Type of Bank Accounts 2 Flashcards
What are bank accounts?
They represent funds entrusted by a depositor to a bank for safekeeping.
What the three basic types of bank accounts?
- Savings Account
- Current/Checking Account
- Time Deposit
What are Saving Accounts?
A bank account that earns a modest interest rate and is intended to encourage savings.
What is a passbook?
It is a book to track the flow of money that comes in and out of your savings account.
What does the passbook show?
- Depositor’s deposits and withdrawals
- Amount of interest earned by the
deposit - The balance of the account
What is a Current/Checking Account?
A bank account wherein the depositor can write checks
What are the two types of accounts that can be current/checking accounts?
- Basic Checking Account
- Interest - Bearing Checking Account
What is a Basic Checking Account?
A checking account that usually does not pay interest
What is an Interest - Bearing Checking Account?
A checking account that pays interest (Just like a savings account)
Instead of a passbook, what can the depositor receive if they are using a checking account?
Check Book
What is a Check Book
A paid booklet containing pre-printed blank checks.
Time Deposit (or Certificate of deposit or Term deposit)
An interest-bearing fund maintained at a bank for a fixed period of time (e.g 30 days,60 days, 90 days, etc.) and has a pre-set date of maturity.
The money must remain in the account for a fixed term in order to earn the stated interest rate.
Time deposits generally pay a slightly higher rate of interest than a regular savings account. The longer the time to maturity, the higher the interest payment will be.
What is a Time Deposit evidenced by?
A “Certificate of Time Deposit”
What is a check?
It is an instrument that orders a bank (drawee) to pay the person named on the check or the bearer thereof (payee) a definite amount of money from the drawer’s bank account.
What are the 6 procedures of a check?
- Drawer
- Payee
- Drawee
- Date
- Amount in numbers and in words
- Signature
Who are the three parties in a check?
- Drawer
- Drawee
- Payee
Who is the drawer of a check?
They are the one writing the check and also the one whose signature appears on the check.
The drawer is the one instructing the drawee to pay the payee the amount stated on the check from the drawer’s bank account.
Who is the drawee of a check?
The bank in which the drawer’s bank account is maintained.
Who is the payee of a check?
The one who is named on the check or the bearer thereof and is entitled to payment from the drawee.
What do you mean by date on a check?
Normally a check is dated as of the date it was written.
What do you call a check that has been issued before the current date? (today’s date)
Antedated Check
What do you call a check that has been issued for a date later than the current date?
Postdated Check
What happens if a check has not been enchased for a period of 6 months or longer from its date?
It becomes a Stale Check
What do you mean by “Amount in numbers and Amount in words” for a check?
The amount to be paid to the payee is stated both in numbers and in words.
