Savings and Checking



Savings and Checking

|Aim: |Date: |

|Objective Questions |Key words |

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A. Savings Accounts

Savings accounts are accounts maintained by retail financial institutions that pay interest but can not be used directly as money. These accounts let customers set aside a portion of their liquid assets while earning a monetary return. Below are different types of savings accounts

Bank Savings Accounts:

When you are beginning to save, you should place your money in investments that are as safe as possible.  In addition, you will likely always have at least some of your money in short-term investments.  Bank savings accounts are such an investment.  The federal government backs these accounts with what is known as Federal Deposit insurance Corporation (FDIC) Insurance.

 

CD or Certificate of Deposit:

The bank holds your money for a set period of time, usually one to six months, or one to five years.  Unlike a normal savings account, you may not withdraw your money at any time.  If you do, you will be subject to withdrawal fees.

 

How would you describe savings accounts?

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B. Checking Accounts

A checking account is a deposit account held at a bank or other financial institution, for the purpose of securely and quickly providing frequent access to funds on demand, through a variety of different channels. Because money is available on demand these accounts are also referred to as demand accounts or demand deposit accounts. Transactional accounts are meant neither for the purpose of earning interest nor for the purpose of savings, but for convenience of the business or personal client; hence they tend not to bear interest. Instead, a customer can deposit or withdraw any amount of money any number of times, subject to availability of funds.

How would you describe checking accounts?

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C. Checks

A check is a written order to a bank to pay a stated sum from the drawer’s account and is only available with a checking account. When writing a check there are important steps to remember:

• Write clearly with blue or black ink

• Don’t leave any space blank

o Checks should always be dated

o Checks must be endorsed (signed)

• When mistakes are made, the check should be voided. (Write VOID across the check and keep it in order to avoid confusion)

• Before writing a check, make sure there is enough money in the account to cover the check. If you don’t the bank will charge you a fee.

• Keep a record of the check. (In the register or keep a copy of the check)

• You should never give a blank check to anyone.

How would you describe a check?

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D. Online Banking

Online banking (or Internet banking or E-banking) allows customers to conduct financial transactions on a secured website operated by a financial institution.

|Positives |Negatives |

|Convenience: Unlike your corner bank, online banking sites never close; |Start-up may take time: In order to register for your bank's online program, |

|they're available 24 hours a day, seven days a week, and they're only a mouse |you will probably have to provide ID and sign a form at a bank branch. If you |

|click away. |and your spouse wish to view and manage your assets together online, one of you|

|Ubiquity: If you're out of state or even out of the country when a money |may have to sign a durable power of attorney before the bank will display all |

|problem arises, you can log on instantly to your online bank and take care of |of your holdings together. |

|business, 24/7. |Learning curve: Banking sites can be difficult to navigate at first. Plan to |

|Transaction speed: Online bank sites generally execute and confirm |invest some time and/or read the tutorials in order to become comfortable in |

|transactions at or quicker than ATM processing speeds. |your virtual lobby. |

|Efficiency: You can access and manage all of your bank accounts, including |Bank site changes: Even the largest banks periodically upgrade their online |

|IRAs, CDs, even securities, from one secure site. |programs, adding new features in unfamiliar places. In some cases, you may have|

|Effectiveness: Many online banking sites now offer sophisticated tools, |to re-enter account information. |

|including account aggregation, stock quotes, rate alerts and portfolio |The trust thing: For many people, the biggest hurdle to online banking is |

|managing programs to help you manage all of your assets more effectively. Most|learning to trust it. Did my transaction go through? Did I push the transfer |

|are also compatible with money managing programs such as Quicken and Microsoft|button once or twice? Best bet: always print the transaction receipt and keep |

|Money. |it with your bank records until it shows up on your personal site and/or your |

| |bank statement. |

How would you describe online banking?

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