Notes

unit 3 lesson 5
Bank Statement - A record of all account transactions, fees, and interest for one month.
•Cashier's Check - A check purchased from the bank, signed by the bank's cashier, and paid from the bank's own money.A cashier's check is a check that you purchase but is the bank's own personal check, signed by the bank's cashier and paid from the bank's own money. This type of check also involves guaranteed payment because it is drawn on the bank's account. The bank's name and the person's name to receive the funds are written on the check. You can obtain a cashier's check by taking money from your account to cover the amount of the check, plus paying a fee, usually around $20.
•Certified Check - A personal check guaranteed by the bank for payment by withdrawing funds from the account.A certified check is your personal check that has been stamped and signed by a bank officer, guaranteeing that your account has the money to cover the check. When the bank certifies the check, it withdraws the money from your account to cover the amount of the check. There is a fee for certifying your check, typically $5 to $20.
•Currency - Paper money or coins; component of the money supply.
•Demand Deposits - Also known as checking accounts; largest component of money supply.
•Direct Deposit - Funds that are automatically and electronically transferred into an account.
•Electronic Funds Transfer (EFT) – The transfer of funds from one account to another by computer.
•Endorsement - The signature on the back of a check allowing for receipt of funds or transfer to someone else.
•Federal Reserve - The nation's central bank with13 locations throughout the country; responsible for controlling the money supply. Referred to as “The Fed”. www.federalreserve.gov This link will open in a new window
•Money - A medium of exchange, store of value, and unit of account for buying and selling goods and services and accumulating wealth.
•Money Order - A check that you purchase but is paid by the bank or other business that issued it.A money order is a check that you purchase but is paid by a bank or other business that issued it. Your name appears on the money order, as well as the name of the person or business to receive payment. You pay for the money order up front, including a small fee of approximately $1 to $10. Many businesses issue money orders, including the post office, check-cashing businesses, and other financial businesses.
•Money Supply - The total amount of money circulating in our country
•Non-negotiable - Having no cash or monetary value.
•Overdraft - A check written for an amount that is more than the total amount available in the account; bounced check.
•Reconcile - To compare bank statement to check register to assure that account balance is accurate.
•Traveler's Checks - Issued in varying denominations to serve as money; component of money supply.

Types of Money
1.Currency - paper money or coins.
2.Check (demand deposit) - an order to a bank to pay a specific amount to the person or business named on the check (payee). Checks are also called demand deposits because they involve funds being converted to currency on demand.
3.Traveler's Checks - issued by bank in varying denominations ($20, $50, $100). They are paid for in advance, plus a 1% fee, and can be replaced if lost or stolen.

Money advantages
.Medium of exchange - widely accepted in exchange for goods and services.
•Unit of account - measurement in which value is expressed; value of goods & services represented in dollar amount (price).

Advantages of checking accounts

1.Safety - if a check is lost or stolen, no one else can cash it. Also, it is much safer to carry a checkbook than cash.
2.Convenience - as an alternative to cash for large payments, and a way to pay bills or send money through the mail.
3.Record of transaction - for bill payment it is very important to keep your cancelled checks, those that have been cashed and returned, as proof of payment. This also allows you to track your spending for budgeting purposes.

•An account that pays no interest and charges relatively lower fees, which might be called something like "economy checking."
•"Basic checking" accounts for low-income earners, which also won't pay interest, but charge lower fees and require a lower monthly balance.
•An account that pays very low interest (called "High Interest," "Super Interest," "Checking Plus," "Success Checking" or any number of other misnomers), charges higher fees for your mistakes, and requires a higher opening balance and higher monthly balances.

Questions To Ask Before You Open An Account

•What is the interest rate on the account? If the account does not pay any interest, what is the difference between the fees charged on the interest account and the non-interest choice?
•What is the minimum deposit necessary to open the account? What is the minimum balance necessary to avoid a fee once the account is open?
•What is the per-check charge? What is the charge for ordering new checks? What is the charge for a bounced check?
•Are cancelled checks returned with the monthly statements? If not, what are the charges for having a cancelled check returned?
•What extra features does the account offer? For example: ATM card, debit card, Internet account access—Internet banking, on-line bill pay?

Opening a checking account
1.Signing a signature authorization card. You will need a form of identification with a signature for this (driver's license, state ID card). This card gives the bank a way to verify that the person withdrawing money from your account is authorized.
2.Signing the contract. Opening an account requires that you enter into a legal agreement with the financial institution. Make sure you understand the contract you are signing.
3.Making an initial deposit. To open the account, you will need to have money to deposit.