Indruduction To Commerical Banks Flashcards
What’s a commercial bank
A business that provides financial services to a person and business customers.
What’s a savings account
This account is for customers who want to save money. Interest is paid each year on the amount saved and it can be withdrawn or added to at any time.
What is interest
As a reward for saving your money in the bank, the bank will add a small amount of money to your account each year. The amount they add is known as interest and is a percentage of the amount you have saved.Customers who earn interest on their savings must pay a tax on this interest. This tax is called Deposit Interest Retention Tax (DIRT)and is taken away by the bank before the interest is added to your account.
What are the advantages of a savings account
🔴It is a convenient way of saving money.
🔴£You will receive interest each year on your savings.
🔴£You can withdraw your money very easily using automated teller machines (ATMs).
🔴£Your savings are completely safe.
What is a current account
A current account is useful for customers who want to pay bills and other expenses, e.g. petrol, on a regular basis. In other words, it is an account where we can put money that will be transferred regularly to other people. Later on we will learn how we can transfer money from our current account using cheques, Laser cards and ATMs.
What are the advantages of a current account.
🔴Current account holders can use a chequeor Laser cardto pay for goods and services, which is safer and more convenient than having to pay cash.
🔴You can arrange to have your wages paid directly into your current account by your employer.
🔴Current account holders can apply for a bank overdraft.
🔴Customers can use the internet and ATMs to gain access to their current account.
How do you open a savings account or a current account.
To open a savings or current account, the applicant must go to their local bank and fill out an application form. On this form, they will be asked questions about themselves and this information will be used by the bank to decide if the applicant should be allowed to open an account. In order to follow certain legal requirements, the bank will also require the customer toprovide:
🔴Proof of address, e.g. a household bill, tax form or insurance policy.
🔴Proof of identity (name and date of birth), e.g. a driver’s licence, a passport, a student card, National Age Card or a social protection card.
If successful, the new customer will be given an account number, a chequebook (if a current account) and an ATM card.
How do you lodge money to a savings or a current account.
From time to time you might want to put money into your savings or current account. This is known as making a lodgement. To do this you should fill out a lodgement slip, which is available in your local bank. Each lodgement slip has a counterfoil, which should also be filled out. This counterfoil is kept by the customer and is your proof that the money was lodged.You then hand the lodgement slip and the money to the bank employee, who will count it to make sure it is the same as the amount written on the lodgement slip. This person is known as a cashieror teller. If everything is correct, the cashier stamps the slip and the counterfoil with the date, writes their initials on both parts and hands the counterfoil back to the customer.
How do you withdraw money from a savings or current account
Most bank customers will use their ATM card to take money out of their account without having to go into the bank. Taking money from your account is known as making a withdrawal. You may also withdraw money from your account by filling out a withdrawal slip, which is available from your local bank. The withdrawal slip is then handed to the bank cashier, who checks that the signature is correct and that there is enough money in the account to make the withdrawal. If everything is correct, the cashier stamps the slip with the date and writes their initials on it.
What is an atm card and what can the customer do with it.
An ATM card is given to each account holder so that they can gain access to their current or savings account 24 hours a day at any branch of any of the main banks. By using their ATM card, the customer can do any of the following. 🔴Lodge money to their account. 🔴Withdraw money from their account. 🔴Transfer money between their accounts. 🔴Order a statement. 🔴Print a mini statement. 🔴Pay a bill.£Check their balance. 🔴Top up their mobile phone.Examples of ATM cards include Pass (Bank of Ireland), Banklink (AIB) and Servicetill (Ulster Bank). You cannot use your ATM card to overdraw your account unless you have special permission from your bank to do so.
How do use an arm
- Insert your ATM card into the ‘hole in the wall’ machine.
- The ATM checks the information stored in the card’s magnetic strip.
- Key in your personal identification number (PIN). The ATM checks that the PIN keyed in matches the number that is stored in the magnetic strip.
- Choose the service required, e.g. withdraw money, pay a bill, check your balance.
- If making a withdrawal, select the amount of money you wish to withdraw.
- Remove the ATM card and the cash if a withdrawal took place.
- Remove the advice slip, which is your record of the transaction.Note:In an effort to protect the environment and reduce paper waste, the ATM will not issue a receipt unless you ask for one.
What is 24 hour banking
24-hour banking refers to telephone and internet banking and means that bank customers can carry out a range of banking services 24 hours a day, 365 days a year. These services include:
🔴Checking your account balance.
🔴Transferring money between your accounts.
🔴Paying bills
🔴Applying for a bank loan, a bank overdraft or a new credit card.
🔴Ordering foreign currency.The customer must log into the bank’s website using their secret registration number and PIN. They will then be asked some security questions to make sure that only the account holder can gain access to the account.
What is a night safe
A night safeis a metal drawer located in the wall of most bank branches. They are used by customers who need to lodge large amounts of cash when the bank is closed. The bank customer who wants to use the night safe is given a key and a special lodgement bag. The procedure for using the night safe is as follows.
- Place the cash in the lodgement bag containing your account number.
- Open the safe with the key.
- Drop the lodgement bag down the chute into the bank’s vault. The next morning, the bank staff will open the bag, count the cash and lodge it to the customer’s account. Customers should be very careful when using night safes to avoid the risk of theft. Night safes are particularly useful for owners of pubs and late-night shops. Can you think of other types of businesses that might use a night safe?
Why was gold a awkward currency and how did they solve this.
🔴Gold was awkward to carry around because of its weight.
🔴There was a danger that the gold would be stolen.
To solve these problems, people began to store their gold with people called goldsmiths who gave them a receipt which showed the amount of gold they were minding for them. If somebody wanted to get their gold back, they brought the receipt to the goldsmith, who checked it and returned their gold to them. If a person only wanted to get some of their gold back, they would be given a new receipt from the goldsmith that showed how much gold they had left. As time went on, some traders started to accept the receipts as payment for goods and services instead of the gold. The traders would then go to the goldsmith with the receipt and claim the amount of gold they were owed. The goldsmiths charged a small fee for providing this service – a service which today we call banking.In this chapter we will learn about:•Current and savings accounts. •Lodging and withdrawing money. •The automated teller machine (ATM). •24-hour banking. •Night safes.
