© Annie Patton

Personal Banking and Commercial Banks

The Role of The Bank

• Current Accounts • Deposit Accounts• Payment Services- e.g. Direct Debit• ATM Machines• Loans • Internet Banking• Night Safes• Foreign Exchange

Name some of the banks in Navan and around Ireland that you are familiar with?

How Banks Operate

• Banks normally talk about two types of interest, that they give people with money in the bank and that they charge people who have loans from them

• So banks borrow from savers and give them a lower rate of interest, than they charge those who have taken out loans from them

• This is how they make some of their profits

How Banks Operate

Takes in savings

Gives out loans

Will charge a higher rate of interest on the loans they give out

Opening a Bank Account

• You must complete an application Form• Provide Proof of Identity- ID and Address• Get a reference from somebody known to

the bank- usually this will be another account holder/school

• Provide a sample signaturehttp://youtu.be/v6uBhcP9ne4

Two Types of Account

• Current account: You are given a cheque book and can withdraw money from the hole in the wall, however you get no interest. There is normally a charge for each transaction, and you may be entitled to an overdraft

• Deposit account: This is a savings account. You get interest on money saved, and you pay DIRT on your savings. There is no cheque book, debit card and you cannot use the hole in wall

Lodging Money to a Current Account

• Name and Address of Account Holder• Account Number• Amount being lodged• Signature of Person lodging the money• Date of Lodgement

Lodging Money in a current account

Withdrawing from Current Account

• Cheque• ATM Machine• Laser Card (including cash back at till)• Direct debits and standing orders (see

chapter 9)• Filling a withdrawal slip in a bank

Cheques• A customer, who has a current account is

given a book containing a number of cheques

• These cheques are personalised with their name for their use only

• A couple will have both names on the cheque and a business will have its name on it

We have seen from the last chapter that the parties to a cheque are:

• The person, who writes the cheque is the Drawer

• The person, to whom the cheque is written to is called the Payee

• The bank that the drawer has their account in is called the Drawee

Essentials for a Cheque

• Signature of the Drawer• Name of the Drawee• Name of the Payee • Date of the Cheque• Amount in both words and figures• Revenue Stamp

Filling Out The Cheque

Types of Cheque

• Stale Cheque: Has not been cashed in 6 months from the date written on it, therefore it cannot be cashed

• Post-dated cheque: A cheque that cannot be cashed until a date has been reached

• Ante-dated Cheque: A cheque that has a shortened life span to encourage it to be cashed quickly

Other Types of Cheque

• Order Cheques: Most cheques have the words ‘or order’ after the payee’s name, this means the payee has to sign the back of the cheque (Endorse it) before lodging it or passing it on to someone else as payment for a debt

• Crossed Cheques: This a cheque with two parallel lines drawn on it, meaning the cheque cannot be cashed in a bank, but must be lodged in an account

A cheque can be dishonoured if:

• One of the six essentials are missing • Post dated-can’t be cashed until certain date• The Cheque is stale• Bank is suspicious of the drawer• Not enough funds in the account• Drawer instructs bank not to do so

Bank Overdrafts

• One cannot withdraw or write cheques for more than they have in their accounts unless they have special permission to do so called an Overdraft

• Special permission has to be sought to get this privilege

Night Safes

• Can deposit cheques and lodgements after hours

• The door is located on the outside and the customer has a key to a shoot that they open and deposit money

• The bank clerk gets the money the next day

ATM

• Most banks now allow one to withdraw money 24 hours per day 365 days per year, using a machine placed outside the building

• The machine is known as an ATM (Automatic Teller Machine)

24 Hour Banking

Foreign Exchange

Exchanging currencies in a bank

There is a ‘we buy, we sell’ rate that the bank operates

We will be doing examples of these in the Economics section