4.

02 Key Terms: Types of Financial Institutions

Term

Definition

Types of Financial Institutions

Commerical bank

A bank that is owned and for profit and offers many financial services

Saving and loan association

A financial institution that resembles a bank but that historically did not
offer services such as personal checking accounts and that invested
capital mainly in home mortgages

Credit union

A bank that is owned by the people who are members and usually they
receive memebrship qualifications

Brokerage firm

A financial institution that facilitates the buying and selling of financial

securities between a buyer and a selle

Insured financial institution

Any bank or savings account that is covered by some form of deposit

insurance

Traditional Services of Financial Institutions

Checking account

Provides quick access to funds for transactions

Savings account

An account for money not intened to be used for daily expeneses

Retirement plan account

the planning one does to be prepared for life after paid work ends, not just
financially but in all aspects of life

Share account

They allow credit-union members to access their share balances by

writing drafts on their accounts

Share certificate account

An credit union savings account that will earn dividends at a particular

rate if held to maturity

Share draft account

A type of draft used in credit unions as a way to access funds in

individual accounts

Bond

an instrument of indebtedness of the bond issuer to the holders. It is a debt

security, under which the issuer owes the holders a debt and, depending
on the terms of the bond, is obliged to pay them interest (the coupon)
and/or to repay the principal at a later date, termed the maturity date

Certificate of deposit

An instrument that is issued by the credit union in the name of the

member stating that a certain sum of money is on deposit and that the
member agrees to keep this money at the credit union for a certain period
of time

Mutual fund

an investment program funded by shareholders that trades in diversified

holdings and is professionally managed

Real estate investment

It is common for investors to own multiple pieces of real estate, one of

which serves as a primary residence, while the others are used to generate

rental income and profits through price appreciation

Stock

A type of security that signifies ownership in a corporation and represents

a claim on part of the corporation's assets and earnings

Credit card

a small plastic card issued by a bank, business, allowing the holder to

purchase goods or services on credit

Loan

a thing that is borrowed, especially a sum of money that is expected to be

paid back with interest

Mortgage

the charging of real property by a debtor to a creditor as security for a

debt, on the condition that it shall be returned on payment of the debt
within a certain period

Financial counseling

Information, advice, and assistance with a wide range of financial topics

Safe-deposit box

Store valuable personal items

4.02 Key Terms:Types of Financial Institutions, continued

Term

Definition

E-Banking Services of Financial Institutions

E-banking

a method of banking in which the customer conducts transactions

electronically via the Internet

access

obtain, examine, or retrieve

approach or enter

Point-of-sale (POS) transfer

is the place where a retail transaction is completed

Personal Identification
Number (PIN)

a numeric password shared between a user and a system, that can be used
to authenticate the user to the system

Automated Teller Machine

(ATM)

a computer terminal that takes the place of a human bank teller and
allows the user to access basic bank services, such as making deposits
and cash withdrawals from remote locations, twenty-four hours a day

Direct deposit

the electronic transfer of a payment directly from the account of the payer
to the recipient's account.

Direct withdrawal

a financial transaction in which one person withdraws funds from another

person's bank account

Smart card

a plastic card with a built-in microprocessor, used typically for electronic

processes such as financial transactions and personal identification

Forms of Payment for Purchases

Currency

a system of money in general use in a particular country

Personal check

written by the customer and drawn on the customer's account

Cashiers check

A check written by a financial institution on its own funds

Certified check

a check that is guaranteed by a bank

Money order

a printed order for payment of a specified sum, issued by a bank or post

office

Travelers check

a check for a fixed amount that can be cashed or used in payment after
endorsement with the holder's signature

Debit card

a card issued by a bank allowing the holder to transfer money

electronically to another bank account when making a purchase

Credit card

a small plastic card issued by a bank, business, etc., allowing the holder
to purchase goods or services on credit

Open-end credit

A pre-approved loan between a financial institution and borrower that

may be used repeatedly up to a certain limit and can subsequently be paid
back prior to payments coming due

Closed-end credit

A loan or extension of credit in which the proceeds are dispersed in full

when the loan closes and must be repaid, including any interest and
finance charges, by a specified date