1.15.2.G1 The Essentials of Take Charge of Your Finances Spending plan Essentials.
© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your...
-
Upload
aisha-fritchey -
Category
Documents
-
view
216 -
download
0
Transcript of © Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your...
© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Depository Institution Essentials – Slide 1
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
7.2.2.G1
Depository Institution Essentials
© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Depository Institution Essentials – Slide 2
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
7.2.2.G1
What is the name of a depository institution in your community?
?
What is a Depository Institution?
Commercial Banks
Credit Unions
These are the two most common types of depository institutions.
© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Depository Institution Essentials – Slide 3
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
7.2.2.G1
Types of Depository Institutions
Commercial Bank
Credit Union
Description
Full service institutions- may offer all of the
services provided by depository institutions
Non-profit cooperative institution that is
owned by the members and often
provides more customer friendly interest rates than commercial banks
Used by?
Open to anyone who wants to utilize a
depository institution
Members must possess a common bond
Type of Insuran
ce Coverag
e
Federal Deposit Insurance Corporation
(FDIC)
National Credit Union Administration (NCUA)
Insurance
Protects
Will restore the lost funds in savings tool
accounts up to $250,000 per account
Will restore the lost funds in savings tool
accounts up to $250,000 per account
© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Depository Institution Essentials – Slide 4
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
7.2.2.G1
Choosing a Depository InstitutionAll depository institutions differ from one another in regards to locations, services offered, interest rates offered, and specific features provided
Choose the correct depository institution to meet individual needs
Individuals may choose to use one depository institution or multiple depository institutions
Individuals may have more than one type of account at the same depository institution
© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Depository Institution Essentials – Slide 5
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
7.2.2.G1
Financial Goals
A goal is defined as the end result of something a person intends to acquire, achieve, do, reach, or accomplish
Financial goals are specific objectives to be accomplished through financial planning
Choose a depository institution that will help meet financial goals
© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Depository Institution Essentials – Slide 6
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
7.2.2.G1
Advantages and Disadvantages of Using a Depository Institution
• May have to pay fees
• May have required minimum balances
• Sharing financial information
• Assists in managing finances and reaching financial goals
• Protection from loss (insurance)
• Opportunity to earn interest
Do you use a depository institution?
?
© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Depository Institution Essentials – Slide 7
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
7.2.2.G1
Individual depository institutions may offer all or some of these services.
© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Depository Institution Essentials – Slide 8
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
7.2.2.G1
Services
Interest - the price of money
Interest bearing
accounts either charge the consumer
interest for money
borrowed or earn interest
for the consumer
Interest rate - percentage
rate used annually to
calculate the total interest either gained
or lost from an accountLook for high interest rates on
interest-earning accounts and low interest rates when borrowing money.
© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Depository Institution Essentials – Slide 9
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
7.2.2.G1
Savings Tools Savings tools are secure, easily
accessible accounts that assist in money management May be interest or non-interest
earning As long as the depository institution
is insured, savings tools are insured against lost
© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Depository Institution Essentials – Slide 10
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
7.2.2.G1
Savings Tools
Checking Account Used to transfer
funds deposited into the account to make a cash purchase
Interest or non-interest earning
Savings Account Hold money not
spent on current consumption
Interest earning
At a credit union a checking account is known as a share draft account and a savings account is known as a share account.
© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Depository Institution Essentials – Slide 11
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
7.2.2.G1
Savings Tools
Money Market Deposit Account
Offers higher interest rates than a savings account
Have a minimum balance requirement
Limited to a certain number of transactions each month
Certificate of Deposit
Interest earning Restricted
access to the funds
© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Depository Institution Essentials – Slide 12
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
7.2.2.G1
Investment Tools
Earn higher interest rates than savings tools but the funds are not as easily accessible
Not insured against lossStocks
Bonds
© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Depository Institution Essentials – Slide 13
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
7.2.2.G1
Credit
Credit is when goods, services, or money is received in exchange for a promise to pay a definite sum of money at a future date
Consumer is charged interest
Loans
Credit Cards
What might a person need a loan to purchase?
?
© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Depository Institution Essentials – Slide 14
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
7.2.2.G1
Other Services
Safe-Deposit Boxes
A secured box to store valuable and important personal items
Financial Counseling
Information and advice is given to customers to help them make financial decisions
What services offered by depository institutions would you use?
?
© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Depository Institution Essentials – Slide 15
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
7.2.2.G1
Depository Institution Features
Made possible by electronic
funds transfers (EFTs)- utilize
computer networks to
transfer funds electronically
(rather than by check or cash)
among depository institution accounts
Adds to the convenience and money
management tools of certain
depository institution services
Allows 24-hour access to move
money electronically in a fast and
paperless way
© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Depository Institution Essentials – Slide 16
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
7.2.2.G1
Advantages and Disadvantages of E-Banking
• Increased risk of fraud and identity theft if consumers are not careful with their personal information
• 24-hour access• Fast transactions• Paperless
transactions• Convenience• Worldwide
access Regulation E was established to combat the security issues of electronic banking Covers all EFT’s including transfers occurring
through an electronic terminal, computer, telephone, or magnetic tape
© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Depository Institution Essentials – Slide 17
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
7.2.2.G1
E-Banking Safety
If a consumer feels his or her funds have been accessed without
permission
Report the problem
immediately to the
depository institution involved
To take full advantage of
e-banking: Keep personal security as your first priority Know how to protect your personal information
© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Depository Institution Essentials – Slide 18
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
7.2.2.G1
Types of E-Banking
Will vary among depository institutions Will vary between services and
accounts at the same depository institution
Debit Cards
ATM’s
Direct Deposit & Direct Payment
Online Banking
© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Depository Institution Essentials – Slide 19
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
7.2.2.G1
Debit Cards
Plastic card which looks like a credit card but is electronically connected to the cardholder’s depository institution account
Functions like a check but electronically Usually used for savings tools,
especially checking, savings, and money market deposit accounts
Require using a personal identification number (PIN) or signature to perform transactions
© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Depository Institution Essentials – Slide 20
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
7.2.2.G1
Debit Card Safety Tips
© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Depository Institution Essentials – Slide 21
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
7.2.2.G1
Fraudulent Debit Card Charges
If reported within 2 days, the consumer is held responsible for no more than $50 in fraudulent
charges
If reported within 60 days, the consumer is held responsible for no more than $500 in fraudulent
charges
After 60 days, the consumer is held liable for no more than the amount of
unauthorized transfers
© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Depository Institution Essentials – Slide 22
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
7.2.2.G1
Automated Teller Machines (ATMs) Electronic computer terminals which
offer automated, computerized banking Usually used for savings tools, especially
checking and savings accounts Accessed with ATM and/or debit cards Allow customers to make deposits,
withdrawal cash, make account transfers, and check account balances
May be offered in many different locations or few (if any) locations
© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Depository Institution Essentials – Slide 23
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
7.2.2.G1
Direct Deposit & Direct Payment
© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Depository Institution Essentials – Slide 24
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
7.2.2.G1
Online Banking Complete transactions with a depository
institution from a personal computer (PC) or through other wireless technology (personal digital assistant (PDA) or cellular phone)
May access account information and statements, transfer funds, manage and pay bills, and apply for loans and mortgages
May be used for savings tools, investment tools, and credit accounts
Online banking is also known as internet banking.
© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Depository Institution Essentials – Slide 25
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
7.2.2.G1
Online Banking Safety Tips
What features offered by depository institutions would you use?
?
© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Depository Institution Essentials – Slide 26
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
7.2.2.G1
Researching Depository Institutions
© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Depository Institution Essentials – Slide 27
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
7.2.2.G1
Summary
• Businesses which offer multiple services in banking and finance
• Location• Services
offered• Interest rates
offered• Features offered
• Research depository institutions and choose the one(s) that best fits needs and helps reach personal financial goals
• Type
© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Depository Institution Essentials – Slide 28
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
7.2.2.G1
Summary
Find the depository institution that best fits your
needs and helps you reach financial goals!
• Savings tools
Electronic banking-
• Investment tools
• Credit • Safe-deposit boxes
• Financial counseling
• Debit cards • ATMs
• Direct deposit• Direct payment • Online banking