Banking services & financial services

Slide 2 - Alternative Financial Services Lesson Reference: Introduction to Financial Services, Activity 1 – Handout 1

ALTERNATIVE FINANCIAL SERVICES

• Cheque-Cashing Services• Cheque-Deferrals, Cash Advances,

Payday Loans• Pawn Shops• Rapid Tax Refunds• Rent-to-Own• Other Financial Services

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Slide 1 – Formal and Informal Financial Services Lesson Reference: Introduction to Financial Services, Activity 2 – Overhead 1

INFORMAL FINANCIALSERVICES

• Payday lenders• Cheque cashing services• Rent-to-own stores• Pawn shops• Title lenders• Loans from family/friends• Cultural savings clubs• Remittances offered through

nonfinancial institutions

FORMALFINANCIAL SERVICES

• Accounts• Credit cards• Loans• Investment vehicles• Direct deposit• Wire transfers/ remittances

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Beware of these high-cost financial services pawn shops charge very high interest for loans

based on the value of tangible assets (such as jewelry or other valuable items).

rent-to-own programs offer an opportunity to obtain home◦ entertainment systems or appliances for a small weekly

fee.◦ However, the amount paid for the item usually far

exceeds thecost if the item were bought on credit.

cheque-cashing outlets charge high fees (sometimes 2 or 3 percent) just to have a paycheque or government cheque cashed.

Payday loan servicesPaycheque advance

A small short-term loan intended to cover a borrower’s expenses until his or her next payday.

Rules that govern these services. Ex. In Ontario, the lender cannot

charge anymore than $21 for every $100

Rollover loans are not allowed.

rapid-refund tax services provide “instant refunds” when you pay to have your federal tax return prepared. However, this “instant refund” is a loan with interest rates as high as 120 percent.

cheque-deferral services allow consumers to get a cash advance◦on their next pay cheque. However, these

short-term loans are very expensive. ◦A $200, two-week advance may cost over

$30 (with annual costs exceeding $900).

Marketplacehttp://

www.cbc.ca/marketplace/episodes/2014-2015/easy-loans-uneasy-money

Slide 2 – How a Bank Can Save You Money Lesson Reference: Introduction to Financial Services, Activity 2 – Handout 2

HOW A BANK CAN SAVE YOU MONEY

Monthly Fees without a Bank Monthly Fees with a Bank*

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• $80 to cash paycheques• $4.16 on money orders and

stamps to pay bills• $20 to send money to family

with a wire transfer company

Monthly cost: $104.16 Annual cost: $1,249.92

• $10 monthly base service

charge• $0 to directly deposit

paycheque• $0 to get cash from bank's

ABMs or make debit card purchase

• $0 to pay monthly bills using electronic bill payment

• $5 to send money to family

Monthly cost: $15.00 Annual cost: $180.00

Annual Savings by Using a Bank: $1,069.92

Slide 3 – Advantages of a Banking Relationship Lesson Reference: Introduction to Financial Services, Activity 2 – Overhead 2

ADVANTAGES OF ESTABLISHING A BANKING RELATIONSHIPNearly everyone needs a bank account to help manage his or her day-to-day money.

Bank accounts can help you to:• Pay bills• Manage your money• Receive money• Send money to a friend or family member• Keep your money secure• Start building wealth• Earn interest

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EXPANDEDSERVICESOF BANKS

• Insurance Sales• Small Business

Advising and Loans• Investments• Credit Cards• Remittances

Slide 2 - Expanded Services of Banks Lesson Reference: Introduction to Financial Services, Activity 3 – Overhead 2

TRADITIONALSERVICESOF BANKS

• Chequing Accounts• Savings Accounts• GICs (Guaranteed Investment Certificates)• Canada Savings Bonds• Loans

• Car• Home (mortgages

and home equity loans)

• Personal• Safe Deposit Boxes10

AUTOMATED BANK SERVICES

• Direct Deposit

• Transfers between Accounts

• Transfers to a Third Party

• Online Banking

• Bank by Phone

• ABM

Slide 5 – Automated Bank Services

Lesson Reference: Basic Banking Services, Activity 2 – Handout 3 11

AUTOMATED BANK SERVICES

• Direct Deposit

• Transfers between Accounts

• Transfers to a Third Party

• Online Banking

• Bank by Phone

• ABM

Slide 5 – Automated Bank Services

Lesson Reference: Basic Banking Services, Activity 2 – Handout 3 12

Slide 2 - Commonly Accepted Forms of ID Lesson Reference: Basic Banking Services, Activity 4 – Handout 2

Primary ID*

• Driver’s Licence issued in Canada

• Canadian passport

• Certificate of Canadian Citizenship

• Permanent Resident card or Citizenship and Immigration Canada Form IMM 1000, IMM 1442, or IMM 5292

• Birth certificate issued in Canada

• Social Insurance card* Financial institutions' ID requirements may differ; check with the institution first

before applying for an account.

COMMONLY ACCEPTED FORMS OF ID

• Old Age Security card

• Certificate of Indian Status

• Provincial health insurance card (except Ontario, Manitoba, and PEI)

• Provincial ID card, bearing the individual’s photograph and signature, issued by authorities such as Insurance Corporation of British Columbia, Alberta Registries, Service New Brunswick, etc.

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Slide 3 - Commonly Accepted Forms of ID Lesson Reference: Basic Banking Services, Activity 4 – Handout 2

Secondary ID*

• Employee photo ID card

• Canadian University/ College photo ID card

• Canadian bank or ABM/debit card

• Canadian credit card

• Canadian National Institute for the Blind (CNIB) client card

• Foreign passport

* Financial institutions' ID requirements may differ; check with the institution first before applying for an account.

COMMONLY ACCEPTED FORMS OF ID

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Slide 1 - Writing a Cheque Lesson Reference: Basic Banking Services, Activity 5 – Handout 1

WRITING A CHEQUE

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OVERDRAFTS AND BOUNCED CHEQUES

Overdrafts and bounced cheques occur when you complete a financial transaction (e.g., write a cheque) for more than what is available in the account. Your financial institution may pay the amount and charge you a fee, known as an “overdraft fee” or a “nonsufficient funds fee.”

Tip: Avoid overdraft or non-sufficient funds fees by making a habit of monitoring the balance in your chequing account.

Slide 5 – Overdrafts and Bounced Cheques Lesson Reference: Basic Banking Services, Activity 6 – Overhead 1 16

Basic Banking Services - Activity 7

ACTIVITY 7

The ABCs of aSavings Account

Overview

• Purpose of a savings account• Shopping for a savings account• Applying for a savings account• Monthly bank statement checkup

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REASONS TO SAVE

• Emergencies

• Future Purchases

• Future Investments

Slide 1 - Reasons to Save Lesson Reference: Basic Banking Services, Activity 7 – Overhead 118

SHOPPING FOR A SAVINGS ACCOUNT

Factors to consider:• Safety• Risk• Liquidity• Minimum Account Balance Requirements• Fees and Service Charges• Interest Rate • Returns (Earnings)• Automatic Transfer• Direct Deposit

Slide 2 - Shopping for a Savings Account Lesson Reference: Basic Banking Services, Activity 7 – Overhead 219

handoutKeeping a running balance

Reading a bank statement

Reconciling a chequing accountstep 1: Obtain the current

balance from your bank statement.

step 2: Add any deposits that you have recorded in your cheque register but that are not on this statement.

step 3: Subtract any outstanding cheques (cheques you have written but that have not yet cleared the banking system).

step 4: Compare the result with the current balance in your cheque register.

Handout