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guide_lines.txt
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guide_lines.txt
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================================
Basic Functions of a Bank
================================
1. Deposits:
- Definition: When you put money into a bank account.
- Example: You get your salary and deposit $1,000 into your account. The bank holds this money for you.
2. Withdrawals:
- Definition: When you take money out of your bank account.
- Example: You withdraw $200 from your account using an ATM to pay for groceries. Your account balance decreases by $200.
3. Loans:
- Definition: The bank gives you money that you agree to pay back later with interest.
- Example: You borrow $10,000 to buy a car. You pay it back over time, plus interest.
4. Interest:
- Definition: The extra money you earn or pay.
The bank pays you interest on savings and charges you interest on loans.
- Example: You earn 2% interest on your savings of $1,000, which gives you $20 at the end of the year.
5. Interest Rates:
- Definition: The percentage used to calculate interest on savings or loans.
- Example: Borrowing $1,000 at 5% interest means you’ll pay back $1,050.
6. Transactions:
- Definition: The movement of money, like deposits, withdrawals, or transfers.
- Example: You transfer $100 from your checking account to your savings account.
7. Credit:
- Definition: Borrowing money with a credit card, to be paid back later, often with interest.
- Example: You use a credit card to buy a $500 TV and pay it back over several months.
8. Fees:
- Definition: Banks often charge fees for various services, such as account maintenance, overdrafts, and ATM use.
- Types of Fees:
a. Monthly Maintenance Fee:
- Charged for maintaining your account.
- It is sometimes waived if you meet certain conditions (e.g., minimum balance).
b. Overdraft Fee:
- Charged when you spend more money than you have in your account.
c. ATM Fees:
- Charged for using an ATM that doesn't belong to your bank.
- Examples:
- If your account balance falls below $500, you might be charged a $10 monthly fee.
- If you withdraw money from an ATM not owned by your bank, you could be charged a $3 fee.
9. Overdraft Protection:
- Definition: A service that prevents your account from going negative by automatically transferring money from
another account or a line of credit.
- Example: If you have $50 in your account but try to spend $60, overdraft protection might transfer $10
from your savings to cover the difference.
================================
Bank Accounts
================================
1. Checking Account:
- Definition: A bank account for everyday transactions, like paying bills or shopping.
- Example: You use your checking account to pay your electricity bill.
2. Savings Account:
- Definition: A bank account designed to help you save money while earning interest.
- Example: You put $1,000 in a savings account with a 2% interest rate. After a year, you’ll have $1,020.
3. Interest Rewards Account:
- Definition: It is a type of savings account that offers interest rates for maintaining a larger balance
or meeting specific requirements.
- Example: You open an Interest Rewards Account with a bank that pays 2.5% interest if your balance is
above $5,000. If you deposit $6,000, you'll earn interest based on that higher balance.