Banking Knowledge

Updated: May 29, 2021

1. What is a bank?

A bank is a financial institution licensed to receive of cash/check deposits and Channel some money into lending activities.

2. What are the different types of banks?

a. Commercial Banks

b. Investment Banks

3. Who regulates Banks?

The National Government of Central Bank.

4. What is investment banking?

Investment banking manage is portfolios of financial assets, commodity and currency, fixed income, corporate finance, corporate adversary services for mergers and acquisitions, debt an equity writing etc.

5. What is a commercial bank?

Commercial bank is owned by the group of individuals or by a member of Federal Reserve System. the commercial bank offers services to individuals, they are primarily concerned with receiving deposits and lending to businesses. search bank earns money by imposing interest on the loan borrowed by the borrower. the money that is deposited by the customer will be used by the bank to give business loan, auto loan, mortgages and home repair loans.

6. What are the types of commercial banks?

a. Retail or consumer banking: Small to mid-sized branch that directly deals with consumer’s Transaction rather than corporate or other banks.

b. Corporate or business banking:Corporate banking deals with cash management, underwriting, financing, and issuing of stocks and bonds.

c. Securities and investment banking: Securities and Investment banking manages portfolios of financial assets, commodity and currency, fixed income, corporate adversary services for mergers and acquisitions, debt and equity writing etc.

d. Non-traditional options: There are many non-bank entities that offer financial services similar to that of a bank. the entities include credit card companies, credit card report agencies and credit card issuers.

7. What is consumer bank?

Consumer bank is all knew edition in the banking sector; such bank exists only in countries like USA and Germany. this bank provides loans to their customers to buy television, car, furniture etc. this bank provides loans to their customers and gives option of easy payment through installments.

8. What are the types of accounts in banks?

a. Checking Account: you can access the account as the saving account but unlike saving account, you cannot own interest on this account. the benefit of this account is that there is no limit for withdrawal.

b. Saving Account: you can save your money in such account and also earn interest on it. The number of withdrawals in a savings account is limited and need the customer needs to maintain the minimum amount of balance in the account to remain active.

c. Money Market Account: This account gives benefits of both saving and checking accounts. The customer can withdraw the amount and will be able earn higher interest rate on this account; this account can be opened with a minimum balance.

d. CD (Certificate of Deposits): A certificate of deposit, or CD, is a type of federally insured savings account that has fixed interest rate and fixed date of withdrawal, known as the maturity date. CDs also typically don't have monthly fees. A CD is different from a traditional savings account. The customer cannot cash a CD before its maturity date. Annual percentage yield on a CD can be very high depending on the money you invest. A 6-year CD, on a $6000 deposit, with a 3.15% APY could earn you around 1200 dollars.

9. What are the different ways you can operate your accounts?

a. Internet Banking

b. Telephone or mobile banking

c. Branch or over the counter service

d. ATM (Automated Teller Machine)

10. What information about the bank should you have, or you need to research before opening a bank account?

a. First and foremost, look for the variety of accounts that you can choose from.

b. Inquire about the minimum deposit required to open a bank account; Some banks might not charge a minimum deposit, while some banks require no deposit to start doing business.

c. Some banks may charge you a monthly service fee if the monthly balance requirements are not met.

d. Before opening a bank account, the customer needs to figure out the type of account they want to open. If you want to open a savings account, you have to check the interest rate on the deposit and the duration for which the interest rate will remain consistent.

e. If you have the checking account then look for how many checks are free to use. Not all banks provide free checks at the time of joining; some banks may charge you for using paper checks or even for ordering you check books. also check for different debit card option that is provided on opening an account and online banking features.

f. Inquire about ATM or Debit cards. Fees apply when you use your ATM card for transactions from ATM other machine which does not belong to your bank.

g. Some banks require you to use pin number (personal identification number) when making a debit transaction; banks which issue pin number might charge a service fee for purchases.

h. I know the different locations of the bank the working hours, Drive through ATM services, teller services on weekend, ATM locations, ATM network, ATM fees etc.

i. Ensure that you're investing your money in the right financial institution. Banks use FDIC (Federal Deposit Insurance Corporation) to protect you against the loss of your deposits. FDIC insurance is usually available for up to $100,000 per depositor, per bank. FDIC coverage only protects you if your bank fails not if you lose money due to investment choices. Check whether your bank or savings Association is insured by FDIC. You can call toll free at 1- 877- 275-3342. Mostly, you see FDIC sign near the deposits window, or else you can always ask the bank teller or the bank manager.

j. Find out from the bank whether you can set up an order, to cover yourself in case your bounce a check. While overdraft lines are usually not cheap, they also carry fees and interest it may be cheaper than an overdrawn account. if you have a savings account you may be able to tie it to your checking account as a backup.

k. Make sure you read the fine print in detail and understand it very well.

l. Ask for a written description of account fees.

m. How many free checks can you write each month and the minimum balance requirements?

n. information on how to order copies of canceled checks if you do not receive them with your statement.

o. Get information from the bank, on how to proceed, in case your ATM or debit card is stolen or if you suspect fraud in your account.

p. There are some hidden facts that you definitely need to know; some banks may give you free gifts like a toaster when you open the bank account; but what you don't realize is but you will get a tax form for that toaster in the next tax period.

11. What is Annual Percentage Rate (APR)?

APR (Annual Percentage Rate) and it is a charge or interest rate that the bank imposes on their customers for using their services like loans, credit cards, mortgage loans etc. the interest rate or fees imposed is calculated annually.

12. What is a Fixed APR?

In fixed APR the interest rate remains the same throughout the term of the loan or mortgage. Previously fixed rates could be changed with as little as 15 days’ notice under the reform law passed by President Obama in May 2009 fixed rates must remain fixed for at least a year and then can be raised with forty-five days’ notice to consumers.

13. What is a variable APR?

In Variable APR the interest rates change without notice based on factors like prime rate

14. What is an overdraft protection?

Overdraft protection is a service that is provided by a bank to their customer. for instance, if you are holding 2 accounts, saving and credit account, in the same bank and if one of your accounts does not have enough cash to process the checks or to cover the purchases the bank will transfer money from one account to another account which does not have cash so as to prevent a check return or a check from bouncing and to clear your bills. Banks charge an order of protection service, but the charges will be applicable only when you start using the service.

15. What is a “Crossed Check”?

A crossed check indicates the amount should we deposited into the payees account and cannot be cashed by the bank over the counter. Two vertical lines are placed on the top left-hand corner of the check with the words “&CO” between the lines. The words “not negotiable” can be added to the crossing.

16. What is a debit card?

A bank card that automatically deducts the amount of purchase from the checking account of the card holder.