Banking vocabulary
 balance - the current amount in your account ($$$)
 bounce: a check is written for more money than is in the account
 check - a piece of paper (usually) that orders payment of money
 check register - where you record all account transactions
 checking account - a place where you can deposit and withdraw money
 credit - money that goes into your account
 debit - money that comes out of your account
 deposit - money put into your account
 depository institution – financial institution that accepts deposits from
consumers
 endorse - sign your name on the back of a check
Source: PDESAS.org, Wikipedia
Banking Vocabulary
memo line - record what the check was written for
mutual fund - investment portfolio shared with others
outstanding - transaction not appearing on your bank
statement
overdraft - when you write a check with too little money
in the bank
reconcile - you and the bank agree on how much money
is in your account
routing number - identifies the bank where you have
your account
signature card - form you need to fill out at the bank to
open an account
withdrawal - money taken out of your account
Sources: PDESAS.org, Wikipedia
Depository Institution
0 Accepts money in the form of deposits from consumers.
0 Uses that money to generate profits through loans and
investments
0 Includes:
0
0
0
0
Savings banks
Savings and loan associations
Commercial banks
Credit unions
0 Differences:
0 Purposes
0 Customers and products
0 Regulation
0 For-profit or non-profit
Note: Check cashing
businesses are financial
institutions but are not
depository institutions.
More at: check
cashing.com
Savings Banks
0 Main purpose: accepts deposits for savings
0 Also called retail banks
0 Deals primarily with consumer accounts as opposed
to business accounts
0 Deposit account earnings are applied to individual
accounts as interest payments
0 Have the letters SSB or FSB after the name to indicate
whether they are a state savings bank or a federal
savings bank.
Savings and Loan
Associations
0 Main purpose: mortgages and other consumer loans
0 By law, must have at least 70 % their assets in
residential mortgages or mortgage-backed securities
(assets backed by residential mortgages).
0 Primarily regulated by the Office of Thrift Supervision
and the state where it resides
Sources: theNest.com, Wikipedia
Commercial Banks
0 Main purpose: provides financial services to
businesses
0 Also called national banks
0 Greater emphasis on business customers
0 Generally deal with larger amounts of money
0 Regulated federally by the Office of the Comptroller of
the Currency (Treasury Department).
0 Services:
0 accepting deposits,
0 giving business loans
0 basic investment products.
Credit Unions
0 Main purpose: consumer deposit and loan services
0 Non-profit
0 Financial cooperatives – owned by members of some
group
0 Deposits = purchases of shares (partial ownership in
the business)
0 Credit Union earnings returned to members in the
form of dividends
0 Lower interest rates on loans and higher rates on
savings because they are non-profit
Source: wdfi.org
Federal Deposit Insurance
Corporation (FDIC)
What is the FDIC?
0 An independent agency of the U.S. government that protects
you against the loss of your deposits if an FDIC-insured bank
or savings association fails.
0 FDIC insurance is backed by the full faith and credit of the
U.S. government.
0 Since the FDIC's creation in 1933, no depositor has ever lost
even one penny of FDIC-insured deposits.
0 Insures deposits up to $250,000
More information at FDIC.gov
Money Talks
Let’s go back to the “Money Talks” Newsletter
Review Questions
Answer these questions using your own
words. Write your responses in your
notebook. We will go over the answers
before you leave if there is time.
Question #1
What is a “depository institution”?
Question #2
How do banks make money?
Question #3
What is a key difference between a
Credit Union and other depository
institutions?
Question #4
What is the main purpose of a
Savings and Loan?
Question #5
Which type of depository institution
would the Casino Theater go to if they
wanted to open a second
restaurant/theater in another location?
Question #6
How much does the FDIC insure
deposits for?
End of lesson
The rest is for another day
Types of Deposit Accounts:
Regular Accounts
0 Single – one account holder
0 Joint – more than one account holder
0 Checking accounts
0 Personal
0 Student / youth account
0 Business
0 Passbook savings
0 Statement savings
0 Christmas / Vacation Clubs
More information at moneymatters
Types of Accounts: CD’s
Certificates of Deposit (CDs)
0 Deposit a specific dollar amount for a specific period of
0
0
0
0
0
time
Low risk investment
Fixed interest rate
Fees for early withdrawal (usually)
More information at FDIC.gov
How to calculate CD earnings (this is a bit advanced but
some of you might be interested)
Rate samples at PNC Bank
Which account is right for you questionnaire
Money Market
0 A type of checking account that pays a higher interest
rate in exchange for limited access to the account. For
example, you may only be able to write 4 checks per
month
More info and video at Investopedia.
Mutual Funds
0 These funds allow you to pool your money with other
investors in order to maximize return (the money your earn
on your investment) and minimize risk through
diversification (spreading your money over a large number
of investments).
0 Every fund has a portfolio manager
who buys and sell investments in
order to make a profit for the mutual
fund members.
0 Mutual fund portfolios often include
a variety of stocks and bonds.
More information at CNN Money 101and Wikipedia
Types of Accounts: Accounts
with Tax Savings
0 College savings plan (529)
0 Individual Retirement Account (IRA)
0 Generally long term investments but there are many
types of accounts that can be opened as IRA’s
0 Tax incentives
0 Roth IRA – after tax money
0 Traditional IRA – before tax
money
0 More information at
The Motley Fool
0 401(k) and 403(b) accounts
have money take directly from your paycheck
Types of Loans
0 Personal loans
0 Car loans
0 Student loans at CollegeBoard.org
0 Mortgages
0
0
0
0
Primary mortgage (first loan on a house)
Second mortgage (additional loan on a house)
Home equity line of credit (based on equity in house)
Refinance (pay off mortgage and redo to save money or
pay for something expensive)
0 Business loans
Other Bank Services
0 Debit cards
0 Credit cards
0 Telephone bill pay
0 Online banking
0 Online statements
0 Investment advice
Today’s Assignment
Read through the Money Matters newsletter. Then
Complete the puzzle on the handout.