A transactional account (North America: checking account or chequing account, United Kingdom and some other countries: current account or cheque account) is a deposit account held at a bank or other financial institution, for the purpose of securely and quickly providing frequent access to funds on demand, through a variety of different channels. Because money is available on demand these accounts are also referred to as demand accounts or demand deposit accounts.
Transactional accounts are meant neither for the purpose of earning interest nor for the purpose of savings, but for convenience of the business or personal client; hence they tend not to bear interest. Instead, a customer can deposit or withdraw any amount of money any number of times, subject to availability of funds.
Friday, May 28, 2010
Checking accounts:
A deposit account held at a bank or other financial institution, for the purpose of securely and quickly providing frequent access to funds on demand, through a variety of different channels. Because money is available on demand these accounts are also referred to as demand accounts or demand deposit accounts.
Savings accounts: Accounts maintained by retail banks that pay interest but can not be used directly as money (for example, by writing a cheque). Although not as convenient to use as checking accounts, these accounts let customers keep liquid assets while still earning a monetary return.
Money market account: A deposit account with a relatively high rate of interest, and short notice (or no notice) required for withdrawals. In the United States, it is a style of instant access deposit subject to federal savings account regulations, such as a monthly transaction limit.
Time deposit: A money deposit at a banking institution that cannot be withdrawn for a preset fixed 'term' or period of time. When the term is over it can be withdrawn or it can be rolled over for another term. Generally speaking, the longer the term the better the yield on the money.
Savings accounts: Accounts maintained by retail banks that pay interest but can not be used directly as money (for example, by writing a cheque). Although not as convenient to use as checking accounts, these accounts let customers keep liquid assets while still earning a monetary return.
Money market account: A deposit account with a relatively high rate of interest, and short notice (or no notice) required for withdrawals. In the United States, it is a style of instant access deposit subject to federal savings account regulations, such as a monthly transaction limit.
Time deposit: A money deposit at a banking institution that cannot be withdrawn for a preset fixed 'term' or period of time. When the term is over it can be withdrawn or it can be rolled over for another term. Generally speaking, the longer the term the better the yield on the money.
Deposit account
A deposit account is a current account, savings account, or other type of bank account, at a banking institution that allows money to be deposited and withdrawn by the account holder. These transactions are recorded on the bank's books, and the resulting balance is recorded as a liability for the bank, and represent the amount owed by the bank to the customer. Some banks charge a fee for this service, while others may pay the customer interest on the funds deposited.
Savings bank
A savings bank is a financial institution whose primary purpose is accepting savings deposits. It may also perform some other functions.
In Europe, savings banks originated in the 19th or sometimes even the 18th century. Their original objective was to provide easily accessible savings products to all strata of the population. In some countries, savings banks were created on public initiative, while in others, socially committed individuals created foundations to put in place the necessary infrastructure.
In 1914, the New Student's Reference Work said of the origins: [1]
France claims the credit of being the mother of savings banks, basing this claim on a savings bank said to have been established in 1765 in the town of Brumuth, but it is of record that the savings bank idea was suggested in England as early as 1697. There was a savings bank in Hamburg, Germany, in 1778 and in Berne, Switzerland, in 1787. The first English savings bank was established in 1799, and postal savings banks were started in England in 1861.
The first chartered savings bank in the United States was the Provident Institution for Savings in the Town of Boston, incorporated December 13, 1816. The Philadelphia Savings Fund Society began business the same year, but was not incorporated until 1819. In 1818 banks for savings were incorporated in Baltimore and Salem, and in 1819 in New York, Hartford, Newport and Providence.
Nowadays, European savings banks have kept their focus on retail banking: payments, savings products, credits and insurances for individuals or small and medium-sized entreprises. Apart from this retail focus, they also differ from commercial banks by their broadly decentralised distribution network, providing local and regional outreach.
Communist Czechoslovakia: see Economy of Communist Czechoslovakia
Germany: see Sparkassen
New Zealand: Savings banks ceased to exist in 1987 as an official type of bank, being replaced with registered banks (Grimes, 1998)
Soviet Union: Traditionally, the Russian term sberkassa (сберкасса, сберегательная касса) is translated as "savings bank". However sberkassas were not banks in the common sense. Initially they were the outlets of the only Soviet State Bank, Gosbank until 1987 and Sberbank (USSR Savings Bank) afterwards.
Spain: see Savings bank (Spain)
United Kingdom: see Trustee savings bank
United States: see Savings and loan association and Mutual savings bank
In Europe, savings banks originated in the 19th or sometimes even the 18th century. Their original objective was to provide easily accessible savings products to all strata of the population. In some countries, savings banks were created on public initiative, while in others, socially committed individuals created foundations to put in place the necessary infrastructure.
In 1914, the New Student's Reference Work said of the origins: [1]
France claims the credit of being the mother of savings banks, basing this claim on a savings bank said to have been established in 1765 in the town of Brumuth, but it is of record that the savings bank idea was suggested in England as early as 1697. There was a savings bank in Hamburg, Germany, in 1778 and in Berne, Switzerland, in 1787. The first English savings bank was established in 1799, and postal savings banks were started in England in 1861.
The first chartered savings bank in the United States was the Provident Institution for Savings in the Town of Boston, incorporated December 13, 1816. The Philadelphia Savings Fund Society began business the same year, but was not incorporated until 1819. In 1818 banks for savings were incorporated in Baltimore and Salem, and in 1819 in New York, Hartford, Newport and Providence.
Nowadays, European savings banks have kept their focus on retail banking: payments, savings products, credits and insurances for individuals or small and medium-sized entreprises. Apart from this retail focus, they also differ from commercial banks by their broadly decentralised distribution network, providing local and regional outreach.
Communist Czechoslovakia: see Economy of Communist Czechoslovakia
Germany: see Sparkassen
New Zealand: Savings banks ceased to exist in 1987 as an official type of bank, being replaced with registered banks (Grimes, 1998)
Soviet Union: Traditionally, the Russian term sberkassa (сберкасса, сберегательная касса) is translated as "savings bank". However sberkassas were not banks in the common sense. Initially they were the outlets of the only Soviet State Bank, Gosbank until 1987 and Sberbank (USSR Savings Bank) afterwards.
Spain: see Savings bank (Spain)
United Kingdom: see Trustee savings bank
United States: see Savings and loan association and Mutual savings bank
Private bank
Private banks are banks that are not incorporated. A private bank is owned by either an individual or a general partner(s) with limited partners. In any such case, the creditors can look to both the "entirety of the bank's assets" as well as the entirety of the sole-proprietor's/general-partners' assets.
These banks have a long tradition in Switzerland, dating back to at least the revocation of the Edict of Nantes (1685). However most have now become incorporated companies, so the term is rarely true anymore. There are a few private banks remaining in the U.S. One is Brown Brothers Harriman & Co., a general partnership with about 30 members. This is also true of private banks in Europe such as the Swiss Bank Hottinger & Cie.
"Private banks" and "private banking" can also refer to non-government owned banks in general, in contrast to government-owned (or nationalized) banks, which were prevalent in communist, socialist and some social democratic states in the 20th century. Private banks as a form of organization should also not be confused with "Private Banks" that offer financial services to high net worth individuals and others.
These banks have a long tradition in Switzerland, dating back to at least the revocation of the Edict of Nantes (1685). However most have now become incorporated companies, so the term is rarely true anymore. There are a few private banks remaining in the U.S. One is Brown Brothers Harriman & Co., a general partnership with about 30 members. This is also true of private banks in Europe such as the Swiss Bank Hottinger & Cie.
"Private banks" and "private banking" can also refer to non-government owned banks in general, in contrast to government-owned (or nationalized) banks, which were prevalent in communist, socialist and some social democratic states in the 20th century. Private banks as a form of organization should also not be confused with "Private Banks" that offer financial services to high net worth individuals and others.
National bank
The term national bank has several meanings:
especially in developing countries, a bank owned by the state
an ordinary private bank which operates nationally (as opposed to regionally or locally or even internationally)
in the United States, an ordinary private bank operating within a specific regulatory structure, which may or may not operate nationally.
In the past, the term "national bank" has been used synonymously with "central bank", but it is no longer used in this sense today. Some central banks may have the words "National Bank" in their name; conversely if a bank is named in this way, it is not automatically considered a central bank. For example, National-Bank AG in Essen, Germany is a privately owned commercial bank, just like National Bank of Canada of Montreal, Canada. On the other side, National Bank of Ethiopia is the central bank of Ethiopia and National Bank of Cambodia is the central bank of Cambodia.
especially in developing countries, a bank owned by the state
an ordinary private bank which operates nationally (as opposed to regionally or locally or even internationally)
in the United States, an ordinary private bank operating within a specific regulatory structure, which may or may not operate nationally.
In the past, the term "national bank" has been used synonymously with "central bank", but it is no longer used in this sense today. Some central banks may have the words "National Bank" in their name; conversely if a bank is named in this way, it is not automatically considered a central bank. For example, National-Bank AG in Essen, Germany is a privately owned commercial bank, just like National Bank of Canada of Montreal, Canada. On the other side, National Bank of Ethiopia is the central bank of Ethiopia and National Bank of Cambodia is the central bank of Cambodia.
Industrial loan company
An industrial loan company (ILC) or industrial bank is a financial institution in the United States that lends money, and may be owned by non-financial institutions. Though such banks offer FDIC-insured deposits and are subject to FDIC and state regulator oversight, a debate exists to allow parent companies such as Wal-Mart to remain unregulated by the financial regulators. "FDIC-insured entities are subject to Sections 23A and 23B of the Federal Reserve Act, which limits bank transactions with affiliates, including the parent company." (FDIC.gov) The ILC is permitted to have branches in multiple states (which is permitted by many states on a reciprocal basis). They are state-chartered, and insured by the Federal Deposit Insurance Corporation. They are currently chartered by seven states, with most chartered by Utah. Other states permitting them include California, Colorado, Minnesota, Indiana, Hawaii, and Nevada.
Companies that have set up industrial banks include UBS, General Electric Co., General Motors, Merrill Lynch & Co. Inc., Morgan Stanley, American Express Co. Target Corp, Nordstrom, Harley-Davidson, First Data, UnitedHealth Group, BMW, and Sallie Mae. In May 2005, Warren Buffett's Berkshire Hathaway, Inc. announced plans to operate a Utah industrial bank to handle consumer loans for its R. C. Willey Home Furnishings stores. The Blue Cross and Blue Shield Association, Ford Motor Co., Ceridian Corp. and Home Depot await approval.
Top Ten FDIC-Insured Industrial Banks by Assets, 2005 ($ millions)
Rank Bank State assets
1 Merrill Lynch Bank USA UT $60,367.7
2 UBS Bank USA UT $18,585.8
3 American Express Centurion Bank UT $15,933.0
4 Fremont Investment & Loan CA $11,316.4
5 Morgan Stanley Bank UT $8,674.9
6 USAA Savings Bank NV $7,099.6
7 GMAC Commercial Mortgage Bank UT $4,872.5
8 GMAC Automotive Bank UT $2,429.5
9 Beal Savings Bank NV $2,420.2
10 Lehman Brothers Commercial Bank UT $2,127.2
Source: Federal Deposit Insurance Corporation. As of 2009, some of these banks are no longer extant.
However, the assets held by an ILC tend to paint an incomplete picture. The actual loan book amount can be considered more important. In this view, for example, UBS would replace Merrill Lynch as number 1.
Companies that have set up industrial banks include UBS, General Electric Co., General Motors, Merrill Lynch & Co. Inc., Morgan Stanley, American Express Co. Target Corp, Nordstrom, Harley-Davidson, First Data, UnitedHealth Group, BMW, and Sallie Mae. In May 2005, Warren Buffett's Berkshire Hathaway, Inc. announced plans to operate a Utah industrial bank to handle consumer loans for its R. C. Willey Home Furnishings stores. The Blue Cross and Blue Shield Association, Ford Motor Co., Ceridian Corp. and Home Depot await approval.
Top Ten FDIC-Insured Industrial Banks by Assets, 2005 ($ millions)
Rank Bank State assets
1 Merrill Lynch Bank USA UT $60,367.7
2 UBS Bank USA UT $18,585.8
3 American Express Centurion Bank UT $15,933.0
4 Fremont Investment & Loan CA $11,316.4
5 Morgan Stanley Bank UT $8,674.9
6 USAA Savings Bank NV $7,099.6
7 GMAC Commercial Mortgage Bank UT $4,872.5
8 GMAC Automotive Bank UT $2,429.5
9 Beal Savings Bank NV $2,420.2
10 Lehman Brothers Commercial Bank UT $2,127.2
Source: Federal Deposit Insurance Corporation. As of 2009, some of these banks are no longer extant.
However, the assets held by an ILC tend to paint an incomplete picture. The actual loan book amount can be considered more important. In this view, for example, UBS would replace Merrill Lynch as number 1.
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