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.