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Certificate of Deposit A Certificate of Deposit is referred to as a CD . These are timed deposits , meaning the depositor commits to leave their funds on deposit with the bank for a period of time — anywhere from 30 days to 10 years. The term ends on the CD’s maturity date . If the funds are withdrawn before the maturity date, a substantial penalty is charged. In exchange for agreeing not to withdraw the money, the bank pays a slightly higher interest rate than on a savings account. When the CD matures, funds can be withdrawn or "rolled" into another CD. Credit Cards Credit cards are another important consumer product offered by banks and credit unions. Credit cards are essentially tools for borrowing money to pay for everyday expenses. Knowing about the different types and terms of credit cards is important for financial literacy. An entire later chapter is devoted to credit cards. • Checking Account • Savings Account • money orders • cashiers checks • foreign currency exchange PRODUCT PREVIEW • Money Market Account • Certificate of Deposit • Credit Cards • Home and other Loans • wire funds transfers • safe deposit box Miscellaneous Bank Services and Products Additional services and products provided by commercial banks and credit unions include loans, credit cards, and home loans. Banks also provide wire transfers , which are electronic transfers of money used to send funds in business transactions or overseas. Banks provide safe deposit boxes which are vault-protected drawers for storing valuable items and documents. They provide money orders and cashiers checks , which are checks guaranteed by the bank to be valid, which is required in some transactions. They will also exchange foreign currency . Reflect on Learning: Can you summarize the differences between a savings account and a checking account? CD and MMA? Can you tell which type of account is primarily used for day-to-day purchases and which types of accounts have restrictions on them which are designed to keep money in the account for a longer period? III. Bank Account Fees and Charges Banks provide important financial products and services. But keep in mind that they are profit-driven institutions . They are in the business of making money — and they make plenty of it. One of the ways banks make money is by charging fees on accounts . These fees and charges often go unnoticed by the account holder because they are automatically deducted from their account. Over time, fees and charges can cost a depositor a lot of money. Let’s look at a few common bank fees and how to avoid them: Monthly Service Fee. Most banks charge a monthly service fee on a checking account. This is sometimes called a maintenance fee . Fees vary from bank to bank, but average about $10.00 per month. Some banks impose a service fee only if the account balance falls below the minimum balance requirement , which is Consumer Bank Products & Services
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Chapter 2 | Battler of the Banks
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