Banking and Financial Services Vocabulary

Concept Definition Federal Reserve -Supervises banks-Banker's bank (lends money to banks)-Conducts monetary policy Monetary Policy The Fed controls the amount of money in the economy by raising or lowering interest rates. Inflation The rise in the cost of goods and services. It is when prices are increasing. Banks -For-profit business-Higher fees-Serves interest of its shareholders-National: Easy to find ATM's. Credit Unions -Not for profit-Serves best interest of members with lower fees-Must qualify for membership FDIC Protects deposits in banks up to $250,000 Checking Account -Most liquid type of account-Used to pay bills Savings Account -Highly liquid-Used to save for emergency savings Certificate of Deposit -Not liquid-Pays higher interest than regular savings, but you cannot access money Liquidity You can get your money easily without fear of it losing value Liquid Accounts Checking, regular savings, money market accounts Not Liquid Certificate of Deposits, Stocks Bonds, Real Estate Blank Endorsements -When you sign the back of a check to deposit-Most dangerous,never sign until at bank Restrictive Endorsement -"Deposit only into savings"-Restricts how check can be used-Very safe Special Endorsement -"Pay to the Order of Bob"You assign a new owner to the check.