Question

used the concept from chapter 5 Managing checking and savings Accounts to write a concise summary. two paragraphs.

Answer 1

account reconciliation   Comparing your records with your bank's records, checking the accuracy of both sets of records, and identifying any errors.

annual percentage yield (APY)   Return on total interest received on $100 deposit for 365-day period, given institution's simple annual interest rate and compounding frequency.

asset management account (AMA, central asset accounts, or all-in-one account)   Multiple- purpose, coordinated package that gathers most monetary asset management vehicles into a unified account and reports activity on a single monthly statement to the client.

ATM cards   Allow deposits and withdrawals into an account and transfers among checking and savings accounts using a PIN at an ATM.

ATM transaction fee   Payments levied each time an ATM is used.

automatic funds transfer agreement   Agreement whereby the amount necessary to cover a bad check will be transmitted from your savings account to your checking account.

automatic overdraft loan agreement   Arrangement whereby the amount necessary to cover a bad check will be automatically loaned to you by your bank or charged to your Visa or MasterCard account as a cash advance.

average-balance account   Checking account for which service fees are assessed if the account's average daily balance drops below a certain level during specified time.

bad check   A check written for which there were insufficient funds in the account.

Bank Insurance Fund (BIF) of the Federal Deposit Insurance Corporation (FDIC)   Federal agency that insures deposits in federally chartered banks against loss up to $100,000 per account.

blank endorsement   Check that shows only the payee's signature on the back, making it a bearer instrument that anyone can cash.

bounce protection agreement   Bank will honor checks written against insufficient funds up to a certain limit and charge customer for each check written.

brokered certificates of deposit   CDs purchased through a stock brokerage firm.

bump-up CDs   Allow savers to bump up interest rate once if rates rise and to add up to 100 percent of initial deposit whenever desired.
canceled check   A check that has been paid to the payee and returned to the writer as a record that the check has been paid.

card registration service   Firm that will notify all companies with which you have debit and credit cards if your cards are lost or stolen.

cashier's check   A check made out to a specific party and drawn on the financial institution's account itself; thus, it is backed by the institution's finances.

certified check   Personal check on which your financial institution imprints the word certified, signifying that the account has sufficient funds to cover its payment.

certificate of deposit (CD)   An interest-earning savings instrument purchased for a fixed period of time.

checkings account   At depository institutions, allow depositors to write checks against their deposited funds, which transfer funds to other people and organizations.

cleared   A check that has been paid by your bank to the entity to which it was written.

college savings plan   Program that allows after-tax contributions to a designated beneficiary to pay college costs; allows tax-free growth and tax-free withdrawals for beneficiary's college costs.

commercial bank   Corporation chartered under federal and state regulations to offer consumer financial services.

community property   Arrangement in which most of the money and property acquired during a marriage are legally considered the joint property of both spouses.

Coverdell education savings account (education savings account or education IRA)   After-tax investments made to pay future education costs for a child younger than age 18; growth and withdrawals are tax free.

credit union (CU)   Member-owned, not-for-profit federally insured financial institutions that provide checking, savings, and loan services to members.

custodial account   An account opened by an adult in the name of a child younger than age 14 under the provisions of the Uniform Gifts to Minors Act (or Uniform Transfers to Minors Act).

debit cards   A plastic card that, when used with a PIN number, allows you to withdraw funds or transfer funds among accounts as well as make purchases via point-of-sale (POS) terminals at retail outlets.

demand deposits   Another term for checking accounts, demand deposit funds must be always accessible to customers.

deposit insurance   Insures deposits, both principal amounts and accrued interest, up to $100,000 per account for most accounts ($200,000 for retirement accounts).

depository institutions   Organizations licensed to take deposits and make loans.

direct deposit   Having paychecks electronically sent from employer into your bank account.

disclosure statement   Government-required written notice of users' rights and responsibilities in using electronic money management, including receipts for ATM transactions.

discount bonds (zero)   Bonds that pay no interest that are bought below face value which grow to face value at maturity.

electronic benefits transfer cards (EBTs)   Government cards to pay military personnel and provide Social Security and other government payments.

electronic funds transfer (EFTs)   Electronic fund transfers among various accounts or to and from other people and businesses.

electronic money management   Transactions conducted without using paper documents.

emergency fund   Saving enough money to cover living expenses (perhaps 70 percent of gross income) for three to six months in case of financial emergency.

endorsement   Process of writing on the back of a check to legally transfer its ownership.
FDIC's Savings Association Insurance Fund (SAIF)   Insures deposits in savings banks up to $100,000 per account.

financial services industry   Companies that provide monetary asset management and other services.

fixed-time deposits/CDs   Specify a period (usually 6 months to 5 years) that the savings must be left on deposit; early withdrawals carry a penalty.

grace period   Period (in days) for which deposits or withdrawals can be made without any penalty.
image statement   A type of bank statement for which you receive a photocopy of checks written and deposits you had made rather than the actual document.

individual account   Has one owner who is solely responsible for the account and its activity.

insurance companies   Financial institutions that provide property, liability, health, life, and other insurance products, as well as monetary asset services.

interest-earning checking account   Any account on which you can write checks that pays interest.

joint account   Has two or more owners, each of whom has legal rights to the funds in the account.

joint tenancy with right of survivorship (also called simply joint tenancy)   Most common form of joint ownership, especially for husbands and wives, in which each person owns the whole of the asset, such as a bank account or home, and can dispose of it without the approval of the other owner(s).
kiddie tax rule   Applies the parents' marginal tax rate to unearned income of a child under age 18 who has such income in excess of $1700 for the year.
lifeline banking accounts   Offer access to minimal financial services that every consumer needs.

liquidity   Speed and ease with which an asset can be converted to cash.
minimum-balance market   Checking account that requires customers to keep a certain minimum amount for a specified time period to avoid fees.

monetary assets   Cash and low-risk, near-cash items that can quickly be converted into cash.

monetary assets (cash) management   How you handle your monetary assets.

money market account   Interest-earning accounts that pay relatively high interest rates and offer limited check-writing privileges.

money market deposit account (MMDA)   Government-insured money market account in a depository institution with minimum-balance requirements and tiered interest rates.

money market mutual fund (MMMF)   Money market account in a mutual fund rather than at a depository institution.

money order   A checking instrument bought for a particular amount.

mutual savings bank (MSB)   Depositors own these financial institutions and share in earnings from deposits and housing and consumer loans.

mutual funds   Investment company that pools funds by selling shares to investors and makes diversified investments to achieve financial goals of income or growth, or both.
NCUSIF   The credit union checking and savings account program.

periodic statements   Consumer-protecting recaps that show all transfers to and from accounts, fees charged, and opening and closing balances.

restrictive endorsement   Uses the phrase For deposit only written on the back along with signature, authorizing the financial institution to accept the check only as an account deposit.

savings account   Account that provides an accessible source of emergency cash and a temporary holding place for extra funds that will earn some interest.

savings banks (savings and loan associations-S&Ls)   Financial institutions that pay depositors a slightly higher interest rate and focus primarily on savings and providing mortgage and consumer loans.

Section 529 Plan   Provides a tax-free way to save for college.

share draft account   A checking account at a credit union.

signature card   Identification used to verify the signatures of the owners of an account.

special endorsement   Additional information, such as "Pay to the order of (name)," that creates a two-party check; such checks are very difficult to cash.

statement savings account (passbook savings account)   Savings account that permits frequent deposits or withdrawals of funds without fees as long as client maintains minimum balance.

stock brokerage firms   Licensed financial institutions that specialize in selling and buying stocks, bonds, and other investments for investors.

stop-payment order   Notifying your bank not to honor a check when it's presented for payment.

stored-value card   Usually gift cards that have magnetic strips or bar codes that encrypt the amount of money stored via the card.

super NOW account   Government-insured money market account offered through depository institutions.

sweeps   Computer programs that check various sub-accounts in an AMA and adjust balances in and out of the MMMF to ensure the highest interest rates.

tenancy by the entirety   Restricted to property held between a husband and a wife; under this arrangement, no one co-owner can sell or dispose of his or her portion of an asset without the permission of the other.

tenancy in common   A form of joint ownership in which two or more parties own the asset, but each retains control over a separate piece of the property rights.

tiered interest   Common feature of NOW accounts that pays lower interest on smaller deposits and higher interest on larger balances.

time deposits   Savings accounts that financial institutions expect to remain on deposit for an extended period.

traveler's checks   Financial instruments issued by extremely large institutions that are accepted virtually anywhere in the world upon countersignature.

variable-rate certificates of deposit (or adjustable-rate CDs)   Financial instruments that pay an interest rate that tracks general interest rates in the economy.