Chapter 10 Banking 10 1 Comparing Financial Institutions

Chapter 10 Banking

10. 1 Comparing Financial Institutions • Bank = an institution where you can deposit money • Interest = fee paid for using someone else’s money for a certain period of time • Banks offer Checking, savings, safe deposit boxes, financial services

Types of Financial Institutions • Commercial Banks = owned by shareholders and operates on a profit • Savings and Loans = owned by the depositors and profits held in reserve • Credit Union = nonprofit, owned by its members and have a common bond • FDIC – Federal Depository Insurance Company

10 -2 Banking Electronically • Electronic Funds Transfer (EFT) = movement of funds by electronic means • ATM (Automated teller machine) = gives you electronic access to your money • PIN = Personal ID Number= security for your account

• Point-of-sale-transaction = paying for an item by electronic means • Debit Card = allows the user to subtract money from bank account in order to obtain cash or make a purchase • Automated Services… Direct deposit, automated transfers between accounts, loan payments • Online banking

10 -3 Managing a Checking Account • Payee- person who the check is made • Cancelled Check = has cleared the system and has been paid • Overdraft= lack of sufficient funds

Advantages of Checks • Choosing a Checking Account Minimum Balance Fees Transaction limits Interest

Using a Checking Account • Making a Deposit • Endorsing a Check Endorsement = signature on the back saying it can be cashed. Blank – signature Special – transfer money to someone else Restrictive – limits the check – deposit only

• Recording Transaction = Check Register. • Writing a Check = date, payee, amount in dollars, words, sign it, memo, • Receiving Your Bank Statement = by mail or electronically • Reconciling