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Banks are financial institutions that take deposits

and engage in lending and operate for a profit
Banks offer checking accounts and savings accounts
to the general public
Two types of banks: Commercial/Retail Banks and
Investment Banks
Most banks are regulated by the national government
or the central bank
Credit Union
Member owned financial co-operative. These
institutions are created and operated by its
members and profits are shared amongst the
For example: a workplace, church, employee union,

Credit Unions offer checking and savings

accounts to members
An account that meets the requirements to be
covered or insured by the Federal Deposit Insurance
Corporation (FDIC)
The different accounts that can be FDIC insured
include, checking, savings, certificates of deposit,
and money market deposit accounts.
Accounts that DON’T qualify safe deposit boxes,
investment accounts (stocks, bonds, etc.), mutual
funds, life insurance, etc.
NCUA – National Credit Union
Insures each account in a federal credit union
up to $100,000 per account.
Checking Accounts
A checking account is an account held at a
financial institution that allows for withdrawals
and deposits.

Checking account records provide proof that you

paid bills and help you keep track of spending

Very liquid, can be withdrawn using checks,

ATM’s, and debit cards, along with other methods.
Bounced Check
A bounced check is slang for a check that
cannot be processed because the writer has
insufficient funds.

Also known as a rubber check, dishonored

check, or a bad

A bounced check usually returns to the writer

along a penalty for non sufficient funds.
Simple Interest
Simple interest means that you only earn
interest on your initial deposit

Called simple because the interest doesn’t


Always based on the original principal, so

interest on interest is not included
How to Calculate Simple
I = Prt
I = Interest owed

P = Principal (or initial sum)

r = Interest rate written as a decimal

t = Number of time periods since loan began

Compound Interest
Compound interest allows you to earn interest
not only on your initial deposit but also on the
interest you earn as you go along

Interest on interest

Can also work against you if you have a loan or

credit card that charges a high rate of interest
and has compounding interest
Compounding Interest Video
Debit Cards
A debit card is a card that deducts money directly
from a consumer’s checking account ot pay for a

Eliminate the need to carry cash and physical checks

Don’t allow the user to go into debt unlike credit


Usually have purchase limits

Reconciling a Bank
This is used so that you don’t forget checks,
cash withdrawals, and purchases while using
your checking account
If you forget to record a transaction you may
overdraw your account which results in fees
(bounced check)
This allows you to monitor your spending, and
how much money is in your account
Automated Teller Machine

An ATM is an electronic banking outlet

which allows customers to complete
basic transactions without the aid of a
branch representative or teller
Stop Payment Fee
A request made to a financial institution to
cancel a check or payment that has not been
processed yet

A stop payment order is issued by the account

holder and can only be enacted if the check or
payment has not already been processed by the
Bank Endorsement
An endorsement by a bank for negotiable
instrument such as a bankers acceptance or
time draft, that assures the counterparty that the
bank will stand behind the obligations of the
creator of the instrument
Direct Deposit
Electronic funds that are deposited directly into
your bank account rather than through a paper
check common uses of a direct deposit include
income tax refunds and pay checks
Cyber Banking
Also known as internet banking

Pay bills, view transactions, transfer funds

between accounts

Benefits: convenient, low or no acct fees, quick

access to info, savings on postage and checks
Automated Payments
A money transfer scheduled on a predetermined
date to pay a recurring bill. Automatic bill
payments are routine payments made from a
banking, brokerage or mutual fund account to

Automatic payments can be made from a

checking account or credit card