Page 51 - DMGT303_BANKING_AND_INSURANCE

Banking and Insurance

Notes Call deposit: A deposit account which allows to withdraw the money without penalty,
mostly without notification to the bank. Often it bears favourable interest rate, but also a
minimum balance to take advantage of the benefits.

3. Personal Account

A personal account is an account for use by an individual for that person's own needs. It is a
relative term to differentiate them from those accounts for corporate or business use. The term
"personal account" may be used generically for financial accounts at banks and for service
accounts such as accounts with the phone company, or even for e-mail accounts.
Banks differentiate their services for personal accounts from business accounts by setting lower
minimum balance requirements, lower fees, free checks, free ATM usage, free debit card (Check
card) usage, etc. The term does not apply to any one service or limit the banks from providing
the same services to non-individuals. Personal account can be classified into three categories:
1. Persons of Nature; 2. Persona of Artificial Relationship; 3. Persons of Representation.

At the turn of the 21st century, many banks started offering free checking, a checking account
with no minimum balance, a free check book, and no hidden fees. This encouraged Americans
who would otherwise live from check to check to open their "personal" account at financial
institutions. For businesses that issue corporate checks to employees, this enables reduction in
the amount of paperwork.

4. Saving Accounts

Savings accounts are accounts maintained by retail financial institutions that pay interest but
cannot be used directly as money in the narrow sense of a medium of exchange (for example, by
writing a check). These accounts let customers set aside a portion of their liquid assets while
earning a monetary return. For the bank, money in a savings account may not be callable
immediately and therefore often does not incur a reserve requirement freeing up cash from the
bank's vault to be lent out with interest.

5. Money Market Account

A money market account (MMA) or money market deposit account (MMDA) is a financial
account that pays interest based on current interest rates in the money markets.
Money market accounts typically have a relatively high rate of interest and require a higher
minimum balance (anywhere from $1,000 to $10,000 to $25,000) to earn interest or avoid monthly
fees. The resulting investment strategy is therefore similar to, and meant to compete with, a
money market fund offered by a brokerage. The two account types are otherwise unrelated.

6. Joint Account

Joint account is a bank account shared by two or more individuals. Any individual who is a
member of the joint account can withdraw from the account and deposit to it. Usually, joint
accounts are shared between close relatives or business partners.

Joint accounts are often created in order to avoid probate. If two individuals open a joint account
and one of them dies, the other person is entitled to the remaining balance and liable for the debt
of that account.
Sometimes a temporary joint account is opened by two parties entering into a transaction where
one party needs a security for the fulfilment of the transaction and the other party has to pay the
sum (deposit), being the security for the other party. Any payment from the joint account or

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