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Deposit Accounts

Deposit Accounts. Two Categories:. Transaction deposits An account that allows transactions to occur at any time and in any number. AKA demand deposits Time deposits Deposits held for or mature at a specified time. Transaction Accounts.

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Deposit Accounts

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  1. Deposit Accounts

  2. Two Categories: • Transaction deposits • An account that allows transactions to occur at any time and in any number. AKA demand deposits • Time deposits • Deposits held for or mature at a specified time.

  3. Transaction Accounts • Demand Deposits- payable on demand whenever the depositor chooses • Checking Account - most common form; offers customers quick access to their money and a convenient way to pay bills or transfer funds to other institutions.

  4. Checking Accounts • Basic- Offer a few simple services for minimal cost • Interest bearing checking- Pay interest on the balance deposited in the account, but usually a minimum balance is required

  5. Other types of transaction accounts • Travelers checks • Automatic transfer service

  6. Time Deposits • Less liquid than check deposits • Examples include: • Savings Accounts • Money Market deposit accounts • Certificates of Deposit (CDs) • Various Savings Bonds

  7. Savings Accounts • Banks usually limit the number of free withdrawals. • Statement Savings Accounts: • Provide a quarterly statement detailing account activity, including fees and interest earned. • Lower interest rates than other time deposits because it is the most liquid

  8. Money Market Deposit Accounts • MMDAs offer a higher rate of interest than savings accounts, but they usually require a higher initial deposit to open an account. • FDIC insured up to $250,000 • Minimum balance usually required • # of Transactions may be restricted

  9. Certificates of Deposit • CDs are certificates offered by the bank that guarantee payment of a specified interest rate until a designated date in the future (maturity date). • Higher the amount and longer time until maturity = higher interest rates • Usually higher than money market accounts and savings accounts

  10. Assignment • In groups of 3, research the various types of transaction accounts and time deposits offered at a bank in your area. • Provide details about each type of account • Research should be summarized on a PowerPoint, a flyer, or brochure.

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