English for Graduate Students

Checking Accounts

Banks offer lots of financial products for their depositors. The checking account is one of the most common ones. It's convenient because it lets you buy things without having to worry about carrying the cash - or using a credit card and paying its interest. While most checking accounts do not pay interest, some do - these are referred to as negotiable order of withdrawal (NOW) accounts. Some say that checks have been around since about 352 B.C. in the Roman Empire. It appears that checks really started becoming popular in Holland in the 1500 to 1600s. Dutch "cashiers" provided an alternative to keeping large amounts of cash at home and agreed to hold depositors' money for safekeeping. For a fee, they would pay the depositors' debts from the account based on a note that the depositor would write - sounds a lot like a check! Today's banks do the same thing. It became a little more complicated when lots of banks became involved and money needed to be shifted from one bank to the next. To make things easier, banks now have a system of check "clearinghouses." Banks either send checks through the Federal Reserve or use a private clearinghouse to transfer the funds and clear the check. Here is a diagram of how that works.

Loans, Checks and Savings

Aside from checking accounts, they offer loans, certificates of deposits and money market accounts, not to mention traditional savings accounts. Some also allow you to set up individual retirement accounts (IRAs) and other retirement or education savings accounts. There are, of course, other types of accounts being offered at banks across the country, but these are the most common ones.

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Savings accounts - The most common type of account, and probably the first account you ever had, is a savings account. These accounts usually require either a low minimum balance or have no minimum balance requirement, and allow you to keep your money in a safe place while it earns a small amount of interest each month. In standard practice, there are no restrictions on when you can withdraw your money.

Money market accounts - A money market account (MMA) is an interestearning savings account with limited transaction privileges. You are usually limited to six transfers or withdrawals per month, with no more than three transactions as checks written against the account. The interest rate paid on a money market account is usually higher than that of a regular passbook savings rate. Money market accounts also have a minimum balance requirement.

Certificates of deposit - These are accounts that allow you to put in a specific amount of money for a specific period of time. In exchange for a higher interest rate, you have to agree not to withdraw the money for the duration of the fixed time period. The interest rate changes based on the length of time you decide to leave the money in the account. You can't write checks on certificates of deposit. This arrangement not only gives the bank money they can use for other purposes, but it also lets them know exactly how long they can use that money.

Individual retirement accounts and education savings accounts - These types of accounts require that you keep your money in the bank until you reach a certain age or your child enters college. There can be penalties with these types of accounts, however, if you use the money for something other than education, or if you withdraw the money prior to retirement age.

Task 4. Answer the questions to the text.

1.What does the interest rate depend on?

2.Why is loaning money risky?

3.What financial products do banks offer?

4.Speaking about certificates of deposit, do you have to agree not to withdraw the money for the duration of the fixed time period?

5.What does education savings account require?

Task 5. Match the words from box A with the words from box B to make phrases from the text.

Task 6. Choose the correct variant and complete the following sentences.

1.The most common financial product is …

a.loan

b.checking account

c.clearinghouse

2.The first checks appeared in …

a.the Roman Empire

b.Greece

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c.Egypt

3.Accounts that allow you to put in a specific amount of money for a specific period of time are called …

a.money market accounts

b.mortgage

c.certificates of deposit

4.Accounts that require you to keep your money in the bank until you reach a certain age or your child enters college are called...

a.individual retirement accounts and education savings accounts

b.certificates of deposit

c.money market accounts

5.You can't write checks on …

a.savings account

b.withdrawal

c.certificates of deposit

Task 7. Match the words with their definitions.

Task 8. Comment on the diagram in the text about how clearinghouse system works.

Task 9. Write the words to the following phonemics.

Listening

Scott Simon talks to Gail Marks Jarvis, personal finance blogger for the Chicago Tribune, about her recent post "Is my money safe in a bank?"

Task 1.Check you know these words.

supervision, to stir up, to develop, diversified investments, to expose, support, to handle, insecurity, a tax, a bond, government services, to diversify, to insure, to double-check, a failure

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Task 2. Listen to the text and underline the words in the box that you will hear.

Task 3. Answer the questions.

1.What is a limit of money protected by the bank if you are an individual?

2.What banking services are insured?

3.Can the Federal Deposit Insurance Corporation control bank failures?

4.What are the government measures to deal with bank failures?

5.Why is it important to have the insurance that the FDIC provides?

Task 4. Read the following sentences and decide if they are true (T) or false (F).

1)Your money is safe in a bank if you have the insurance that the Federal Deposit Insurance Corporation provides.

2)Your money is protected up to 100,000 dollars per family.

3)In a bank, it's the traditional banking services that are insured, the checking account, the savings account, and the certificates of deposits.

4)Some banks are riskier than the others.

5)The list of banks with some level of insecurity is available to everyone.

Task 5. Write the words from the text to the following transcriptions.

Task 6. Decode one of 4 parts of the text:

Part 1 – 00.41 ―Are banks the safest place …‖ – 01.28 ―…two hundred and fifty thousand.‖

Part 2 – 01.29 ―What if someone …‖ – 02.06 ―…the CDs.‖ Part 3 – 02.07 ―What about if …‖ – 02.30 ―…protected.‖

Part 4 – 03.00 ―Can the FDIC afford …‖ - 03.53 ―…to cover it.‖

Recommended function and writing

Study Function 8 “HOW TO make comparison and contrast” and write a review comparing different banks or services one bank provides.

Speaking

Prepare a talk about one of the banks you know very well. Tell about the following things:

-its name, type, location, if it‘s a head office or a subsidiary

-its services and offers

-your experience with this bank, your opinion of it

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