Term
| What are two categories of accounts? |
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Definition
| Transaction accounts, and time deposits |
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Term
| What is an example of demand deposit? |
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Definition
A transaction acct is an example of a demand deposit because it is payable on demand whenever the depositor chooses.
-Checking Account. |
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Term
| What is a transaction account? |
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Definition
| It’s an account that allows transactions to occur at any time and in any number. |
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Term
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Definition
| By writing a check a depositor can withdraw money by giving written notice to the bank to pay a named person a specified amount for his/her acct. |
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Term
| What is a basic checking account? |
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Definition
A account that offers a few simple services at minimum cost
-Some are free -Some may be free if a minimum balance is maintained
-Many have a basic fee and price extra services per item. |
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Term
| What is an interest bearing checking account? |
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Definition
| A checking account that pays interest on the balance deposited in the account. This is usually if the deposited balance maintained at or above a required level. |
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Term
| Why is it important for consumers to look closely at fees charged and services offered for their checking acct? |
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Definition
| It’s possible that a basic acct might cost more money to operate than another type of acct if there are many transactions raising the fees. |
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Term
| What other transactions are labeled as demand deposit transaction? |
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Definition
| Travelers checks, ATS (Auto transfer service). B/c these are considered to be checkable deposits because the funds are deposited in the checking accounts. |
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Term
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Definition
| Checks, ledger transfers, even credit. |
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Term
| How do reserve requirements impact the flow of money? |
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Definition
| If reserve requirements are high then the money supply contracts because banks most keep more money in the banks. If low the money supply expands because the banks are free to loan out more money. |
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Term
| What are some limitations to reserve requirements? |
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Definition
• Reserve requirements don’t change that often and is not a big factor in bank lending as general economic conditions
• Reserve requirement only apply to the M1 money supply
• The Fed does not control other forms of commerce. |
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Term
| What are the two ways that the Fed can influence the money supply and the flow of deposits? |
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Definition
• The Fed can put more money into the economy by buying securities, or by creating more money. This new money is called Raw Money.
• The Fed effectively can take money out of the economy if they feel it needs to slow the economy. They do this by selling treasury securities. The money they earn from the sell of these securities does not go into a bank account it effectively disappear. |
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Term
| What is the discount rate? |
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Definition
| The rate the Fed charges the banks for loans. |
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Term
| How does the Federal Reserve influence the flow of deposits? |
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Definition
• The Federal Reserve influence the flow of deposits by taking money out of the economy if they feel it needs to slow the economy. This is done by the Fed selling treasury securities the money earned is not put back into the economy but disappears.
• Also they can set a reserve requirement. |
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Term
| What are banks required by states and federal government to provide? |
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Definition
| Documentation to customers so that questions about policies and procedures related to their accounts with clear answers. |
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Term
| Reference to governing documents |
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Definition
| Account holders agree to abide by the rules as set forth in the rest of the governing document. |
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Term
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Definition
| Banks keep a signature card on file with the signature of all parties to an account, whether it is held solely or jointly with other signatures. |
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Term
| Opening and Closing Accounts |
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Definition
| Policies governing opening requirement may include a specified minimum opening deposit, the presence of the person opening the account with proper identification, and the right not to open an account for a person if the bank so chooses. |
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Term
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Definition
| This provision is similar to the check hold policy of the government documents, except that it goes further in explaining the effect of uncollected deposits on the account. |
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Term
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Definition
| When an account has insufficient funds to meet is obligations, it is overdrawn. |
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Term
| Minimum Balance/Service Charges |
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Definition
| Here the bank specifies exactly the terms for when failure to maintain minimum balance charges apply. |
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Term
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Definition
| Requirements for withdrawing funds from the bank are explained here. |
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Term
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Definition
| These policies include requirements for accurate dating of checks and timely deposit or presentation of them. |
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Term
| Account Statement Policies |
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Definition
| These policies deal with the bank statement sent by the bank. |
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