Financial Instituitions

FINANCIAL INSTITUTIONS

Introduction

When trying to finance your dreams, people are often unable
to gather the amount of money necessary to fulfill their
dreams, especially when purchasing expensive items or
planning a post-secondary education. There are many
financial institutions which are available to assist with
funds. Choosing the best place should be done carefully
after considering all of the options available.

Financial Institutions

A financial institution is a business
which deals with money. Since it is a
business, these places need to make money
just like any other business. They do
this by charging fees and interest on
money loaned. They also pay interest on
deposited money but the amount paid must
be less than the amount earned for the
business to survive.

Financial Institutions

There are several types of financial institutions in Canada.

These include the following:

-Chartered Banks

-Trust Companies

-Credit Unions

-Investment Companies

Chartered Banks

Chartered banks are regulated by the Bank Act of Canada.
They include the Royal Bank, the Bank of Montreal, the
Canadian Imperial Bank of Commerce, the Bank of Nova Scotia,
the Toronto-Dominion Bank and the National Bank of Canada.
These are all Canadian based banks but there are also some
foreign banks established as well. These businesses offer
services such as accepting deposits, lending money, and
credit cards.

Trust Companies

Trust companies offer services similar to banks especially
mortgages. These were once trustees for banks but have now
developed their own services.

The government of Canada has a website dedicated all trust
and loan companies:

https://laws-lois.justice.gc.ca/eng/tableprivateacts/trust.h
tml

Credit Unions

Credit unions are savings and credit groups that were
originally begun by groups of people with common interest.
They use the deposits of members to provide loans for
others. They offer similar services as other institutions.

Here you will find a list of all Credit Unions in Canada:

https://wowa.ca/credit-unions-canada

Investment Companies

Investment companies offer limited services where clients
may invest in a money market fund (stocks).

Sometimes jobs will also offer you an option to buy into
their stocks. This gives you a possibility to earn extra
money, depending on the companies stock values.

Bank Accounts

Most young people have only two types of accounts; chequing
or savings. A chequing account provides a place to store
money but is easily withdrawn to pay bills or for spending.
Most accounts of this nature do not pay interest and there
are fees associated with using the services, like writing
excess cheques during a month or using the automated banking
machine.

Bank Accounts

A savings account is designed to save money and is usually
not used on a day-to-day basis. These accounts pay interest
on the money deposited and is used for long term investment.
A decision to choose one type of account depends on how the
money will be used.

Financial Institutions

At one time, financial institutions were limited to the
clients they could reach due to physical distance.

However, today, electronic banking has eliminated the need
to actually travel to the location of business. There are
many methods of electronic banking:

-Automated teller machines (ATM)

-Telephone banking

-Computer banking

-Debit cards

ATM’s

Automated teller machines (ATM) allows a
person to use a plastic card with a
magnetic strip to access personal bank
accounts from numerous locations. The
accounts are protected with an encoded
Personal Identification Number (PIN).
Each financial institution has their own
ATM but access to any ATM is available
with a card. A fee is usually charged for
using a machine that is not associated
with your own bank.

Telephone/Online Banking

Telephone banking is available using a phone. There is usually a charge
associated with each service. Bank transactions can be made and utility
bills may be paid.

Computer banking is through internet banking. Websites on the Internet
allow customers to access information about their accounts and carry
out some transactions. Passwords are distributed to provide secure
privacy. Some institutions provide computer software which allows a
personal computer to dial directly to a bank computer. This method is
more secure than Internet banking.

Debit Cards

Debit cards are similar to cheques
but involve the use of a plastic card
with a magnetic strip. The money owed
is automatically removed from the
account when the card is used.
Sometimes, businesses will charge a
fee for completing a debit
transaction since they must pay the
bank for having a debit machine at
their store.

Banking Terms

debit purchase using a debit card (also called a bank card)
to make a purchase at a store. Your card is swiped or tapped
against a machine and money is automatically transferred

e-Transfer moving money from one bank account to another
using the internet

direct deposit putting money into a bank account as a form
of payment (e.g. a paycheque is put directly into an
employee’s bank account)

Banking Terms Con…

pre authorized payment a money transfer scheduled on a
predetermined date to pay a recurring bill. The money is
transferred from the individual’s bank account to the person
or organization they owe money too (e.g. money is
transferred from an individual’s bank account to a phone
company to pay a phone bill)

cheque is a document that instructs a financial institution
to pay a specific amount of money from a person’s account to
the person in whose name the document has been issued

Banking Terms Con…

mobile cheque deposit depositing a cheque into your bank
account using a smartphone or other mobile device. You take
a picture of the cheque from your bank’s financial app, the
financial institution will scan the cheque for authenticity
and deposit the amount in your bank account

ATM withdrawal taking money out of your bank account using
an ATM (automated teller machine)

ATM deposit putting money into your bank account using an
ATM (automated teller machine)