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BANK ACCOUNTS

#Major Money Management ActivitiesCreatingand implementinga plan forspending, and saving (budgeting).

Creatingpersonalfinancialstatements(balancesheets andcash flowstatements of income and outflow).3-4Storingandmaintainingpersonalfinancialrecordsanddocuments.#Bank Accountsas defensive investment

Deposit: to put money in the bank (serves as bank liability)Bank deposit (noun)Withdraw: to take money out of the bankWithdrawal (noun)Overdraw: to take more money out of your account than is availableInterest: money which your bank account earnsFixed interest rate: unchanging rate of interestVariable interest rate: rate of interest which changes regularly

#Factors to be considered when opening a bank accountMinimum balance requiredInterest rate(s)Limitations as to withdrawalsBanks reputationInsurancesinking funda fund to which a corporation makes deposits for the purpose of paying back a bond issue

serial bondsbonds issued at the same time but which mature on different datestiered interestInterest rate that changes depending on the balance in the bank account

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Forms of Bank AccountsChecking AccountsSavings AccountsTime depositsSpecial Time Deposits#

Checking Account

-permits you to write checks up to the amount of money in the account-withdrawals are made by issuing checks; deposits are made with the use of deposit slips-may also be maintained to control expenditure

Advantages:reduces temptationstop payment and replacements may be madeserves as evidence of paymentcheckbooks can serve as records of disbursements#Minimum depositMinimum amount of money required to open accountService feesMonthly statement feePer check feeDebit card (ATM) feeMinimum balanceRequired amount of money in accountYou must pay a fee if amount falls below minimum balance.Features of Checking Accounts

#More Features of Checking AccountsInterestInterest-bearing accounts pay interestInterest-free accounts do not pay interestOther FeesNonsufficient Funds (NSF) feeFee for writing a check for bouncing a check (writing it for more money than is in your account)Wire transfer feeFee for sending money electronically from another bank

#More Features of Checking AccountsOverdraft protectionProtects you from overdrawing your accountMoney is automatically taken from your savings account if you write a check or make an ATM withdrawal for too much money.

#Savings AccountDeposits thereto and withdrawals therefrom can be made any timeEarn interest on the money in the accountMay not have check-writing or ATM privilegesMaintained to take care of minor emergency requirements

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Interest and Withholding Tax ComputationInterest Rate of 2% with 20% Withholding tax#

Savings Account as First Step in Making InvestmentsAnnual Savings Schedule:Prepare an annual savings schedule based on desired earnings of P100,000 after 5 years, 10 years and 15 years at 3%, 5.5% and 7.5%#

Time Deposit-loan to a bank for a fixed term-evidenced by certificates of time deposits (CTDs)-minimum term is one (1) month; no penalty to be imposed in case of pre-termination Example: A time deposit of P10,000 is rolled over every month at the rate of 7%. How much is the annual value of time posit? How much would be the value if the depositor saves P10,000 every year for five years and continue to roll over the amount at the rate of 8%?

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Special Time DepositSpecial Savings Deposit (SSD)Special Savings Account (SSA)Mega Savings AccountPremium Savings Account

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Trust Investments-cash entrusted to a trustee bank for investment in chosen items such as treasury bills, loans, stocks and bonds for the benefit of the designated beneficiary-not part of normal bank operations that it is not insured with PDIC but under the supervision of Bangko Sentral ng Pilipinas #