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Depository Institutions

Take Charge of Your Finances

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© Family Economics & Financial Education – Revised May 2010 – Depository Institutions Unit – Depository Institutions – Slide 2

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Depository Institutions Depository Institutions –

businesses which offer multiple services in banking and finance These institutions include:

Banks Savings and Loans Credit Unions

They are regulated by various state and federal agencies

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© Family Economics & Financial Education – Revised May 2010 – Depository Institutions Unit – Depository Institutions – Slide 3

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Depository InstitutionsWhy consumers may use them:

Why consumers may not use

them:

Fees are too high

Minimum balances

required are too high

They wish to keep their financial

information private

To keep money safe

To receive the advantages of

interest earning accounts

To have the opportunity to

receive lower cost loan

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© Family Economics & Financial Education – Revised May 2010 – Depository Institutions Unit – Depository Institutions – Slide 4

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Services include:

Federal Reserve BankFederal Reserve Bank – is part of the

central banking

system in the United

States

Collecting checks

Electronically

transferring funds

Distributing and

receiving cash and

coin

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© Family Economics & Financial Education – Revised May 2010 – Depository Institutions Unit – Depository Institutions – Slide 5

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Federal Reserve BankWhich federal reserve bank is located

in your region?

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© Family Economics & Financial Education – Revised May 2010 – Depository Institutions Unit – Depository Institutions – Slide 6

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Depository Institutions

Commercial Bank

Credit Union Savings and

Loan Association

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© Family Economics & Financial Education – Revised May 2010 – Depository Institutions Unit – Depository Institutions – Slide 7

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Commercial Bank Commercial Banks

Usually the largest depository institutions

Considered full-service depository institutions

Available to any/all consumers Examples – Centier Bank, US Bank,

Chase Bank, Peoples Bank

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© Family Economics & Financial Education – Revised May 2010 – Depository Institutions Unit – Depository Institutions – Slide 8

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Credit Union Credit Unions

Non-profit cooperative depository institution

Owned by members who share a common bond

Examples – Tech Federal Credit Union, Teachers Federal Credit Union, L C School Employees Federal Credit Union, IUN Credit Union

Typically offer interest rates that have the most positive impact on the consumer

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© Family Economics & Financial Education – Revised May 2010 – Depository Institutions Unit – Depository Institutions – Slide 9

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Savings and Loan Association (S&Ls)

Savings and Loan AssociationFocus on providing loans and mortgages

Customers must have a savings account with them

Examples – Citizen’s Financial, American Federal Savings Bank, Pioneer Federal Savings & Loan.

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© Family Economics & Financial Education – Revised May 2010 – Depository Institutions Unit – Depository Institutions – Slide 10

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Types of Insurance Federal Deposit Insurance

Corporation (FDIC) Federal government agency which

protects depository institution accounts Insures commercial banks and savings

and loan associations National Credit Union

Administration (NCUA) Provides insurance for credit unions

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© Family Economics & Financial Education – Revised May 2010 – Depository Institutions Unit – Depository Institutions – Slide 11

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Insurance Protection Insurance protection

Each depositor is insured up to $250,000 for money deposited in a regular account and $250,000 for retirement deposits

Available from both FDIC and NCUA Insurance is important because of the risk

of loss Risk of Loss is used to determine which

party should be responsible for damage or loss of products after a service transaction has been completed but prior to delivery

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© Family Economics & Financial Education – Revised May 2010 – Depository Institutions Unit – Depository Institutions – Slide 12

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Interest Is The amount earned or paid for using

money

Interest Rate Is

The % used to calculate the amount of money to be earned or paid for using money.

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© Family Economics & Financial Education – Revised May 2010 – Depository Institutions Unit – Depository Institutions – Slide 13

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Common Services OfferedChecking accountAlso known as a

Share Draft Account at a credit union

Paper checks or debit cards that

are used to withdraw money May or may not

be interest earning

Savings account Also known as a Share Account at

a credit unionAn account in

which money is typically

deposited to earn interest

Interest earning

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© Family Economics & Financial Education – Revised May 2010 – Depository Institutions Unit – Depository Institutions – Slide 14

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Interest Earning Accounts• Ownership, represented by shares in a

corporationStock• Share certificate account at a credit

union• An insured interest – earning savings

instrument with restricted access to the funds

Certificate of Deposit

• An account which offers higher interest rates than a savings account and may offer limited check writing privileges

Money Market Account

• A debt instrument issued by an organization such as a business or the government

• Designed as an investment for the purchasers to earn interest

Bond

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© Family Economics & Financial Education – Revised May 2010 – Depository Institutions Unit – Depository Institutions – Slide 15

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Accounts On Which You Must Pay Interest

Credit Card A card used to make a purchase now and repay

later If the balance is paid before the grace period ends,

interest is not added If the balance is paid after the grace period, the

payment of interest is required Loan

Money borrowed and paid back with interest Mortgage – loan for a home Personal – interest rates vary depending upon type of

loan Loan types can include vehicle, school, etc.

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© Family Economics & Financial Education – Revised May 2010 – Depository Institutions Unit – Depository Institutions – Slide 16

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Additional Services Which May Be Offered

Safe-Deposit Box A secured box in a bank to be used for valuable

and important personal items.

Financial Counseling Information and advice is given to customers

to help make financial decisions.

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© Family Economics & Financial Education – Revised May 2010 – Depository Institutions Unit – Depository Institutions – Slide 17

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

ReviewMoney management is part of everyday life!

Depository institutions offer multiple services – shop around for the one which best fits your needs!

Ensure the depository institution is insured by the FDIC or NCUA

Comparison shop the financial services and interest rates offered before choosing