Bank Accounts

Deposit Account: Deposit Account: An account at a banking institution which allows the account holder to deposit money into or withdraw money from the account.

4 Main Types of Deposit Accounts:

Checking Savings Money Market Time Deposit (Certificate of Deposit)

Checking Accounts Allow quick access to funds Account holder can write checks authorizing the bank to transfer funds to another individual May be linked to a debit card Typically no limits on number of transactions At risk of being “overdrawn” – To Overdraw: To have checks cashed against an account in excess of the available funds Some pay interest Most have a minimum balance – Minimum balance: An amount of money that must remain in an account at all times to avoid a fee

Checking Fees: May have account fees Overdraft fees: Charge for overdrawing the account Minimum balance fee: Charge for having the balance of the account fall below the minimum balance Check ordering fees: Charge for obtaining additional checks Debit Transaction Fee: Charge for using the debit card to make a purchase

Checks: Banks MUST take checks for the written amount (not the numeric amount) Post-dated checks are illegal – Post-dated: To write a date later than the current date

Savings Account Passbook or Statement – Passbook: The account holder has a booklet showing all transactions – Statement: The account holder receives a statement each month showing all transactions Pays interest Usually limits the number of withdraws permitted each month Typically have no minimum balance

Savings Account Fees: Fee for Exceeding the limit of withdraws during a month Some banks are considering charging a maintenance fee just to have the account

Money Market Account: Mix between a Checking and Savings Account Tiered interest – The more money in the account, the higher the interest rate Can write checks – Limited on the number of checks per month that you can write High minimum balances – Typically $1,000 or more Typically have maintenance fees

Time Deposit (Certificate of Deposit): Highest rate of interest Account holder agrees to keep the account balance for a set period of time Can LOSE MONEY for early withdraw

Holds: Hold:

Holds: Hold: An amount of money that is not available to be drawn against

Holds: Hold: An amount of money that is not available to be drawn against Funds deposited into a bank account may not be available immediately – Checks deposited into a bank account almost always have a hold for the full amount of the check