17.2 Financial Services and Electronic Banking Flashcards
requires a bank customer to authorize preset amounts of monthly expenses, the bank deducts the payments from your account and transfers them to the appropriate companies
Automatic bill payment
commonly used to pay rent, mortgage, loans, utilities and other bills without doing anything
a nationwide banking plan set up by the federal government to supervise and regulate member banks
Federal Reserve System
What are the 3 most common types of checking accounts?
- regular checking accounts
- interest earning checking accounts
- special checking accounts
a federal agency that protects deposited money in case of the failure of a bank or financial institution that it regulates
Federal Deposit Insurance Corporation (FDIC)
a report sent by the bank to a depositor showing the status of his or her account
bank statement
Describe a regular checking account.
- smart choice for a person who writes a lot of checks each month
- most banks do not charge a service fee for this type of account as long as you maintain a certain minimum balance - this amount varies and is often $300 or higher
- a checking account at a credit union is normally called a share draft account because the members are called shareholders
What are the 4 different kinds of electronic payment options?
- debit card transactions - most places accept this as form as payment, amount of purchase is deducted directly from checking account
- online payments - most web companies and banks offer online bill payment services, be sure to check the monthly charge as well as the online security
- stored value cards - these are gift cards from stores, phone services, bus fares, school lunches, highway tolls - some cards can be reloaded
- smart cards - similar to ATM cards but have an embedded microchip that stores account balances, transaction records, insurance information and medical history
Describe payment services.
- the ability to transfer money to others is necessary for daily business activities
- types of payment services include checking account, debit cards, online payments and automatic withdraws
refers to the use of computers and other technology for banking activities
Electronic Funds Transfer (EFT)
a separate form on which the depositor keeps a record of deposits and checks
check register
Describe special checking accounts.
- smart choice for someone who writes only a few checks each month
- also called an activity account
- banks charge about 10 to 20 cents for each check written
- a monthly service charge may also be added
Describe lending services.
- most people, businesses and governments borrow money
- ex. business loans - to build new warehouse, buy products, etc
- ex. individual loans - to buy a car, pay college tuition
- banks make loans because most of their income is from the interest they charge borrowers
- banks offer many tupes of lending services:
- auto loans, business loans and mortgages
- credit cards - allows a person to buy items without having the cash, when paying with a bank credit card you are borrowing money from the bank
a fee a bank charges for handling a checking account
service charge
Describe investment advice.
- banks can assist custoemrs with decisions about buying a home, offer tips on money management, and help customers exchange US funds to foreign currency
- most banks offer advice on investments - this involves savings that are put to work to earn more money
- types of investments include government bonds, stocks and mutual funds
a statement showing how the checkbook balance and the bank statement were brought into agreement
bank reconciliation
a bank that offers a full range of financial services
commercial bank
Describe storage of valuables.
- banks offer safe deposit boxes for storage of valuables
- these boxes are in secured areas, they are very safe places to keep jewelry, rare coins, investment certificates, birth records, insurance policies, and other valuable documents
- only you or someone to whom you here given the right to open the box may open it
- not even a bank has the right to open your safe deposit box unless it is ordered to do so by a court
- safe deposit boxes are rented by the year and come in many sizes
Describe interest-earning checking accounts.
- is a checking account that earns interest
- these accounts may require a higher monthly balance than regular checking accounts
- if the account falls below the required amount the bank usually pays no interest and may add a service charge
- the interest rates that banks pay their customers vary
- interest rates on checking accounts are normally very low
What are some examples of activities you can do through the ATM?
- check account balances
- withdraw cash
- make deposits
- transfer funds
checks that have not been deducted from the bank statement balance
outstanding checks
allows many banking services, the most common use is withdrawing cash or getting a cash advance from a credit card
Automatic Teller Machines (ATM)
aka cash machine
be careful when choosing a checking account, banks may attract you with a low _____ balance, but fees can result in a higher total cost
be careful when choosing a checking account, banks may attract you with a low minimum balance, but fees can result in a higher total cost
Describe Automatic Teller Machines.
- most common use of ATM is withdrawing cash
- customers can also check their account balances, make depositis, or transfer funds
- use a debit card for these transactions
- can also buy bus passes, postage stamps and gift cards at some ATM’s now
- be careful though - many banks charge fees for ATM usage
a user-owned, not for profit cooperative financial institution
credit union
a container in a secured area in a bank vault for storing valuables
safe deposit box
Describe payments at the Point-of-Sale.
- a merchant accepts a debit card to pay for purchases
- most gas stations, stores, and restaurants accept this type of payment
- vending machines also accept debit cards now
issued by your bank, can be used for ATM transactions or at retailers for POS transactions
debit card
Describe savings services.
- safe storage of funds (money) for future use
- one of the main services that financial institutions offer is accepting money from customers for safekeeping
- a range of savings plans is available for this purpose
What are the financial services used by consumers?
- savings services
- payment services
- lending services
- electronic banking
- storage of valuables
- investment advice
- management of trusts
Describe electronic banking.
- includes EFT, ATM, point of sale transactions, direct deposit and automatic bill payment
- online computer banking allows a customer to access many financial services
a device used for cash machine transactions
debit card
What is the difference between a debit card and credit card?
- when you use a debit card you are using money that is in your account
- when you use a credit card you are borrowing from the bank to pay later
true or false
Using a debit card is similar to writing a check.
true
they both come right out of your checking account
true or false
If you write only a few checks each month you should consider a regular checking account.
false
you should use a special checking account
written evidence that you received payment or that you transferred your right of receiving payment to someone else
endorsement
a fee a bank charges for handling a checking account
service charge
used for the storage of valuables
safe deposit boxes
Describe management of trusts.
- banks manage investments on behalf of customers
- this money or property that is turned over for the bank to manage is said to be held in trust
- this service can be offered through a trust company or through trust departments in banks
- trusts are used by people of all ages - very useful for very young people and for some elderly people
- a young person who inherits money may not have the skill and experience to manage it wisely
- elderly people who are ill may ask the trust department of a bank to manage their money
- the bank makes investments and keeps the customers informed about what is happening to their money
What should you evaluate when selecting a checking account?
- minimum balance
- interest rate earned, if any
- monthly service charge
- fees for other services, such as printing checks and stop payment orders
- other restrictions
true or false
Automatic payments are made through automatic teller machines.
false
they are made through your bank or through the vendor which you owe the money
funds are deposited electronically and available automatically for your use, common for paychecks and government payments
direct deposit
a written notice telling the bank not to pay a certain check
stop payment order
What are some examples of online banking activities?
- check account balances
- transfer funds
- view account history
- pay bills
- apply for loans
- manage investments
- pay bills automatically
- make debit card purchases
