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A Little Bit Of Knowledge Is Helpful
A Brief History of Checking Accounts
No one is quite sure when the first checks appeared. Some experts think the Romans may have invented the check about 352 B.C. But even if that were true, the idea apparently didn\'t catch on. According to most history texts, it probably wasn\'t until the early 1500s, in Holland, that the check first got widespread usage. Amsterdam in the sixteenth century was a major international shipping and trading center. People who had accumulated cash began depositing it with Dutch cashiers, for a fee, as a safer alternative to keeping the money at home. Eventually the cashiers agreed to pay their depositors\' debts out of the money in each account, based on the depositor\'s written order or note to do so.
The concept of writing and depositing checks as a method of arranging payments soon spread to England and elsewhere, but not without resistance. Many people in the sixteenth and seventeenth centuries still had doubts about trusting their hard-earned money to strangers and little pieces of paper. In the United States, checks are said to have first been used in 1681 when cash-strapped businessmen in Boston mortgaged their land to a fund, against which they could write checks.
The first printed checks are traced to 1762 and British banker Lawrence Childs. The world check also may have originated in England in the 1700s when serial numbers were placed on these pieces of paper as a way to keep track of, or check on, them.
As checks became more widely accepted, bankers discovered they had a big problem: how to collect the money due from so many other banks. At first, each bank sent messengers to the other banks to present checks for collection, but that meant a lot of traveling and a lot of cash being hauled around. The solution to this problem was found in the 1700s, according to banking lore, at a British coffee shop. The story goes that a London bank messenger stopped for coffee and noticed another bank messenger. They got to talking, realized that they each had checks drawn on the other\'s bank, and decided to exchange them and save each other the extra trip. The practice evolved into a system of check clearinghousesnetworks of banks that exchange checks with each otherthat still is in use. Today banks in the U.S. can present checks to the Federal Reserve System or private clearinghouses for regional and national check collection. Glossary of Financial TermsFinancial Websites Online Trading Websites
Glossary of Credit Card Terms
Source: The Federal Reserve Board. Web: http://www.federalreserve.gov/pubs/shop/. Annual feeA flat yearly charge similar to a membership fee. Annual percentage rate (APR)A measure of the cost of credit expressed as a yearly rate. Many credit card plans charge different APRs for credit used in different waysfor example, one APR for purchases, another for cash advances, and still another for balance transfers. Some plans may increase the APR if a payment is late. Cash-advance feeA fee charged if you obtain a cash advance. This fee is in addition to the interest rate charged on the amount of the advance. Finance chargeThe dollar amount you pay to use credit. Besides interest costs, the finance charge may include other charges such as cash-advance fees. Grace periodA period of time, often about 25 days, during which you can pay your credit card bill without incurring a finance charge. Under nearly all credit card plans, the grace period applies only if you pay your balance in full each month. It does not apply if you carry a balance forward. Also, the grace period usually does not apply to cash advances. Interest rateA measure of the cost of credit, expressed as a percent. For variable-rate credit card plans, the interest rate is explicitly tied to another interest rate, such as the prime rate or the Treasury bill rate. If the other rate changes, the rate on your card will, too. The interest rate on fixed-rate credit card plans, though not explicitly tied to changes in other interest rates, can also change over time. The card issuer must notify you before the fixed interest rate is changed. A tiered interest rate means that different rates apply to different levels of the outstanding balance (for example, 16% on balances of $1$500; 17% on balances over $500). Late-payment chargeA charge imposed when your payment is late. If your payment arrives after the grace period, you may be charged both a finance charge (the interest on your outstanding balance) and a late-payment charge. Some card issuers may also impose a penalty rate if you have more than one late payment within several months. Over-the-limit feeA fee imposed when your charges exceed the credit limit set on your card. Penalty rateThe rate that applies under specific circumstances set out by the card issuer. For example, if you make 2 late payments within 6 months, a card issuer may have a policy of raising the interest rate. Periodic rateThe rate you are charged each billing period. For most credit card plans, the periodic rate is a monthly rate, calculated by dividing the APR by 12. For example, a credit card with an 18% APR has a monthly periodic rate of 1.5%.
Tips for Online Investing
Source: Securities and Exchange Commission
More Americans are investing in the stock market and many of them are doing so through the Internet. Online brokerages account for approximately 25% of all retail stock trades, and the number of online brokerage accounts is expected to exceed 10 million by the end of 1999.
The price of some stocks can soar and drop suddenly. In these fast markets, when many investors want to trade at the same time and prices change quickly, delays can develop. Executions and confirmations slow down, while reports of prices lag behind actual prices. In these markets, investors can suffer unexpected losses very quickly.
Investors trading over the Internet, who are used to instant access to their accounts and near instantaneous executions of their trades, especially need to understand how they can protect themselves in fast-moving markets.
You can limit your losses in fast-moving markets if you:
know what you are buying and the risks of your investments and;
know how trading changes during fast markets and take additional steps to guard against the typical problems investors face in these markets.
Trading is quick, investing takes time
With a click of the mouse, you can buy and sell stocks from more than 100 online brokers offering executions as low as $5 per transaction. Although online trading saves investors time and money, it does not take the homework out of making investment decisions. Before you trade, know why you are buying or selling, and the risk of your investment. Set price limits
To avoid buying or selling a stock at a price higher or lower than you wanted, you need to place a limit order rather than a market order. A limit order is an order to buy or sell a security at a specific price. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher. When you place a market order, you can\'t control the price at which your order will be filled.
For example, if you want to buy a stock of a hot IPO that was initially offered at $9, but don\'t want to end up paying more than $20 for the stock, you can place a limit order to buy the stock at any price up to $20. By entering a limit order rather than a market order, you will not be caught buying the stock at $90 and then suffering immediate losses as the stock drops later in the day or in the weeks ahead. What if you can\'t access your account?
Most online trading firms offer alternatives for placing trades. These alternatives may include touch-tone telephone trades, faxing your order, or doing it the low-tech waytalking to a broker over the phone. Make sure you know whether using these different options may increase your costs. If you experience delays getting online, you may face similar delays when you turn to one of these alternatives. Don\'t assume your order didn\'t go through
Some investors mistakenly assume that their orders have not been executed and place another order. They end up owning either twice as much stock as they wanted, or with selling a stock they do not own. Talk with your firm about what to do when you are unsure if your original order was executed. Make sure your cancel order worked
When you cancel an online trade, make sure that your original transaction was not executed. Although you may receive an electronic receipt for the cancellation, don\'t assume that it means the trade was canceled. Orders can only be canceled if they have not been executed. Ask your firm about how you should check to see if a cancellation order actually worked. A word about margin trades
Now is the time to reread your margin agreement and pay attention to the fine print. If your account has fallen below the firm\'s maintenance margin requirement, your broker has the legal right to sell your securities at any time without consulting you first. Some investors have been rudely surprised that margin calls are a courtesy, not a requirement. Brokers are not required to make margin calls to their customers.
Even when your broker offers you time to put more cash or securities into your account to meet a margin call, the broker can act without waiting for you to meet the call. In a rapidly declining market, your broker can sell your entire margin account at a substantial loss to you, because the securities in the account have declined in value. There is no time limit to make a trade
There are no Securities and Exchange Commission regulations that require a trade to be executed within a set period of time. But if firms advertise their speed of execution, they must not exaggerate or fail to tell investors about the possibility of significant delays. If you have a complaint
Act promptly. By law, you only have a limited time to take legal action.
Talk to your broker or online firm and ask for an explanation. Take notes.
If you are dissatisfied with the response and believe you have been treated unfairly, ask to talk with the broker\'s branch manager. In the case of an online firm, go directly to step number three.
If you are still dissatisfied, write to the compliance department at the firm\'s main office. Explain your problem clearly, and tell the firm how you want it resolved. Ask the compliance office to respond in writing within 30 days.
If you\'re still dissatisfied, then send a letter of complaint to the National Association of Securities Dealers, your state securities administrator, or to the Office of Investor Education and Assistance at the SEC along with copies of the letters you\'ve already sent to the firm.
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