16-4 Financial Services Provided by Banks and Other Financial Institutions:b Banking services can be divided into three categories: 16-4a Traditional Banking Services for Business Clients- traditional services provided by banks and other financial institutions include savings and checking accounts, loans, processing credit- and debit-card transactions, and providing professional advice. Savings and Checking accounts- savings accounts provide a safe place to store money and very conservative means of investing. Business loans-banks, savings and loan associations, credit unions, and other financial institutions provide short- and long-term loans to business. Line of credit is a loan that is approved before the money is actually needed. Revolving credit agreement is a guaranteed line of credit. Collateral s a real estate or property pledged as security for a loan.
16-4b Credit and Debit Card Transactions: do not confuse debit cards with credit cards. Although they may look alike there are important differences. A debit card electronically subtracts the amount of a customer's purchase from her or his bank account at the moment the purchase is made. By contrast when you use your credit card, the credit-card company extends short-term financing, and you do not make payment until you receive your next statement.
16-4c Electronic Banking Services- An electronic funds transfer (EFT) system is a means of performing financial transactions through a computer terminal. The following four EFT applications are changing how banks help firms do business: 1. Automatic teller machines (ATMs) is a machine that provides almost any service a human teller can provide. 2. Automated clearinghouses (ACHs) is designed to reduce the number of paper checks, recurring bill payments, Social security benefits, and employee salaries. 3. Point-of-Sale (POS) terminals is a computarized cash register located in a retail store and connected to a bank's computer 4. Electronic check conversion (ECC) is a process used to convert information from a paper check into an electronic payment for merchandise, service, or bills.
16-4d International Banking Services- a letter of credit is a legal document issued by a bank or other financial financial institution guaranteeing to pay a seller a stated amount for a specified period of time. Banker's acceptance is a written order for a bank to pay a third party a stated amount of money on a specific date.