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
