Bank Terminology

8/2/2019 Bank Terminology

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Bank accounts represent financial accounts in banks in which financial institutions holdmoney for account holders, resulting in a debt balance or positive balance. Alternatively,

banks loan money to customers, and this leads to a credit or negative balance. Bank accounts

are used to deposit savings, unlike brokerage accounts which are used to sell and buy

securities. Savings and checking accounts are two main types of bank accounts.

Broadly speaking, a bank account refers to a monetary account, designed to process multiple

transactions. Bank accounts make it possible to deposit money, thereby earning monetary

returns. Some accounts come with debit and credit facilities and cannot fit neatly in a

polarized definition. They have different names depending on the country where you open an

account. For example, checking accounts in Canada and the United States correspond to

current accounts in the United Kingdom.

There are different types of bank accounts, and some may work better for you than others. If

you choose a checking account, you can loan or give money, pay bills, and make purchases.

Checks can be used for money transfers as well. You can transfer money from your account to

a bank account held at a different bank. Typically, you will be allowed to make as many

withdrawals and deposits as you need to. Many bank clients also choose to deposit and

withdraw money through automatic teller machines.

A savings account is another type of account that pays interest. Account holders cannot writechecks or otherwise use the money directly. With this account, holders deposit some of their

liquid assets and earn monetary returns in exchange for that. Money cannot be called in

immediately, and you cannot free up cash without incurring a penalty fee. Banks typically limit

the number of financial transactions (deposits and withdrawals) that can be made every

month. At the same time, holders of savings accounts may be allowed to withdraw money and

make deposits through ATMs. Passbooks are provided with savings accounts, helping account

holders keep track of the transactions they make.

Another type of bank account offered by some institutions is the no-frills bank account. It is a

basic account that allows bank clients to cash checks and pay bills without having to pay high

fees for these transactions. If you choose such an account, you may be allowed to make only

a limited number of withdrawals and deposits. The number of checks to be processed will also

be limited within a given month. No-frills bank accounts typically dont go with interest.

A money market account is still another deposit account offered by banking institutions. They

invest in various corporate and government securities, thus paying interest to depositors.

Interest paid is determined by the current interest rates set on the money markets. Money

market accounts differ from other bank accounts in that they offer a higher interest rate and

thus, a higher minimum balance is required. In this way, bank clients avoid paying monthly

fees and earn interest.

Finally, certificates of deposit are yet another type of bank account in which bank clients

deposit certain amount of money for a specified period of time. You cannot withdraw the

money from the account before the maturity date. Some banking institutions allow this, but

you will be charged a penalty fee. The interest banks pay on certificates of deposit is normally

higher, compared to other types of accounts. However, the interest is based on the period of

maturity, meaning that the longer it is, the more the account will earn.

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account statement

Banking Terms -> account statement
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a statement of recent transactions and the resulting balance; "they send me an accountingevery month"

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agent bankBanking Terms -> agent bank

a bank that acts as an agent for a foreign bank a bank named by a multi-bank lending syndicate to protect their interests

wire transfer

Banking Terms -> wire transfer

Wire transfer, also known as credit transfer, refers to a method of transferring funds

electronically from one institution or person to another. Wire transfers are made in twodifferent ways. Cash can be transferred at a cash office or from one bank account to another.

Compared to bulk payments, wire transfer systems are intended to offer individualized

transactions. Examples of such systems are Check21 and ACH. ACH stands for Automated

Clearing House, which functions as an electronic network for making transactions in the US.

This system processes debit and credit transactions in batches and in large volumes. Credit

transfers encompass vendor payments and direct deposits. Direct debit transfers include, on

the other hand, mortgage loans, insurance premiums consumer payments, and other types of

bills. Check21 is another name for Check Clearing for the 21st Century Act, which was enacted

in 2004. Under this law, recipients are allowed to create digital versions of paper checks,

which are known as substitute checks. In this way, further processing of the physical

document is not necessary. The effects of this become visible to consumers when some checks

no longer come with their monthly statements. At the same time, others are returned. In

addition, under this law, mobile phones and computer scanners cannot be used to capture

checks images with the purpose of depositing them electronically. This is called remote

deposit.

Basically, wire transfers are transfers of money done by a bank, and both recipients and

senders do not touch the funds. It is not difficult to make a wire transfer, and the first step is

to contact your financial institution online or by phone and provide the required information.

This includes the name of the company or person to have the money wired to, the routing

number of the bank, together with the phone number and address of the latter, the account

number of the recipient, and the contact details of a person to whom questions can be

presented, if needs be. The next step is to determine the sum of money to be wired and when

the recipient needs to have it sent. The transaction is to be completed through your banking

institution. Some banks allow clients to make transactions over the Internet, but other entities

require that clients contact them by fax or phone. Finally, you have to confirm that the wire

transfer took place. Request a transfer confirmation to be emailed or faxed or call thereceiving bank and ask for confirmation.

Wire transfers are a popular payment method, along with personal account management,

balance transfers, and credit cards. With account management, clients can transfer money

between savings and checking accounts. In fact, by swiping an ATM card, bank clients

authorize a wire transfer from their bank accounts. At point of sale, transfers are free-of-

charge for customers, but a fee may be charged for other types of transfer. For example, it

will be based on percentage of the amount to be transferred, or it can be a flat amount. This is

oftentimes the case with credit card balance transfers.
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Western Union and some other companies feature an anonymous type of wire transfer.

Customers can go to Western Union, for example, and send certain amount of money to a

branch of Western Union in Jamaica. Even if the office they visit is in Chicago, they will send

cash and pay all applicable fees. The wire transfer will be made electronically.

Wire transfers have advantages and disadvantages. They are handy in case you do not have a

bank account. However, if you make a wire transfer to buy something from a private seller,

they may provide wrong or false information.

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time draft

Banking Terms -> time draft

a draft payable at a specified future date

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thrift

Banking Terms -> thrift

extreme care in spending money; reluctance to spend money unnecessarily

stop payment

Banking Terms -> stop payment

A stop payment occurs when an accountholder asks their bank not to honor some payment.Stop payments can be made before the receiving party cashes a check and after the latter is

delivered. Stop payment orders are mainly governed by banking regulations and state laws,

and they can vary by bank and state. Banking institutions usually charge a fee to issue a stop

payment. If the check is issued to pay back a legitimate debt, stopping payment may be

regarded as an act of fraud. State fraud laws determine if this is considered a criminal act, and

laws differ from one state to another.

Bank clients can request a stop payment in different ways, depending on the bank. Clients of

Wachovia Bank, for example, can instruct the bank to issue a stop payment online. They can

simply login to online banking using their password and user ID. The next step is to click

customer service on their my account page and click on stop payment. The bank will ask

why the accountholder requests a stop payment order. In three or more steps, users cansubmit all the necessary information, and the stop payment request will be processed. The

bank will typically request details on the pre-authorized payment or check, which has to be

stopped, including the amount of payment and the payee. The bank will also need information

on the bank account from which the amount has been sent.

While banks differ with regard to requesting a stop payment order, they cannot stop the

payment if the check has been paid already. If you have received money by mistake, the

sender has to request them back. In general, financial institutions include a provision on stop

payment forms, which states that a stop payment cannot be guaranteed before the bank
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circulates the information around its offices and branches. Thanks to computer networks,

banking institutions are able to quickly issue a stop payment order. However, if the clients

bank already paid the check, and you cashed it, this money is in your bank account and not

the senders.

Usually, you have to call or visit your bank in order to request a stop payment. After you have

made a request to stop a payment, it is a good idea to keep track of the time and date you

made the request. Make note if you talked to a bank employee. If you requested a stop

payment over the Internet, print the confirmation page. If you cannot get your check back,

you may want to send a written request to your financial institution. Keep in mind that

requests made by phone are valid up to 2 weeks. Written requests are followed for much

longer (6 months). So, checks have to be void within this time frame. The bank will charge

you a fee for each stop payment you make. You need to resubmit your request for a stop

payment every 6 months until your check is finally returned.

The fee you will pay to the bank to issue a stop payment depends on the bank and the state

where you live. Customers of Bank of America are charged $20 while those of Washington

Mutual are charged between $18 and $29, depending on where they reside. In Maryland, you

will be charged around $30 while in Oklahoma you will pay about $25.

Note that payments cannot be stopped on a certified cashiers check. If you have a standardcheck, you may include in the memo line: not valid after 6 months. This helps, but you wont

be protected 100 percent.

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sight draft

Banking Terms -> sight draft

a draft payable on presentation

retail banking

Banking Terms -> retail banking

Retail banking is a type of banking with which financial transactions are executed withclients instead of other banks and corporations. Products and services provided include credit

and debit cards, transactional and savings accounts, personal loans, mortgages, and many

others. Retail banking is designed as a one-stop location for a number of financial products

and services. Some retail banks even offer various investment services, including brokerage

accounts, wealth management, retirement planning, and more. Some banks also have

commercial and merchant branches that cater to businesses.

The most basic products offered by retail banks include transactional and savings accounts.However, retail banks aim to offer a large array of products to attract customers and maintain

customer loyalty. This diversification offers more opportunities for financial institutions to

profit.

In addition to basic services, banking establishments offer retirement accounts, certificates of

deposit, car and home loans, safe deposit boxes, and others. Banks offer some or all of these

services depending on the financial and banking regulations. However, they often partner with

other banks and financial entities to offer more services. It can be safely said that retail banks

aim to offer customers financial products and services for life, from college loans to retirement
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accounts and trusts.

It should be noted that retail banking is a very competitive field. With so many persons

requiring retail banking products, many are shopping around to find the most lucrative offers,

as well as the best rates, incentives, rewards plans, and deals. Retail banks compete by

offering perks (e.g. credit monitoring, travel credit cards), low interest rates, and other

services aiming to attract new customers. Many retail banks offer incentives such as balance

transfer credit cards which allow clients to transfer balances to credit card accounts at their

bank.

Some banking establishments are, in fact, international corporations with many offices and

branches. Other retail banks only have national presence. Some of them may be single-branch

banks or they may operate regionally. Community banks, for example, may provide products

and services intended to meet the needs and requirements of community members. These

may include home or business loans, mortgages, and other financial products. In fact,

community banks often offer better interest rates than the big banks. Community

development banks are one type of banks in the United States that work to boost economic

development and growth in moderate- and low-income communities and geographic areas.

They aim to serve the members of these communities and are certified by the US Community

Development Financial Fund. To become certified, community development banks should have

as their main goal community development. These banks offer a variety of retail bankingservices to customers in economically underdeveloped areas.

Postal savings banks are another type of retail banks run by postal savings systems. Their

mission is to offer clients a convenient and save way to save money. In the USA, the Postal

Savings System operated between 1911 and 1967, offering depositors annual interest of 2

percent.

Private banks are another distinct type of retail bank, which are owned by general or individual

partners. Only a few such banks operate in the United States, such as Brown Brothers

Harriman & Co. Brown Brothers operates through 3 businesses commercial banking, wealth

management, and investment banking. These businesses serve high net worth clients and

corporate institutions. Savings banks also function as retail banks that accept savings

deposits. They offer a variety of products and services, among which insurances and credit,

savings products, and payments. These are available to medium-sized and small enterprisesand individuals. In the US, for example, savings and loan associations accept deposits and

offer different loans and mortgages.

reconciliation

Banking Terms -> reconciliation

getting two things to correspond; "the reconciliation of his checkbook and the bank statement"

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private banking

Banking Terms -> private banking

Private banking is a term that encompasses different financial, investment, and bankingservices offered to high net worth individuals. Banks provide personalized services to

individuals with sizeable assets through bank advisors. With regard to wealth management,

high net worth individuals have more wealth than regular bank customers and enjoy access to
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a large array of alternative and conventional investment instruments. Private banking aims to

offer such clients the best products and services, suited to their individual requirements.

Bank advisors provide investment-related advice, customized financial solutions, credit and

liquidity management, estate and tax planning, retirement planning, and much more. Banking

teams operate on the domestic and international markets to provide investment and banking

solutions to persons from diverse backgrounds. Structured products are featured with returns

linked to currencies, basket of stocks, single stocks, equity indices, interest rates, etc.

Investment protection is also designed to fit the requirements of individual clients from 0

percent to 100 percent. In addition, investment products may be offered with terms from 1

month to 10 years. Private banking also encompasses alternative investment products which

are not associated with traditional asset classes such as bonds and equities. High net worth

individuals enjoy access to private real estate and equity funds and hedge funds. Bank

advisors also offer a large selection of financial planning services, including business and

family protection, pension consolidation, saving for retirement, and income planning. Business

and family protection services are designed to protect high net worth individuals and their

families from financial hardship. Income planning aims at income generation through

developing and implementing a personalized investment strategy. Pension consolidation is a

service intended for persons with multiple pension plans. Bank advisors help high net worth

individuals avoid lost opportunities and problems by consolidating pension plans into a single

one. Finally, those who are saving for retirement are offered help in designing a plan to buildup their wealth and enjoy it post retirement.

A number of financial institutions in the US offer private banking to high net worth clients,

among which Morgan Stanley, Bank of America, Wells Fargo, JP Morgan, and others. Other

large private banks with a global reach are Deutsche Bank, Royal Bank of Canada, and Credit

Suisse. Their customers pay based on the performance of an annual portfolio, on the number

of transactions made, or a flat fee, which is an annual percentage of the amount of

investment.

Generally, private banking aims at wealth management, wealth protection, and managing the

impacts of wealth, including tax advisory, property investment, philanthropy, and media.

Influential, wealthy families enjoy wealth advisory services that help them build wealth

structures and achieve their entrepreneurial dreams. Wealth advisory services encompass

philanthropic and art advisory, trust services, sports advisory, and others. Trust services, forexample, include investment management and fiduciary services, estate planning strategies,

and investment platforms. Trust officers specialize in family and fiduciary wealth transfer

structures, including charitable trusts, grantor trusts, private foundations, and dynasty trusts.

Wealth advisory also encompasses aircraft advisory, with dedicated advisory teams offering

personalized assistance and advice on purchasing a private aircraft. Advisors oversee the

initial selection and assessment of aircraft and develop a financial strategy to fit clients

financial circumstances. Art advisory aims to help high net worth clients build and maintain art

collections. Advisors assist established and new collectors in managing collection

administration and give advice on philanthropic and estate planning. Artwork is also accepted

as collateral when applying for loans. Finally, sports advisory encompasses the sale and

purchase of franchises and sports assets. Bank advisors offer interest-rate hedging and

valuation services, as well as advice on renovated and new venues.

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overdraft

Banking Terms -> overdraft


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Overdrafts occur when bank customers withdraw cash from their account, with the balancegoing below zero. An overdraft is basically a form of credit extended by a creditor when the

account balance reaches zero. Overdrafts allow bank clients to withdraw money even when

there are no funds in the account. In other words, banks allow their clients to borrow certain

amount of money. With overdraft accounts, financial institutions cover checks to prevent them

from bouncing. Given that overdrafts are a type of loan, bank clients pay interest on the

overdrafts loan balance. On the other hand, the interest rate is often lower compared to credit

cards.

Overdrafts may occur for various reasons, among which not maintaining proper account

register, merchant error, unexpected electronic withdrawals, and more. When the

accountholder fails to maintain his account register well, overspending is due to negligence.

Another reason for overdraft is, in fact, the possibility to overdraw money using an ATM. Some

ATMs and banks allow withdrawals even when cash is insufficient in the account. ATMs are

sometimes unable to communicate with the bank of the accountholder, with this resulting in

automatic authorization of withdrawals. With temporary deposit holds, banks can put on hold

a deposit that has been made to an account. Bank policies or Regulation CC may be

responsible for that. Given that money is not immediately available, this will result in overdraft

fees. Unexpected electronic withdrawals are yet another reason for overdrafts. This may occur

when the trial period of some recurring service ends. Overdrafts may also occur due to direct

deposit chargeback, recovering overpayment, or wage garnishment. Finally, overdraft mayoccur due to merchant error, with a merchant wrongly debiting a clients account.

On the other hand, it can be said that an overdraft acts like a safety net on ones account.

Clients are allowed to borrow up to a specified limit whenever they do not have money in the

account. This is useful in covering short-term financial problems. Keep in mind that some bank

accounts come with an overdraft facility, but this is not necessarily true for all accounts. If

your account doesnt, you need to ask your banking institution for an overdraft facility. The

banks decision will depend on the clients record, and he may be required to pay a fee for

setting it up. You will not have to use it unless you need an overdraft. Moreover, you will not

be required to pay additional charges in case of accidentally overdrawing. Naturally, clients

have to pay the overdraft and interest charges. Rates depend on the bank and can be variable

and fixed. In addition, a monthly charge and arrangement fee may apply. If you dont have

the banks authorization to overdraw, the charges may be quite high. Your financial institution

may not pay direct debits, bounce checks, and charge a fee for all refused transactions.Administration fees may be set in place as well.

Overdraft protection is mainly offered by US financial institutions. Overdraft protection, also

called courtesy pay program protection, covers the payment of items when money is not

sufficient for given withdrawal. Overdraft protection may cover different withdrawals, including

checks, electronic transfers, debit card payments, and ATM withdrawals. In simple words,

overdraft protection allows for the payment of authorized items rather than being bounced or

returned.

Finally, there are overdraft lines of credit, which are extended in compliance with the Truth in

Lending Act. Clients can apply for an overdraft credit line by completing and signing an

application. Based on the clients credit rating, banks will deny or approve the application.

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offshore banking

Banking Terms -> offshore banking


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Offshore banking is a type of banking conducted at an offshore bank, which is a banklocated outside the depositors own country, usually in an area where the taxes are low, and

there are other financial and legal benefits. These benefits include, but are not limited to

greater privacy due to bank secrecy, easy access to deposits and protection against local

economic, financial, or political risks. The term offshore banking is quite fitting because most

offshore banks are located in islands, as was the very first one, from where the term

originated. However, the term today has come to include banks in Switzerland, Luxembourg,

and other landlocked countries in Europe and other places around the world.

Accounts in offshore banks are subject to personal income tax on interest just like everywhere

else. In most countries, the income tax does not differentiate between interest earned in local

and offshore banks. For instance, clients subject to US income tax have to declare all offshore

bank accounts that they have in other countries. Indeed, offshore banks are not bound by law

to report income to tax authorities, but account holders are obligated to declare this income

nonetheless.

Offshore banks offer personal and corporate accounts and other financial products. These may

include company incorporation, savings accounts, payment cards, and others. Some banks

offer term deposits with interest rates that can be as high as 5 percent. Offshore banks also

offer relationship management advice and wealth management advice, suitable for high net

worth clients. Online banking is another service offered by offshore banks. Their customerscan access both corporate and personal accounts and monitor activity, exchange currencies,

and make deposits. In addition, clients can transfer funds around the globe and communicate

with bank officials online. Benefits featured by offshore banks depend on the institution and its

location. They may include zero tax on capital gains and dividend income, as well as no

shareholder requirements.

Proponents of offshore banking criticize attempts to control this branch with the argument that

the institutions involved only want to access this money. What is more, offshore banks are

seen as a threat to onshore bank systems, leading people to believe that these countries are

trying to get ahead of the competition this way.

One advantage of offshore banking is that it can grant access to financially and economically

stable jurisdictions. People living in locations characterized by political turmoil can benefit from

offshore banking as well and prevent their assets from being frozen, confiscated or seized. Inall honesty, however, the banking systems in developed countries are pretty stable as well.

Sometimes offshore banks offer higher interest compared to onshore ones due to the absence

of government intervention. Proponents of offshore banking frequently describe government

regulation as a type of tax on domestic banks, lowering interest rates on deposits.

There are few industries that are open to remote nations in terms of being able to compete

fairly, with tourism being the only other one. Some offshore banks also offer services and

extras that traditional banks do not, such as lower rate loans and anonymous bank accounts.

Offshore banking has some downsides too. These accounts are usually less financially secure

and are often associated with the underground economy and organized crime. In addition, due

to their location, offshore banks are many times costly to visit, and access to information maybe more limited. Global communication technologies have resolved this problem to a great

extent, with communication taking place online and by phone. Offshore banks also offer

accounts that can be set up by mail, phone, and online.

Payday Loan Canadamoney market account

Banking Terms -> money market account


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A money market account is a type of depository account featured by banks that invest incorporate and government securities. Interest is paid to depositors, which depends on the

current interest rates set in the money markets. Money market accounts are a good option for

persons who want to benefit from a higher rate of interest, but they also go with a higher

minimum balance.

Money market accounts are basically savings accounts intended for larger deposits. They are

also known as money market demand accounts with a minimum balance of at least $500.

However, some banks require that the balance be much higher. There are also restrictions on

the number of transaction that can be made within one month.

The money kept in money market accounts is used by banks to make money, and interest

rates are higher. Accountholders can make up to 6 withdrawals a month, and exceeding this

number of transactions results in penalty fees. Financial institutions are required to discourage

their clients from going over these limits. They can either close bank accounts or impose high

fees. Banks may or may not count ATM transactions toward the total of transactions. In

addition, these accounts are not regular transactional accounts, and different rules apply

compared to savings and checking accounts. For example, accountholders can write up to 3

checks every month. The money held in money market accounts is insured by FDIC; so, even

if some financial institution goes out of business, depositors money is still safe.

Credit unions and bank send accountholders a statement every month, either by email or by

mail. This statement includes interest earned, transactions, and fees charged to the account.

It is a good idea to check if you have written down all deposits and withdrawals in your

register by comparing the entries with the statement. The process of matching them up is

known as reconciling. If some entries are missing or incorrect, you have to find what they are

and add or correct them. While bank errors are possible, they are not likely.

Money market accounts represent premium accounts and are not the same as money market

funds. The latter are investment mechanisms which feature higher returns than premium

accounts. Basically, money market funds are open-ended mutual funds investing in debt

securities, including commercial paper and treasury bills. Financial intermediaries benefit from

them because these funds provide liquidity. In contrast, it is easy to open a money market

account at most banks. Money deposited in the account is typically put into investment

instruments such as treasury bills, certificates of deposit, and other investment vehicles, whichare considered safe. Moreover, these are short-term low risk investments. Accountholders are

rewarded for keeping their money at the bank and receive a premium interest which can be

twice as higher compared to a regular account.

It should be noted that there is a difference between CDs and money market accounts. CDs or

certificates of deposit represent debt instruments that pay at certain rate of interest. Holders

lend the financial institution money for a specified period of time so that they can be paid

higher interest. In general, the interest rate increases with the maturity of CDs the longer

the term, the higher the interest rate. Money market accounts feature most of the benefits

that go with CDs, along with some features of checking accounts. An account can be opened

at most banks and other financial establishments which will issue a checkbook to withdraw

money from the account. Finally, depositing money is not different from depositing into a

checking or savings account, and money becomes available for alternative investmentinstruments.

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letter of credit

Banking Terms -> letter of credit


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A letter of credit represents a letter from a banking establishment which guarantees that apayment made by a buyer to seller will be received in the specified amount and on time. In

case that the buyer cannot pay for the item purchased, the bank has to cover the purchases

remaining amount. International transactions often involve letters of credit to make sure that

payment has been made. The nature of international transactions makes letters of credit

important due to factors like different laws, distance, and the impossibility to know all parties

in person. Banks act on behalf of buyers as to guarantee that sellers will be paid only after the

ordered items have been shipped. Letters of credit are issued by financial institutions most of

the time, serving as payment for certain transactions. They are employed in transactions of

considerable value in international trade, and the Uniform Customs and Practice for

Documentary Credits is applicable. In addition, letters of credit are employed in land

development as to make sure that public facilities, which have been approved, will be

constructed. These include storm water ponds, sidewalks, streets, and others.

In most cases, the letter of credit is irrevocable, meaning that it is not possible to cancel or

amend it without the consent of the confirming bank, the issuing bank, and the beneficiary.

The beneficiary has to show certain documents as to receive the payment, including bill of

landing, commercial invoice, and documents which prove that the shipped item was insured

against damage or loss.

Banks issue letters of credit only after making sure the buyer will pay. Some clients havedeposited or have to deposit money, which are sufficient to cover the payment. Other buyers

make use of a line of credit to do that. Sellers, on the other hand, have to make sure that they

deal with a legitimate bank. Then, sellers are paid only after they perform specific actions, to

which both parties (seller and buyer) have agreed to. These may include the delivery of

merchandise to a specific location, thus satisfying the letter of credits requirements. Once

shipment is made, the seller is sent documentation which proves delivery. The item shipped

must be paid even if something has happened to the merchandise. The seller should be paid

even if the ship carrying the item sinks. The bank reviews the documentation proving that the

seller has carried out the required actions. Then payment is made and the quality of goods is

not taken into consideration.

Letters of credit are important in international trade, but sellers should keep the following in

mind. They have to read all requirements pertaining to the letter of credit before proceeding

with the deal. Moreover, sellers have to make sure they understand what documentation isrequired. There are certain time limits, and sellers should check if they are reasonable. Finally,

sellers should ask their service providers how long it will take to produce the required

documentation for them.

Documents that have to be presented include official documents such as origin certificate,

embassy legalization, license, inspection certificate, etc. The type of documents to be

presented is open to negotiation. Shipping documents may have to be provided as well,

including insurance certificate, transport document, and other legal or commercial documents.

In addition, financial documents, commercial documents (e.g. packing list, invoice), and

insurance documents may have to be provided as well. Insurance documents include a

certificate or insurance policy rather than a cover note. With these in mind, the payee has to

present documentation which proves that the items were sent, rather than showing the actual

items.

Payday Loan Canadainvestment banking

Banking Terms -> investment banking

Investment banking is a banking field that focuses on assisting companies to obtain funds.Apart from funds acquisition, investment banks provide advice on a variety of transactions

that businesses make. Banks specialized ininvestmentor commercial banking in the past. In
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fact, it was illegal for banks to engage in both investment and commercial banking in the USA

until 1999. This became possible with the Gramm-Leach-Bliley Act. Todays commercial banks

offer various investment products in order to become one-stop shops for their clients.

Investment banks have two possible venues to generate funds. One way is to offer stake in

the company in exchange for private equity or venture capital. Alternatively, banks generate

funds on the capital market by drawing on public funds and trading stock.

Banks of this variety cater to a variety of stock holders, among which governments,

businesses, individuals, and non-profit organizations, helping them raise money. Among their

clients are municipalities, states, educational institutions, healthcare organizations, investors,

and banks. Investment banks engage in various activities, including investing and lending

assets, managing investment portfolios, and issuing, trading, buying, and selling bonds and

stocks. Investment banks also offer advice on various financial transactions such as mergers

and acquisitions and act as trading intermediaries for their customers. Finally, investment

banks conduct research as to develop opinions on economies, markets, and securities.

Investment banks may follow two lines of business. First, they may trade securities for other

types of securities or for cash. Second, they may invest in and promote securities through

research and underwriting. Investment banks are not involved in these activities only.

Merchant banking is a type of banking through which banks gain share ownership in exchangefor offering capital. Examples of merchant banks are One Equity Partners and Defoe Frontier &

Cie. Investment management is another branch that specializes in the management of

different securities, including bonds and shares, as well as other assets. The aim is to meet

the investment objectives of a variety of investors. These can be corporations, pension funds,

insurance companies, and other institutions, as well as private investors. Investments can be

made through mutual funds and other investment schemes or through investment contracts.

Investment schemes are more common nowadays. Investment banks investment

management units often function as separate divisions, such as Private Client Services and

Private Wealth Management groups. Another sub-division of investment banking is global

transaction banking, specializing in securities brokerage, custody services, lending, and cash

management.

Investment banking firms also specialize in consulting and giving advice to companies. To be

able to do this, they follow the market to see when it is a good time to manage the publicassets of companies and to make public offerings. An investment bank will normally offer buy-

and-sell advice to the businesses is represents. In general, full-service investment banks offer

financial and advisory services and research on a wide variety of financial products, such as

commodities, rates, currency, credit, and equities. Big investment banks include Citigroup,

Barclays Capital, Merrill Lynch, JP Morgan, and others. Some investment banks are affiliated

with big financial entities while others are large-cap advisory firms and independent

investment banks. Examples of the latter are Thomas Weisel Partners, Robert W. Baird &

Company, and others.

Most investment banks maintain markets for securities, which have been previously issued,

and specialize in broker/ dealer operations. Investment banks have an important role to play

in corporate structuring and private equity placement. In contrast to traditional banks, these

financial institutions do not generally offer loans or accept deposits. However, someinvestment banks offer products much like traditional banks. J.P Morgan, for example, not

only specializes in risk management and strategic advice, but lends money to its customers.

Payday Loan Canadaforex

Banking Terms -> forex


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Forex, also called currency market, foreign exchange market, and FX, is a decentralizedcurrency trading market, functioning on a global scale. Financial centers around the globe

serve as the meeting point of various sellers and buyers, with forex determining the relative

values of various currencies. The main purpose of the currency market is to facilitate

investment and global trade as it allows companies to convert currencies.

The foreign exchange market is a place where participants exchange, sell, buy, and speculate

on different currencies. Generally, this market is comprised of central banks, banks,

investment management firms, and commercial companies. Investors, retail forex brokers, as

well as hedge funds participate on it. With such a variety of participants, the foreign exchange

market is regarded as the biggest financial market around the globe.

Currency markets are considered to be efficient because they are liquid and large. It should be

noted, however, that forex is not a single exchange. The foreign exchange market connects

participants from all over the world via a network of computers. With its help, convertible

currencies are bought and sold, and conversion rates are determined. A huge volume is traded

every day, and only fifteen percent of it is traded for services and goods.

The way the foreign exchange market functions is simple to understand. It you buy a currency

when it is low and then sell it when it is high, you will make money, profiting from your

investment. The tricky part is to know what factors have impact on the currency market, whatmoves it, and what direction it is going to move next.

The foreign exchange market is open 24/7 unlike other financial markets. So, investors are

not concerned with when the market will open. With four trading sessions around the world,

however, it is a good idea to monitor it only when the busiest sessions take place. These are

the sessions in London and New York. It is recommended to buy and sell currencies when both

sessions overlap because the foreign exchange market moves a lot then. At the same time,

the foreign exchange market is a busy place even during one of the sessions. Trading takes

place only on working days because weekends are officially market holidays.

Many dealers on the currency market offer leveraged trading. Leverage is a type of lending,

with dealers multiplying investments so that even small moves in rates can bring investors

considerable profits. At the same time, beginner investors should be careful because this type

of trading is a risky business compared to unleveraged trading.

The currency market is unique because of its features. Due to the large volume of trade, the

forex market is quite liquid. Its continuous operation and geographical dispersion contribute to

the currency markets uniqueness. Moreover, a number of factors have impact on exchange

rates. The currency market also offers low margins of profit unlike markets that offer fixed

income.

The trading of forex derivative products, such as options on currency futures and currency

futures is allowed in most developed countries. These states have capital accounts, which are

fully convertible. Trading forex derivative products is not permitted in some emerging

countries as to ensure control over their capital accounts. Other states have controls over their

capital accounts but have allowed currency futures exchanges to be established. Among them

are South Africa, Korea, and India.

It should be noted that up to 90 percent of transactions on the foreign exchange market are

speculative. In other words, traders only speculate on the movement of currencies. Of all

participants, hedge funds are notorious for currency speculation, due to their ability to borrow

huge amounts of money, preventing central banks interventions in support of any currency.

Payday Loan Canada
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float

Banking Terms -> float

the number of shares outstanding and available for trading by the public

the time interval between the deposit of a check in a bank and its payment allow (currencies) to fluctuate; "The government floated the ruble for a few months"

Federal Deposit Insurance Corporation

Banking Terms -> Federal Deposit Insurance Corporation

FDIC is a US state corporation established under the GlassSteagall Act in 1933. The FDICguarantees the security of citizens deposits in banks. At the present, the amount of $250,000

per account per bank is guaranteed and given back to the holder if the institution goes

bankrupt. This law is extended only to banks that are members of the corporation. The law,

which was passed in 1933, was a measure to counteract and prevent further incidences like

the consequences of the Great Depression, when all people who had savings in banks lost

them irrevocably.

At present the Federal Deposit Insurance Corporation insures deposits at almost 8,000

institutions across the United States. No depositor has lost any funds due to bank insolvency

since 1934, a fact the United States as a developed country is very proud of. It is not difficult

to check whether certain financial institution is a member. Banks post emblems in each branch

to affirm their FDIC membership.

The Board of Directors has five members, three of whom are appointed by the US President

with the agreement of the Senate. Their term of office is six years per person. No more than 3

members can be elected from one political party.

Under the Banking Act of 1933, signed by President Roosevelt, the Federal Deposit Insurance

Corporation was set up as a temporary government corporation, given the right to offerdeposit insurance to banks, to monitor and control non-member banks, to establish a dividing

line between investment and commercial banking, to ban financial institutions from paying

interest on clients checking accounts, and to permit them to open branches nationwide if

separate state laws allow it.

The first major challenge that faced the Federal Deposit Insurance Corporation occurred in the

late 80s and early 90s. At this time, there was a loan crisis in the United States, which also

affected savings and commercial banks. Among the preventive measures taken was the 1989

Financial Institutions Reform, Recovery and Enforcement Act and other acts. It cost taxpayers

around $150 billion to combat this crisis successfully. The next big challenge was the recent

global downturn. 25 banks went under in 2008 and were taken over by the FDIC. In mid-

2009, the corporation implemented what is known as a legacy loan program. The aim of this

program is for banks to get rid of liabilities in order to increase lending and raise new capital.

The most recent development is that 157 banks with around $92 billion in assets in the US

have become insolvent. FDIC maintains a failed bank list which is regularly updated. The list

includes a number of banks, among which the Mountain Heritage Bank, Atlantic Southern

Bank, First Georgia Banking Company, United Western Bank, and many others.

The Federal Deposit Insurance Corporation is funded by member banks, and they have to

meet certain reserve and liquidity requirements. Examiners visit member banks on a regular

basis to make sure that they follow the established guidelines. In case a bank is unable to
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comply with the guidelines, the corporation issues a warning. However, if the problems cannot

be resolved, the Federal Deposit Insurance Corporation can force the institution to take certain

corrective actions, like changing the management. Although this has happened on just a few

occasions, FDIC can take measures that result in a banks closure. The reason is that FDIC

works to maintain confidence in the banking sector. This objective is mainly attained by

offering insurance to depositors and taking various measures to minimize the risk of bank

failure.

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dishonor

Banking Terms -> dishonor

refuse to accept; "dishonor checks and drafts"

Payday Loan Canada

demand deposit

Banking Terms -> demand deposit

Demand deposit is a term which refers to an account in which money has been depositedand can be withdrawn without notifying the depository entity and at any time. With this type

of account, persons can withdraw their money whenever required. This is the opposite to a

term deposit which is not to be freely accessed over a specified period of time. Most savings

and checking accounts represent demand deposit, with funds being accessible by account

holders. Checking accounts are among the most common accounts that work on the demand

deposit principle. Money can be withdrawn immediately after it has been posted to thechecking account.

Bank money in the form of demand deposits is held in commercial banks. It is the larger part

of the money supply in states, with account balances of demand deposits being money. Money

supply includes demand deposits and currency. Deposited money can be used to various

purposes, such as payment for services and products, settling debts, etc.

During periods of financial crisis, depositors withdraw their money which results in a reduced

money supply. The opposite is true for periods of stability and growth.

In general, depositors can withdraw their money without making a special arrangement with

their credit union or bank. Withdrawals can take place if the balance is sufficient and the

procedures of the bank are followed. Depending on the regulations of the financial institution,

some exceptions may exist, as is the case with demand deposits including financialinstruments that have not cleared before the money is released. Restrictions may also apply to

checks by foreign financial institutions. Electronic funds transfer is a kind of demand deposit

which is available for withdrawal within minutes. Electronic funds transfers are bank-to-bank

transfers, which are pre-qualified by the sending institution. In many cases, receiving banks

immediately post the funds. Electronic transfers of this type allow recipients to withdraw the

full amount just minutes after the money has been posted.

In general, withdrawals can be made in several ways. One way to do that is to present a check

that is written, with money deposited in the bank account. The financial institution then checks
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the available balance and if money is sufficient, the check is being cashed for the client. Using

a debit card is another way to withdraw money from a demand deposit. Some restrictions may

apply, for example, there may be a limit on the amount that can be withdrawn within a 24-

hour period. A third way to withdraw money is by transferring it from one account to another.

Sometimes demand deposits are made into checking accounts. Clients may decide to transfer

some or all of the money into a savings account. This can be done online, by phone, or at the

local branch of ones bank.

Basically, any account from which funds can be withdrawn on demand is a demand deposit.

Money market accounts fall into this category. In contrast, certificates of deposit do not allow

accountholders to withdraw their money until maturity. If money is withdrawn before that, the

holder risks incurring fees and interest penalties. Money market accounts and savings

accounts are both demand deposits, despite of some differences. They both pay interest on

the money you have deposited. Money market funds and banks impose restrictions on

withdrawals, and a minimum balance should be maintained. A charge of $5 usually applies if

you fall below this minimum. Accountholders can make certain number of withdrawals free-of-

charge and once they reach the limit, a fee applies.

In general, demand deposits are quite useful. With the help of online tools, accountholders can

monitor transactions, transfer money and schedule payments as a way of managing their

money.

Payday Loan Canada

custodial account

Banking Terms -> custodial account

a brokerage firm account that parents have created for a minor

Payday Loan Canada

credit union

Banking Terms -> credit union

A credit union is a profit-sharing financial institution, which is democratically run andcontrolled by its members. Credit unions provide financial services and offer credit to their

members. They operate to contribute to international and community development, with some

credit unions being volunteer operations. Credit unions around the world vary widely in terms

of size, from entities with several members to large unions with thousands of union members

and billions of assets. In general, credit unions are smaller than banking establishments,

especially in terms of assets.

Three main functions of credit unions can be differentiated. First, they offer union memberssupport and assistance in managing their financial situation, when necessary. Second, they

provide low interest loans; and third, they encourage union members to save on a regular

basis. In addition to low cost loans, union members enjoy other benefits, including insurance

at no direct cost, personalized service, protection through NCUA insurance, and many others.

Credit union membership is a convenient and easy way to borrow and save and an excellent

source of financial information. On top of low interest rates on loans, some credit unions offer

higher interest savings accounts than banks do. Savings are insured against theft and fraud.

Truly, credit unions have also faced a rise in delinquencies during the financial crisis. At the

same time, they have been less affected. A strong sense of responsibility for the community


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makes members pay off their loans on time. Union members realize that they will affect other

members by not paying off their loans.

In should be noted that unions must be able to function on their own in a competitive market

economy. Thus, most credit unions do not accept donations. Another distinctive feature of

credit unions is that normally, only members of the union can borrow and deposit money with

it. Credit unions market themselves as entities that are committed to their members financial

wellbeing. To this purpose, they aim to offer excellent member service. They work to provide a

broad range of savings and loan products, including share draft accounts, share accounts,

online banking, share term certificates, and more. Union members make savings on a regular

basis, as much or as little as they want. These savings are pooled together and given out as

loans to other union members. Union members, who have made savings over some period of

time can apply for a loan. They may be charged just 1 percent a month on the outstanding

balance. The income of credit unions is in the form of interest that is charged on loans.

The majority of credit unions offer products and services to individual clients only. Unlike

them, corporate credit unions offer various services to credit unions, including service and

product delivery, funds clearing tasks, operational support, and others. The largest US credit

union of this variety is the U.S. Central Credit Union.

Credit unions that focus on moderate- and low-income communities and people join theNational Federation of Community Development Credit Unions, based in New York. It is a

national trade association which provides technical assistance, training, education, and

investments to community development credit unions across the country.

Credit unions are supported by a variety of groups and institutions. These include community

groups, churches, national consumer councils, and others. How to join a credit union? First,

you will have to fill out an application form, which can be collected from a collection point. You

will need to show some ID. Collection points are located in accessible places and some even

work on Saturdays. Some credit unions organize sign up events as well.

Payday Loan Canada7

compensating balance

Banking Terms -> compensating balance

a minimum credit balance that a bank may require a borrower to keep on deposit as acondition for granting a loan; a common requirement for establishing a line of credit at a

bank; "the compensating balance increases the effective interest rate to the ban

Payday Loan Canada

checking account

Banking Terms -> checking account

A checking account is a type of deposit account in a bank or another financial establishment,which allows for deposits and withdrawals. Money in checking accounts is liquid, meaning that

the account holder can withdraw it using automated teller machines, checks, electronic debits,

etc. Checking accounts are different from other types of bank accounts because they allow

unlimited deposits and repeated withdrawals. In contrast, savings accounts may limit both.

There are various types of checking accounts, including student accounts, business accounts,

and joint accounts, all of which offer some special and similar features. Due to the high


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liquidity that goes with checking accounts, the interest rate offered with them is not high.

Checking accounts are also known as transactional accounts and demand accounts. Most

banking establishments offer such accounts for no fee or minimal fee. Electronic banking

services today allow bank customers to set up automatic payments with their checking

accounts so that their monthly expenses are taken care of. Due to the low fees of checking

accounts, big commercial banks consider them loss leaders. Naturally, the aim of most

financial institutions is to attract clients to use their other, more profitable products. Examples

of these are certificates of deposit, mortgages, and various loans.

These transactional accounts are not to be used for the purpose of savings or earning interest.

They are opened for the convenience of individual clients and businesses. Financial

transactions appear in itemized lists at the clients passbook or bank statement. Checking

accounts typically allow customers to receive and make payments by cash (bank notes and

coins), pre-authorized or direct debit money orders and checks. Payments can also be made

by giro or direct deposit (funds transfer), a debit or ATM card, standing order, or SWIFT, which

is an international account-to-account transfer.

The Banking Acts of 1933 and 1935 and Regulation Q prohibited the payment of interest on

checking accounts by members of the Federal Reserve until recently. Banks have

circumvented the restriction by creating different account types such as the Negotiable Orderof Withdrawal. Banks that are not members of the Federal Reserve also offer interest-paying

checking accounts. The Consumer Protection Act and the Dodd-Frank Wall Street Reform

repealed statutes which prohibited interest-bearing checking accounts. In this way, Regulation

Q was effectively repealed. As of July, 2011, financial establishments will be allowed but not

obliged to offer interest-beating checking accounts.

A checking account can be opened at almost any banking institution or credit union. You can

check with your local bank or read reviews of checking accounts. If you want a checking

account that earns interest, you can check the offers of HSBC or ING Direct (the online

checking account at HSBC and ING Direct Electric Orange Checking Account, respectively).

Keep in mind that some interest-bearing checking accounts are offered with restrictions.

Check what they are before you decide to open an account. Among the pitfalls you should look

for are bounced check fees, minimum balance requirements, and a limited number of monthly

transfers. Reward checking accounts are another type, which goes with more restrictions.While they pay higher interest, it is more difficult to qualify for them.

Once you have chosen and opened a checking account, you may want to fund it. The easiest

way to do that is with direct deposit, which is a good option if you want to move funds

electronically. Checks can also be deposited to a checking account so that you can cover

future payments. Sometimes, you may not have enough money in your checking account. To

avoid possible problems, you can use overdraft protection, which will serve as a safety net.

Payday Loan Canada

certified check

Banking Terms -> certified check

A certified check is a type of check, which banks certify, verifying that funds are sufficient inthe account. This money will be set aside and held in an internal account of the bank until the

check is returned by the payee or cashed. Certified checks do not bounce and are like cash in

terms of liquidity. With this type of check, banks guarantee the recipient that the holders

account has sufficient funds deposited to be transferred. Banks also guarantee that the

signature of the accountholder is not forged. Certified checks come handy when a recipient is


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not sure about the account holders creditworthiness and wants to prevent the check from

bouncing. In general, certified checks are used if the payee wants to make sure the check is

good as well as for making down payments on homes and cars. Certified checks were widely

used in many countries before the advent of electronic transfers, debit cards, and gift cards.

Certified checks are a liability of the issuing bank, and it will set aside the sum of money,

which is listed on the check. Certified checks have their downsides as well. First, depositors

are typically not allowed to place a stop payment order on such checks. Second, most banking

establishments charge a fee as to certify checks. If the payee is a client of the issuing bank,

there is a good chance that it will reduce the charge. With some account types, the check will

be issued free-of-charge. You will be charged an issuance fee if you are not a client of the

bank.

Keep in mind that in some cases, you can obtain a certified check only if you have a checking

account at the bank. After you write the check, the teller has to stamp it certified. Your

banking institution will put a hold on this sum in your checking account, thus guaranteeing

funds availability.

If you want to get a certified check, the first thing to do is check whether you have enough

money in the account. It has to cover the amount of the check and the fee of your bank.

Certified checks are not issued through the drive through; so, you have to actually speak tothe teller and explain what you need. Make sure you bring your account information with you,

including some form of identification such as an ID card or your drivers license. After verifying

your account balance, the teller will ask you to write the check in front of them. It is a good

idea to record the checks amount and number in your check register. Then, you can present

the check to the person or entity that requested it. In case you lose the check, proceed as

with an ordinary check. Ask your bank to issue a stop payment for it.

A certified check is not drawn on a regular checking account. It is issued directly by a banking

establishment. Anyone can request such a check payable to a specific recipient. Certified

checks are among the oldest checking services that banks offer. They can be used to forward

a documented financial instrument to a specific payee. This is very simple to do. You just

supply your financial institution with the payees name and the sum to be paid. With most

banks, you can also request additional data to be included, such as a field to record the reason

for payment or an invoice number. Additional details include the date of issue and your nameas a payer.

Payday Loan Canada

certificate of deposit

Banking Terms -> certificate of deposit

The term certificate of deposit refers to a promissory note, which is issued by a bankingestablishment. With time deposits like this, withdrawals are possible but often result in a

penalty. This means that withdrawing funds is restricted. Certificates of deposit entitle bearers

to receive interest at a set interest rate. They have a term or maturity and can be issued in

various denominations. The term of CDs spans from 1 month to 5 years, and they are typically

issued by commercial banks. In some cases, certificates of deposits are indexed to the bond

market or stock market, and other indices may be introduced as well.

Investors are paid interest in exchange for loaning funds to an institution for a specified

period. The interest increases in proportion to the period over which funds are loaned out.

Certificates of deposit come with one major advantage. Investors can calculate the amount of

expected earnings when they make the investment. Given that CDs are FDIC-insured, they are


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a good option for elderly people who want to maintain some capital over the course of their

life. On the other hand, when investors choose a higher interest rate and longer maturity, they

forgo other, sometimes more profitable uses of their capital.

In general, CDs are mid-term to long-term investment instruments offered by banking and

savings and loan institutions. Banks offer higher interest rates in order to use investors

money for a longer period of time. Why cannot banks let customers use this money anytime

they need them? Banks also make various commitments with the funds. They lend them to

other clients and trade investment securities. If you decide to withdraw your money on

demand, the bank may be forced to pay a penalty some other place. Banking establishments

charge a penalty that is usually in the amount of interest you could have earned by holding

the certificate to maturity.

There is no threshold for the amount of the penalty, so it is important to read the terms and

conditions. If you hold a relatively short-term certificate of deposit and withdraw your money

before maturity, you will pay between 1 and 3 months of interest. This applies to CDs with a

term of one year or less. For certificates of deposit with longer terms, you may pay over 3

months of interest. If you hold a 5-year certificate of deposit, you may lose 6 months of

interest. In general, the longer the term, the higher the penalty will be. While losing some of

the interest may not sound that bad, it may happen that you havent earned it yet. In this

situation, the bank may take a portion of the principal, and you will be left with less than theamount of your original investment. Unless you have another investment in mind, that will

bring you a substantially higher return, it is not a good idea to withdraw the money before

maturity. You may withdraw your money at maturity, along with the accrued interest.

It should be noted that a bigger principal generally receives a higher interest, but this is not

always the case. In addition, certificates of deposits with longer terms also go with a higher

interest rate, but not before recession (when inverted yield curve is observed). If you want to

find a better rate, check with smaller institutions first. They are likely to give you a better rate

than larger ones. In addition, business CD accounts generally receive lower interest rate

compared to personal CD accounts. Finally credit unions and banks, which are not insured by

NCUA or FDIC, often offer a higher interest rate.

Payday Loan Canada

Bank Ombudsman : Bank Ombudsman is the authority to look into complaints against Banks in the main areas of

collection of cheque / bills, issue of demand drafts, non-adherence to prescribed hours of working, failure to honour

guarantee / letter of credit commitments, operations in deposit accounts and also in the areas of loans and advances

where banks flout directions / instructions of RBI. This Scheme was announced in 1995 and is functioning with new

guidelines from 2007. This scheme covers all scheduled banks, the RRBs and co-operative banks.

Bancassurance : Bancassurance refers to the distribution of insurance products and the insurance policies of

insurance companies which may be life policies or non-life policies like home insurance - car insurance, medi-policies

and others, by banks as corporate agents through their branches located in different parts of the country by charging

a fee.

Banker's Lien : Bankers lien is a special right of lien exercised by the bankers, who can retain goods bailed to them

as a security for general balance of account. Bankers can have this right in the absence of a contract to the contrary.

Banking : Accepting for the purpose of lending or investment of deposits of money from Public, Repayable on

demand or otherwise and withdrawable by cheques, drafts, order, etc.

Basel-II : The Committee on Banking Regulations and Supervisory Practices, popularity known as Basel Committee,

submitted its revised version of norms in June, 2004. Under the revised accord the capital requirement is to be

calculated for credit, market and operational risks. The minimum requirement continues to be 8% of capital fund (Tier
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I & II Capital) Tier II shall continue to be not more than 100% of Tier I Capital.

Brick & Mortar Banking : Brick and Mortar Banking refers to traditional system of banking done only in a fixed

branch premises made of brick and mortar. Now there are banking channels like ATM, Internet Banking,tele banking

etc.

Business of Banking : Accepting deposits, borrowing money, lending money, investing, dealing in bills, dealing inForeign Exchange, Hiring Lockers, Opening Safe Custody Accounts, Issuing Letters of Credit, Traveller's Cheques,

doing Mutual Fund business, Insurance Business, acting as Trustee or doing any other business which Central

Government may notify in the official Gazette.

Bouncing of a cheque : Where an account does not have sufficient balance to honour the cheque issued by the

customer , the cheque is returned by the bank with the reason "funds insufficient" or "Exceeds arrangement".This is

known as 'Bouncing of a cheque' .

Back

Certificate of Deposit :. Certificate of Deposits are negotiable receipts in bearer form which can be freely tradedamong investors. This is also a money market instrument,issued for a period ranging from 7 days to f one year .The

minimum deposit amount is Rs. 1 lakh and they are transferable by endorsement and delivery.

Cheque : Cheque is a Bill of Exchange drawn on a specified banker ordering the banker to pay a certain sum of

money to the drawer of cheque or another person. Money is generally withdrawn by clients by cheques. Cheque is

always payable on demand.

Cheque Truncation : Cheque truncation, truncates or stops the flow of cheques through the banking system.

Generally truncation takes place at the collecting branch, which sends the electronic image of the cheques to the

paying branch through the clearing house and stores the paper cheques with it.

Collecting Banker : Also called receiving banker, who collects on instruments like a cheque, draft or bill of

exchange, lodged with himself for the credit of his customer's account.

Consumer Protection Act : It is implemented from 1987 to enforce consumer rights through a simple legal

procedure. Banks also are covered under the Act. A consumer can file complaint for deficiency of service with

Consumer District Forum for amounts upto Rs.20 Lacs in District Court, and for amounts above Rs.20 Lacs to Rs.1

Crore in State Commission and for amounts above Rs.1 Crore in National Commission.

Co-operative Bank : An association of persons who collectively own and operate a bank for the benefit of

consumers / customers, like Saraswat Co-operative Bank or Abhyudaya Co-operative Bank and other such banks.

Co-operative Society : When an association of persons collectively own and operate a unit for the benefit of those

using its services like Apna Bazar Co-operative Society or Sahakar Bhandar or a Co-operative Housing Society.

Core Banking Solutions (CBS) : Core Banking Solutions is a buzz word in Indian banking at present, where

branches of the bank are connected to a central host and the customers of connected branches can do banking at

any breach with core banking facility.

Creditworthiness : It is the capacity of a borrower to repay the loan / advance in time alongwith interest as per

agreed terms.

Crossing of Cheques : Crossing refers to drawing two parallel lines across the face of the cheque.A crossed cheque

cannot be paid in cash across the counter, and is to be paid through a bank either by transfer, collection or clearing.A

general crossing means that cheque can be paid through any bank and a special crossing, where the name of a bank

is indicated on the cheque, can be paid only through the named bank.
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Current Account : Current account with a bank can be opened generally for business purpose. There are no

restrictions on withdrawals in this type of account. No interest is paid in this type of account.

Customer : A person who maintains any type of account with a bank is a bank customer. Consumer Protection Act

has a wider definition for consumer as the one who purchases any service for a fee like purchasing a demand draft or

a pay order. The term customer is defined differently by Laws, softwares and countries.

Debit Card : A plastic card issued by banks to customers to withdraw money electronically from their accounts.

When you purchase things on the basis of Debit Card the amount due is debited immediately to the account . Many

banks issue Debit-Cum-ATM Cards.

Debtor : A person who takes some money on loan from another person.

Demand Deposits : Deposits which are withdrawn on demand by customers.E.g. savings bank and current account

deposits.

Demat Account : Demat Account concept has revolutionized the capital market of India. When a depository

company takes paper shares from an investor and converts them in electronic form through the concerned company,

it is called Dematerialization of Shares. These converted Share Certificates in Electronic form are kept in a DematAccount by the Depository Company, like a bank keeps money in a deposit account. Investor can withdraw the

shares or purchase more shares through this demat Account.

Dishonour of Cheque : Non-payment of a cheque by the paying banker with a return memo giving reasons for the

non-payment.

Debit Card : A plastic card issued by banks to customers to withdraw money electronically from their accounts.

When you purchase things on the basis of Debit Card the amount due is debited immediately to the account . Many

banks issue Debit-Cum-ATM Cards.

Debtor : A person who takes some money on loan from another person.

Demand Deposits : Deposits which are withdrawn on demand by customers.E.g. savings bank and current accountdeposits.

Demat Account : Demat Account concept has revolutionized the capital market of India. When a depository

company takes paper shares from an investor and converts them in electronic form through the concerned company,

it is called Dematerialization of Shares. These converted Share Certificates in Electronic form are kept in a Demat

Account by the Depository Company, like a bank keeps money in a deposit account. Investor can withdraw the

shares or purchase more shares through this demat Account.

Dishonour of Cheque : Non-payment of a cheque by the paying banker with a return memo giving reasons for the

non-payment.

E-Banking : E-Banking or electronic banking is a form of banking where funds are transferred through exchange of

electronic signals between banks and financial institution and customers ATMs, Credit Cards, Debit Cards,International Cards, Internet Banking and new fund transfer devices like SWIFT, RTGS belong to this category.

EFT - (Electronic Fund Transfer) : EFT is a device to facilitate automatic transmission and processing of messages

as well as funds from one bank branch to another bank branch and even from one branch of a bank to a branch of

another bank. EFT allows transfer of funds electronically with debit and credit to relative accounts.

Either or Survivor : Refers to operation of the account opened in two names with a bank. It means that any one of

the account holders have powers to withdraw money from the account, issue cheques, give stop payment instructions


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etc. In the event of death of one of the account holder, the surviving account holder gets all the powers of operation.

Electronic Commerce (E-Commerce): E-Commerce is the paperless commerce where the exchange of business

takes place by Electronic means.

Endorsement : When a Negotiable Instrument contains, on the back of the instrument an endorsement, signed by

the holder or payee of an order instrument, transferring the title to the other person, it is called endorsement.

Endorsement in Blank : Where the name of the endorsee or transferee is not mentioned on the instrument.

Endorsement in Full : Where the name of the endorsee or transferee appears on the instrument while making

endorsement.

Execution of Documents : Execution of documents is done by putting signature of the person, or affixing his thumb

impression or putting signature with stamp or affixing common seal of the company on the documents with or without

signatures of directors as per articles of association of the company.

Garnishee Order : When a Court directs a bank to attach the funds to the credit of customer's account under

provisions of Section 60 of the Code of Civil Procedure, 1908.

General Lien : A right of the creditors to retain possession of all goods given in security to him by the debtor for any

outstanding debt.

Guarantee : A contract between guarantor and beneficiary to ensure performance of a promise or discharge the

liability of a third person. If promise is broken or not performed, the guarantor pays contracted amount to the

beneficiary.

Holder : Holder means any person entitled in his own name to the possession of the cheque, bill of exchange or

promissory note and who is entitled to receive or recover the amount due on it from the parties. For example, if I give

a cheque to my friend to withdraw money from my bank,he becomes holder of that cheque. Even if he loses the

cheque, he continues to be holder. Finder cannot become the holder.

Holder in due course : A person who receives a Negotiable Instrument for value, before it was due and in good

faith, without notice of any defect in it, he is called holder in due course as per Negotiable Instrument Act. In the

earlier example if my friend lends some money to me on the basis of the cheque, which I have given to him for

encashment, he becomes holder-in-due course.

Hypothecation : Charge against property for an amount of debt where neither ownership nor possession is passed

to the creditor. In pledge, possession of property is passed on to the lender but in hypothecation, the property

remains with the borrower in trust for the lender.

Identification : When a person provides a document to a bank or is being identified by a person, who is known to the

bank, it is called identification. Banks ask for identification before paying an order cheque or a demand draft across

the counter.

Indemnifier : When a person indemnifies or guarantees to make good any loss caused to the lender from his actions

or others' actions.

Indemnity : Indemnity is a bond where the indemnifier undertakes to reimburse the beneficiary from any loss arising

due to his actions or third party actions.

Insolvent : Insolvent is a person who is unable to pay his debts as they mature, as his liabilities are more than the

assets . Civil Courts declare such persons insolvent. Banks do not open accounts of insolvent persons as they cannot

enter into contract as per law.


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Interest Warrant : When cheque is given by a company or an organization in payment of interest on deposit , it is

called interest warrant. Interest warrant has all the characteristics of a cheque.

International Banking : involves more than two nations or countries. If an Indian Bank has branches in different

countries like State Bank of India, it is said to do International Banking.

Introduction : Banks are careful in opening any account for a customer as the prospective customer has to beintroduced by an existing account holder or a staff member or by any other person known to the bank for opening of

account. If bank does not take introduction, it will amount to negligence and will not get protection under law.

JHF Account : Joint Hindu Family Account is account of a firm whose business is carried out by Karta of the Joint

family, acting for all the family members.. The family members have common ancestor and generally maintain a

common residence and are subject to common social, economic and religious regulations.

Joint Account : When two or more individuals jointly open an account with a bank

Karta : Manager of a Hindu Undivided Family (HUF) who handles the family business. He is usually the eldest male

member of the undivided family.

Kiosk Banking : Doing banking from a cubicle from which food, newspapers, tickets etc. are also sold.

KYC Norms : Know your customer norms are imposed by R.B.I. on banks and other financial institutions to ensure

that they know their customers and to ensure that customers deal only in legitimate banking operations and not in

money laundering or frauds.

Law of Limitation : Limitation Act of 1963 fixes the limitation period of