Banking Services

Overview of Services

Different types of accounts Loans Lines of credit Credit cards Direct deposit Money orders and drafts Night depositories Overdraft protection Preauthorized bill payments Safety deposit boxes Traveller’s cheques

Accounts

Transaction Accounts An account used to deposit money

needed for everyday use, such as paying bills, rather than for savings

Savings Account An account where money is put in

to accumulate Not used to pay bills

Loans

Many types from small personal loans to million dollar loans to business for a new building

Most important function that a bank provides Interest charged on loans are a major

source of income for the bank Only lend the money if it is likely to be repaid on time

Most common forms: Term loans, student loans, credit cards,

lines of credit and mortgages

Loans continued…

Term Loan Borrowing money and paying it

back at a specified time Interest rate can be fixed (set for

the specific length of the loan) or variable (rate rises and falls with the general interest rate, known as the prime rate)

Line of Credit

A form of instant access to credit that has been pre-arranged between you and your financial institution

A one-time pre-approved loan that allows you to borrow up to a certain dollar amount

Only pay interest on the exact amount borrowed

Great for emergencies!

Credit Cards

A convenient alternative to writing cheques

VISA and MasterCard are examples Many cards are available with different

features, fees and interest rates Known as multi-purpose cards since they

can be used worldwide

Direct Deposit

A service that transfers money from an outside source into an account that you specify

Provides immediate access to money

Used for payroll, government payments such as tax refunds

Money Orders

A form of payment, like a cheque, in which the issuing institution guarantees to pay the amount shown on the form to the payee

Also protects the payee in case the money order is lost or stolen

A safe way to send money through the mail

Issued by a bank or Canada Post Can also purchase in foreign

currencies

Drafts

Similar to a money order except that they are only issued by financial institutions and are usually for larger dollar amounts

Jut like cash so the recipient has instant access to the money Bank does not place a hold on the

money

Night Depository

Usually a chute or other facility at the bank

Allows customers to make deposit or drop off paperwork 24/7

Businesses do not have to hold on to large deposits and wait for bank to open Decreases risk of theft

Place deposit in a locked pouch and then place in the chute

Bank employee removes the money from the chute during regular business hours

Overdraft Protection

Means you can write a cheque for more money than you have in your account

Bank “lends” the depositor the money so the cheque does not bounce

Bank charges a fee for this service

Preauthorized Bill Payments

The process of paying regular monthly bills such as loans, car insurance and utilities automatically from your bank account on specified dates

Must provide written permissionPreauthorized Debit A regular, automatic withdrawal from a

bank account For bills that vary in amount, the business

must provide you with notice at least 10 days before payment is due

Safety Deposit Boxes

Fireproof, metal boxes at the bank used to store important documents and valuables, jewellery

Rates vary according to the size of the box

Two keys are required The renter’s key and the institution’s key

Traveller’s Cheques

Just like cash, but safer Financial institution requires you to sign

them in their presence at the bank In order to redeem it, you must provide photo identification and sign it in the presence of the business

The signatures must match Not all businesses accept them