A book transfer is a financial instrument that transfers money or securities from one account to another without physically moving paper. It is convenient for customers and profitable for banks, as it removes the uncertainty of check transactions. Book transfers can also refer to securities transfers, including bonds, preferred stock, and common stock.
Often called a transfer for short, a book transfer occurs when a financial instrument is transferred from one owner or account to another without physically moving the paper financial instrument. Although a book transfer can be used to transfer securities such as bonds, most people deal with book transfers when they are transferring money from one bank account to another, such as when an account holder transfers funds from a savings account. to a checking account. A book transfer can be done in person, through contact between a customer and a banker, or it can be arranged electronically through online banking services. Online book transfers can often be scheduled for automatic transfers.
In general, book transfers are convenient and profitable for the bank because they are immediate, removing the uncertainty and float time of check transactions. The float time is the time between the time the check was written and the time the check was debited from the account of the person who wrote the check. A check is a paper promise to allow a person or business to debit a specified amount from the check writer’s account, sometimes at a future date. When a check is written for a time in the future, it is called a postdated check. Using a book transfer is convenient for bank customers because book transfer transactions do not require a paper exchange or trip to the bank to complete.
Book transfers generally refer to transactions that occur within the same bank, for example if a customer transfers money to another customer at the same bank. In general, the term “book transfer” is used more loosely to refer to any transfer transaction in which documents or physical goods are not exchanged. These transactions may include electronic check transactions or transfers of bonds and other securities. Most securities transfers take place without paper or physical delivery, which is why many securities transactions are considered book transfers.
Securities that can be exchanged in a book transfer include bonds, preferred stock, and common stock. A bond is essentially a loan to a corporation with the promise of constant interest payments and scheduled payments on designated dates. Common shares are shares traded on the stock market. With common stock, small parts of the company’s property called shares are traded for profit. Preferred stock is a lesser-used type of stock that pays interest like a bond and has the privilege of receiving stock dividend payments first, before it is paid to common stock owners.
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