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Chapter 5 - bank
| Question | Answer |
|---|---|
| • Liquidity: | Refers to your access of cash including saving, credit to cover short term and unexpected costs |
| ◦ if someone does not have enough cash | they can finance for the short term from financial institutions |
| ◦ Emergency funds can be invested into | saving accounts, GICs and money market |
| ◦ Depository institutions : | Financial institutions that accept deposits and provide loans to individuals and business. They pay interest on saving deposits and charge interest on loans |
| ‣ Charted banks: | Financial institutions that accept deposits in chequing and saving accounts and use the funds to provide business and personal loans. These banks are federally incorporated. CDIC of 100,000 |
| ◦ Non-depository institutions: | Financial institutions that do not offer federally insured deposits accounts but provide various financial services |
| ‣ Mortgage companies: | Non-depository institutions that specialize in providing mortgages loans to individuals |
| ‣ Investment dealers: | Facilitate the purchase or sale of various investments by firms or individuals by providing investment banking and brokerage services |
| ‣ Insurance companies: | Sell insurance to protect individuals or firms from risk that can result in financial loss |
| ‣ Mutual funds: | Sell units to individuals and use the proceeds to invest in securities to create mutual fund |
| ‣ Payday loan companies | provide single-payments short term loans to cover a cash shortfall |
| ‣ Cheque Cashing Outlets: | cash third party cheques immediately as long as you have adequate personal identification and may charge a fee i.e money mart |
| ‣ Pawn shop: | Provide a secured loan for a fee and usually require a resealable item worth more than the loan as a deposit if the loan is not repaid the item is foretied. |
| ◦ Schedule l banks | cash third party cheques immediately as long as you have adequate personal identification and may charge a fee i.e money mart |
| ‣ Big 5: | RBC, Bank of Canada, Td, BNS, BMO financial group, CIBC |
| ‣ First Nation Bank of Canada: | focuses specifically on the indigenous market because section 89 prevents banks from taking reserves as collateral. |
| ◦ Schedule II banks | are foreign banks that have subsidiaries operating in Canada ( there are 13 federally regulated in Canada) they are regulated by foreign parent corporations. But are allowed to accept deposits |
| ◦ Schedule III banks: | a |
| ‣ Financial conglomerates: | financial institutions that offer a diverse set of financial services to individuals or firms |
| • Trust and loan companies: | Financial institutions that provided services similar to banks but can provide financial planning services, administer estates and act as trustee in the administration of trust accounts |
| • Credit unions/ caisses populaires: | Provincially incorporated co-operatives financial institutions that are owned and controlled by their members |
| • Chequing services: | Use a chequing account to withdraw money and offer cheque writing services( you provide cheque for 50 dollars to Bell, Bell goes to cash cheque, bank increase bells account and decreases your) |
| • Chequing account: | typically charge a fee but can be waive if a minimum amount is met |
| • Debit cards | A card the is used to identify you at bank but can allow you to make purchases that are charged against an existing chequing account |
| ◦ NSF fee | is attached if you write a cheque the gets bounced |
| • Overdraft protection: | An arrangement that protects customers who wrote cheques for an amount that exceeds their chequing card balance, It's a short term loan for depository institutions where the cheque is maintained |
| • stop payment: | A notice that it will not honour a regular monthly automatic withdraw usually by request of the account owner |
| • Online banking services: | A service offered by financial institutions that allow a customer to check balance, credit card, and investments accounts , transfer funds, pay bills, and preform a number of administrative tasks |
| ◦ Banking apps: | can be useful and contain useful features |
| • Interac e-transfer: | allows for user to exchange money for one bank account to another |
| • Credit card financing: | at end of billing cycle you would receive a bill |
| • Safety deposit box: | a box at a financial institution in which a customer can store documents, jewellery, and other valuable that are stored in the banks vault |
| • Automated banking machines | :A machine that individuals can use to deposit and withdraw funds at any time of day |
| • Certified Cheques: | a cheque that can be cashed immediately by the payee without the payee having to wait for the bank to process and clear it |
| • Money order and drafts: | Products that direct your bank to pay a specified amount to the person named on them |
| • Travellers cheque: | a cheque written on behalf of an individual that will be charged against a large well know financial institution |
| ◦ Deposit rates and insurance: | you would want to compare what other banks are offering on interest( web based banks tend to be lower due to lower overhead) |
| ◦ Fees: | If you use ABM a lot want bank account with favourable ABM withdrawal same with cheque services , Avoid institutions that charge high fees on services |
| ◦ TFSA | flexible saving that can be used for short-term or long term, the contribution room for 2020 is 6,000, you have an deductible when you invest in TFSA |
| ◦ Safety Deposit: | Traditional saving account offered by depository institutions that pay interest on deposits |
| ◦ Term deposits | are short or longterm investments that are cashable designed for people who don't know when they want there money |
| ◦ GIC | an instruments issued by depository institutions that specifies a minimum investment an interest rate and maturity date, based on annualized interest rate |
| ◦ Return Depository institutions | offer higher interest rates on GIC than on saving deposits and term deposits |
| ◦ Money market Fund: | Account that pool money from individual and invest in securites that have short term maturites such as a year or less |
Created by:
annajone
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