Textbook Notes (367,852)
Canada (161,454)
MCS 2100 (49)
Jian Zhao (2)
Chapter 4-7

MCS2100 Chapter 4-7.docx

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Department
Marketing and Consumer Studies
Course
MCS 2100
Professor
Jian Zhao
Semester
Fall

Description
Ch 4The Banking Services of Financial Institutions Types of Financial Services 1 Savings safe storage of funds time deposits savings acct investment certificates referred to as time deposits 2 Payment Service transfer money referred to as demand deposits 3 Borrowing 4 Other ServicesTrustLegal agreement that provides for the management and control of assets by one party for the benefit of anotherATM a computer terminal used to conduct banking transactionsMethods of Payment Point of Sale Transactions debit purchases Store Value CardsPrepaid CardsGiftcards Smart Cardsstores prepaid amounts also stores data about account balances transaction records insurance information and medical history Electronic Cashpayment solution that enables you to safely pay for a web purchase using your credit cardTypes of FIs Deposit Types Institutions Chartered Bank Trust Company Credit Union NonDeposit Institutions Life Insurance Company Investment Company Mortgage and Loans Pawnshops Cheque cashing outletsChartered Banka financial institution that offers a full range of financial services to individuals businesses and govt agencies Schedule I BMO CIBC RBCBNSTD Natl Bank Schedule II foreign subsidiaries eg HSBC Canada Schedule III branches of foreign banks authorized in bank act to do business in CanadaCitibank Deutsche BankTrust Company Sun Life Great West Life offer a broad range of financial services similar to banks in addition they are the only corporations allowed to act as a trustee in charge of corporate or individual property stocks and bonds Most trust companies are owned by banks except large independents Credit Union A user owned nonprofit cooperative financial institution Money Market Fund a savings investment plan offered by investment companies with earnings based on investments in various shortterm financial instruments Favorable rate of return minimum balance and not insuredSavings Plans Regular Savings Accounts passbook accountsLow minimum balance ease of withdrawal low rate of returnTerm Deposit A deposit that is made for a specified term in exchange for a higher rate of return Can be redeemed before maturity by earning a reduced rate of interestInterest Earning Chequing Accounts 0 Chequing privileges interest earned insured Possible service charge for going below minimum balance cost of printing cheques Guaranteed Investment Certificate GICGuaranteed rate of return for time of GIC insured possibly penalty for early withdrawalCanada Saving BondsRate of return varies with current interest rates low minimum deposit regular or compound interest government guaranteed No interest paid if redeemed before three monthsRate of Return The percentage of increase in the value of savings as a result of interest earned aka yieldEffective Annual Interest Rate EAR 1 Rate of Return in Year of Compounding Periods of compounding periods1 Overdraft Protection an automatic loan made to chequing account customers to cover the amount of cheques written in excess of available balance in the account This service is convenient but costly since loans are usually made in increments of 50 to 100Ch 5Introduction to Consumer CreditCreditAn arrangement to receive cash goods or services now and pay for them in futureConsumer CreditThe use of credit for personal needs Except home mortgageYoung adults are most vulnerable to misusing credit post secondary students are a prime target for credit card issuers and issuers make it easy for students to get credit cards3 alternatives in financing purchases draw on savings use current earnings or borrow against future incomeCredit grace period 2130 days
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