The Language of Banking Chapter 1 Unit 2

The Language of Banking This unit will be covering the most common banking terms and their definitions. The MA who works as the Office Manager must have a good working knowledge of banking and basic accounting procedures As the Manager, knowledge of banking terms will help you communicate with bank officials

Banking Terms Agent – is a person that is authorized to act for another person American Bankers association a/k/a ABA – is a codes number that is found in the upper right hand corner of a printed check

Banking Terms Automated Teller Machine a/k/a ATM – a banking machine operated by inserting a credit or bank card and entering a personal I.D number (Pin) code Bank Statement – a record of checking account sent to the customer on a monthly basis. This record shows the beginning balance, deposits made, checks drawn, bank charges, and closing balance

Banking Terms Bankbook – in this case, a savings account is called a savings passport, it contains a record of deposit, withdrawals, and interest earned Cashier’s Check – the purchaser pays the bank the full amount of the check

Banking Terms Certified Check – the bank stamps the customer’s own check certified and then holds the certified amount in reserve in the customer’s account until the check is cashed Check Register a/k/a check stub – it’s a record showing the check number, person to whom the check is paid, amount of the check, date, and the balance

Banking Terms Checking Acct-a bank acct against which checks may be written Currency – paper money issued by the government Debit – an entry in an account of an amount owed that has been charged to the account Deposit – an amount of money placed in a bank account

Banking Terms Deposit Record – a record of deposit that is given to the customer at the time of the deposit Deposit Slip –an itemized list of cash and checks deposited into a checking account Direct Deposit – when an amount is sent electronically by the payer directly into a savings/checking account of the payee Electronic Check – a check paid directly from a checking account via the internet

Banking Terms Electronic Fund Transfer a/k/a EFT – a method of crediting/debiting accounts by computer w/out checks or deposit slips Endorsement – the payee’s signature on the back of the check Endorser – the payee on a check. If the name is misspelled on the face of a check, it should be endorsed the misspelled way followed by the correct way

Banking Terms Insufficient Funds – a bank term used to indicate that the writer of the check did not have enough money in the account to cover the check. These checks are also described as bounced checks and the account is called overdrawn Limited Check – a check that will be marked void if written over a certain amount

Banking Terms Magnetic Ink Character Recognition (MICR) –this technique consist of characters and numbers printed in magnetic ink at the bottom of the left side of checks and deposit slips Maker – the individual who signs a check

Banking Terms Money Order – negotiable instrument often used by individuals who do not have checking accounts or meet the requirements for purchasing an item or service Negotiable – refers to the fact that something is able to be transferred or exchanged

Banking Terms Note – legal evidence of a debt Promissory note – written promise to pay Collateral note – written promise to pay with additional requirements that the maker of the note must list marketable securities that may be sold by the creditor if the maker does not pay the note w/in the time limit promised

Banking Terms Online banking – banking on the banks internet web site Overdraft Checking Account-accounts that allow checks to be written for a larger amount than is currently in the account. Overdraft is covered by the bank in a form of a loan and interest is charged

Banking Terms Payee – the person to whom the check is written Payer – the person who signs the check Postdated Check – a check made out with a future date Power of Attorney – a legal procedure that authorizes one person to act as an agent for another

Banking Terms Saving Account – A bank account upon which the depositor can earn interest Service Charge – fee charged by the bank on a monthly basis for services rendered. Some banks charge for every transaction, whether depositing money or writing checks Stale Check – a check presented to long after it was written to be honored by the bank. Some checks specify that they must be cashed within 90 days. A period of 6 months is generally considered enough time for a check to be presented

Banking Terms Stop Payment – a method by which the maker of a check may stop a payment. A fee is charged by the bank. The steps needed for a stop payment are as follows -payer must furnish the check number -Date issued -Name of payee -Amount of check -Reasons for the stop payment

Banking Terms Traveler’s Check – a special check used by individuals who are traveling and do not wish to carry a large amount of cash Voucher Check – a check with a detachable voucher form that is used to show the reason for which the check was drawn EX: Insurance Check Withdrawal – removal of funds from a depositor’s acct » End