Aaron J Hudson November 16, 2005 AMM 101

Aaron J Hudson
AMM 101
Dr. Silverman
November 16, 2005
Chapter 19: Key Terms
1. Commercial Bank: A profit-making organization that accepts deposits, makes
loans, and provides related services to its customers.
2. National Bank: A commercial bank chartered by the U.S. Comptroller of the
3. State Bank: A commercial bank chartered by the banking authorities in the state
in which it operates.
4. Savings & Loan Association (S&L): A financial institution that offers checking
and savings accounts and certificates of deposit and that invests most of its assets
in home mortgage loans and other consumer loans.
5. Credit Union: A financial institution that accepts deposits from and lends money
to only those people who are its members.
6. Check: A written order for a bank or other financial institutions to pay a stated
dollar amount to the business or person indicated on the face of the check.
7. NOW Account: An interest bearing-checking account; NOW stands for
Negotiable Order of Withdrawal.
8. Certificate of Deposit (CD): A document stating that the bank will pay the
depositor a guaranteed interest rate for money left on deposit for a specified
period of time.
Line of Credit: A loan that is approved before the money is actually needed.
10. Revolving Credit Agreement: A guaranteed line of credit.
11. Collateral: Real estate or property pledged as security for a loan.
12. Debit Card: A card that electronically subtracts the amount of your purchase
from your bank account at the moment the purchase is made.
13. Electronic Funds Transfer (EFT) System: A means of performing financial
transactions through a computer terminal or telephone hook up.
14. Letter of Credit: A legal document issued by a bank or other financial institution
guaranteeing to pay a seller a stated amount for a specified period of time.
15. Banker’s Acceptance: A written order for the bank to pay a third party a stated
amount of money on a specific date.
16. Credit: Immediate purchasing power that is exchanged for a promise to repay
borrowed money, with or without interest, at a later date.