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Intro to Business > 17.2 Financial Services and Electronic Banking > Flashcards

17.2 Financial Services and Electronic Banking Flashcards

1
Q

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

A

Automatic bill payment

commonly used to pay rent, mortgage, loans, utilities and other bills without doing anything

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2
Q

a nationwide banking plan set up by the federal government to supervise and regulate member banks

A

Federal Reserve System

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3
Q

What are the 3 most common types of checking accounts?

A
  1. regular checking accounts
  2. interest earning checking accounts
  3. special checking accounts
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4
Q

a federal agency that protects deposited money in case of the failure of a bank or financial institution that it regulates

A

Federal Deposit Insurance Corporation (FDIC)

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5
Q

a report sent by the bank to a depositor showing the status of his or her account

A

bank statement

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6
Q

Describe a regular checking account.

A
  • 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
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7
Q

What are the 4 different kinds of electronic payment options?

A
  1. debit card transactions - most places accept this as form as payment, amount of purchase is deducted directly from checking account
  2. 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
  3. stored value cards - these are gift cards from stores, phone services, bus fares, school lunches, highway tolls - some cards can be reloaded
  4. smart cards - similar to ATM cards but have an embedded microchip that stores account balances, transaction records, insurance information and medical history
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8
Q

Describe payment services.

A
  • 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
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9
Q

refers to the use of computers and other technology for banking activities

A

Electronic Funds Transfer (EFT)

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10
Q

a separate form on which the depositor keeps a record of deposits and checks

A

check register

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11
Q

Describe special checking accounts.

A
  • 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
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12
Q

Describe lending services.

A
  • 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
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13
Q

a fee a bank charges for handling a checking account

A

service charge

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14
Q

Describe investment advice.

A
  • 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
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15
Q

a statement showing how the checkbook balance and the bank statement were brought into agreement

A

bank reconciliation

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16
Q

a bank that offers a full range of financial services

A

commercial bank

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17
Q

Describe storage of valuables.

A
  • 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
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18
Q

Describe interest-earning checking accounts.

A
  • 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
19
Q

What are some examples of activities you can do through the ATM?

A
  • check account balances
  • withdraw cash
  • make deposits
  • transfer funds
20
Q

checks that have not been deducted from the bank statement balance

A

outstanding checks

21
Q

allows many banking services, the most common use is withdrawing cash or getting a cash advance from a credit card

A

Automatic Teller Machines (ATM)

aka cash machine

22
Q

be careful when choosing a checking account, banks may attract you with a low _____ balance, but fees can result in a higher total cost

A

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

23
Q

Describe Automatic Teller Machines.

A
  • 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
24
Q

a user-owned, not for profit cooperative financial institution

A

credit union

25
Q

a container in a secured area in a bank vault for storing valuables

A

safe deposit box

26
Q

Describe payments at the Point-of-Sale.

A
  • 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
27
Q

issued by your bank, can be used for ATM transactions or at retailers for POS transactions

A

debit card

28
Q

Describe savings services.

A
  • 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
29
Q

What are the financial services used by consumers?

A
  • savings services
  • payment services
  • lending services
  • electronic banking
  • storage of valuables
  • investment advice
  • management of trusts
30
Q

Describe electronic banking.

A
  • includes EFT, ATM, point of sale transactions, direct deposit and automatic bill payment
  • online computer banking allows a customer to access many financial services
31
Q

a device used for cash machine transactions

A

debit card

32
Q

What is the difference between a debit card and credit card?

A
  • 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
33
Q

true or false

Using a debit card is similar to writing a check.

A

true

they both come right out of your checking account

34
Q

true or false

If you write only a few checks each month you should consider a regular checking account.

A

false

you should use a special checking account

35
Q

written evidence that you received payment or that you transferred your right of receiving payment to someone else

A

endorsement

36
Q

a fee a bank charges for handling a checking account

A

service charge

37
Q

used for the storage of valuables

A

safe deposit boxes

38
Q

Describe management of trusts.

A
  • 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
39
Q

What should you evaluate when selecting a checking account?

A
  • minimum balance
  • interest rate earned, if any
  • monthly service charge
  • fees for other services, such as printing checks and stop payment orders
  • other restrictions
40
Q

true or false

Automatic payments are made through automatic teller machines.

A

false

they are made through your bank or through the vendor which you owe the money

41
Q

funds are deposited electronically and available automatically for your use, common for paychecks and government payments

A

direct deposit

42
Q

a written notice telling the bank not to pay a certain check

A

stop payment order

43
Q

What are some examples of online banking activities?

A
  • check account balances
  • transfer funds
  • view account history
  • pay bills
  • apply for loans
  • manage investments
  • pay bills automatically
  • make debit card purchases

Intro to Business (41 decks)

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