Chapter 10

Banking

10.1 Comparing Financial Institutions

• Bank = an institution where you can deposit money

• Interest = fee paid for using someone else’s money for a certain period of time

• Banks offer Checking, savings, safe deposit boxes,

financial services

Types of Financial Institutions

• Commercial Banks = owned by shareholders and operates on a profit

• Savings and Loans = owned by the depositors and profits held in reserve

• Credit Union = nonprofit, owned by its members and have a common bond

• FDIC – Federal Depository Insurance Company

10-2 Banking Electronically

• Electronic Funds Transfer (EFT) = movement of funds by electronic means

• ATM (Automated teller machine) = gives you electronic access to your money

• PIN = Personal ID Number= security for your account

• Point-of-sale-transaction = paying for an item by electronic means

• Debit Card = allows the user to subtract money from bank account in order to obtain cash or make a purchase

• Automated Services…Direct deposit, automated transfers between

accounts, loan payments

• Online banking

10-3 Managing a Checking Account

• Payee- person who the check is made

• Cancelled Check = has cleared the system and has been paid

• Overdraft= lack of sufficient funds

Advantages of Checks • Choosing a Checking Account

Minimum Balance

Fees

Transaction limits

Interest

Using a Checking Account• Making a Deposit

• Endorsing a Check

Endorsement = signature on the back saying it can be cashed.

Blank – signature

Special – transfer money to someone else

Restrictive – limits the check – deposit only

• Recording Transaction = Check Register.

• Writing a Check = date, payee, amount in dollars, words, sign it, memo,

• Receiving Your Bank Statement = by mail or electronically

• Reconciling

10-4 Using other Payment Methods

• Certified Checks = check from personal account, that has been stamped for guarantee payment

• Cashiers Check = check issued by the bank

• Money order= get them at bank or post office, safe for travel

• Travelers Checks

• Wire Transfer

• Prepaid Cards

• Online Payment Services