POB Unit 4 Understanding the Banking System
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25 terms
Terms | Definitions |
|---|---|
 Commercial bank | full service banks; offer a wide range of financial services from schecking accounts to loans to safe deposit boxes and trust accounts. |
| Depository institution | accept deposits from people and businesses and use the deposits to finance their business. |
| Credit union | user-owned, not-for-profit, serving members only. |
| Non-depository institution | do not take or hold deposits; earn their money selling specific services or policies. |
| Endorsement | written evidence that you received payment or that you transferred your right of receiving payment to someone else. |
| Blank endorsement | consists of only the endorser's name; most unsafe way to endorse a check. |
| Special endorsement | allows you to transfer a check to another person. |
| Restrictive endorsement | limits the use of the check to the purpose given in the endorsement. |
| FDIC | protects depositor's money in case of the failure of a bank; up to $250,000.00. |
| Joint account | when 2 or more people have an account together. |
| Outstanding checks | checks that have not been deducted from the bank statement balance. |
| Payee | person or business to whom the check is written. |
| Signature card | first step in opening a checking account; document is used to verify your signature. |
| Stop payment order | a written notice that tells the bank not to pay a certain check; banks usually charge a fee for this service. |
| Bank reconciliation | document created to show how the bank statement and your check register are brought into balance (equal one another). |
| Bank statement | the report the bank will send (mail or email) you on the status of your account. |
| Check register | a separate book, usually the same size as the checkbook, used for recording account activities. |
| Drawer | the owner of the account who signs the check. |
| Drawee | the bank or other financial institution that pays the check. |
| Certified check | a personal check for which a bank has guaranteed payment. |
| Cashier's checks | a check that a bank draws on its own funds; it costs the purchaser the amount of the check plus a fee. |
| Traveler's checks | special forms designed for making payments when away from home; helpful when traveling so you do not have to carry cash. |
| Money orders | a form of payment that orders the issuing agency to pay the amount printed on the form to another party. |
| Safe deposit boxes | banks off these for storage of valuables. |
| Federal Reserve System | a nationwide banking plan set up by the federal government to supervise and regulate member banks. |
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