The 3-6-3 rule is a slang term for an informal practice in banking, especially in the 1950s, 1960s and 1970s, that was the result of the industry’s uncompetitive and simplistic conditions.
The 3-6-3 rule describes how bankers allegedly pay 3% per annum on their depositors’ accounts, lend money to depositors at 6% per annum, and then play golf by 3:00 pm.
After the Great Depression, the government introduced tighter banking regulations, which made it harder for banks to compete with each other and limited the services they could provide to customers; in general, the banking industry has become stagnant.
The account balance represents the available funds or present value of an account of a particular financial account, such as a checking, savings or investment account.
The annual equivalent rate (AER) is the actual interest rate on investments, loans or savings accounts that can be obtained after compounding interest.
The bank reconciliation report summarizes the banking and commercial activities by reconciling the organization’s bank account with its financial statements.
A bank run occurs when large groups of depositors withdraw their money from banks at the same time, out of fear that the institution will become insolvent.
A canceled check is a check that has been redeemed by cashing or depositing it, making the check invalid for further transactions and cannot be reused.