters. For safety, do not carry your PIN in written form. Commit it to memory.
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Bank Credit Cards You can apply to a full-service bank for a bank credit card, such as a Visa or MasterCard. If you meet the requirements and are issued a card, you can use it instead of cash at any business that accepts credit cards. Banks often offer special credit card "perks" to their best customers whose accounts are in good standing.
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Bank Fees Banks charge fees to their customers to help cover their operating costs. If you want to cash a check at a bank where you do not have an account, the bank may charge you a fee or refuse to cash the check. When you spend more than you have in your account and you don't have overdraft protection, you are assessed an overdraft fee called an NSF fee. An ATM fee is typically charged by an ATM that does not belong to your own bank. In some cases, your own bank will also charge you an ATM fee for using another bank's ATM.
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Banking Services A full-service bank is one that offers every possible kind of service, from savings and checking accounts to credit cards, safe deposit boxes, loans, and ATMs. Other services commonly offered are online banking, telephone banking, certified checks, cashier's checks, money orders, and debit cards. Most banks offer FDIC insurance, which protects the deposits of customers against loss up to $250,000 per account.
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Debit Cards A debit card is a bank card that deducts money from a checking account almost immediately to pay for purchases. The debit card is presented at the time of purchase. When a debit card is used, the amount of the purchase is quickly deducted from the customer's checking account and paid to the merchant.
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Guaranteed-Payment Checks A certified check is a personal check that the bank guarantees or certifies to be good. Sometimes a payee might want you to get your personal check certified to reduce the risk of accepting your check for payment. For example, if you buy a used car from someone, the owner might want a certified check before allowing you to take the car. A cashier's check, also called a bank draft, is a check written by a bank on its own funds. You can pay for a cashier's check through withdrawal from your savings or checking account, or in cash. After receiving your payment, the teller makes out the cashier's check to your payee, and an officer of the bank signs it.
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Online and Telephone Banking Most financial institutions offer online and telephone banking services. These services give you the ability to access your accounts from a computer or telephone, transfer money from one account to another, and pay bills by authorizing the bank to disburse money. You can find out your current balance, what checks have cleared, and which deposits have been entered. Online and telephone banking enable you to access your account any time, day or night. Most banks also allow and encourage electronic transfers of money. An electronic funds transfer (EFT) uses a computer-based system that enables you to move money from one account to another without writing a check or exchanging cash.
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Overdraft Protection Overdraft protection allows you to cover checks or withdrawals up to a specified amount, usually between $100 and $1,000, depending on the typical balance in your account. With overdraft protection, your checks will be covered even if you have insufficient funds in your checking account. Protection may be offered in the form of an instant "loan" with high interest rates. Other banks may charge a flat fee.
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Safe Deposit Boxes Financial institutions offer customers a safe deposit box to store valuable items or documents. They charge a yearly fee based on the size of the box. Annual rental fees may range from $50 to $150 or more. The customer is given one key for the box. The bank will also have a key. Both the customer's key and the bank's key must be used to open the box. Documents commonly kept in a safe deposit box are birth certificates, marriage and death certificates, deeds and mortgages, and stocks and bonds.