Financial Service Providers

SELECT YOUR OWNFINANCIAL SERVICE PROVIDER

2©2012 National Endowment for Financial Education | Lesson 5-4: Financial Service Provider

PreviewToday we will answer these questions:• Where can I cash my paycheck?

• What is the difference between a bank, credit union, and check cashing business?

• What do I need to know about using banking services?

• How do I decide where to do my banking?

Use what you learn todayto select a financial service provider.

3©2012 National Endowment for Financial Education | Lesson 5-4: Financial Service Provider

What’s the Difference?

©2012 National Endowment for Financial Education | Lesson 5-4: Financial Service Provider

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Teach Your Peers

• Describe the financial service business– Share description in one or two sentences– Reference at least one local example

• List typical consumer finance services

• Explain how consumers use the services– Explain in 30-60 seconds– Give examples of how teens use services

©2012 National Endowment for Financial Education | Lesson 5-4: Financial Service Provider

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Read the Fine Print

• Do you think the fees and fee conditions are reasonable?

• Be prepared to share your findings with the class.

©2012 National Endowment for Financial Education | Lesson 5-4: Financial Service Provider

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Payday Loan• Customer leaves post-dated check with lender

– Fill out application– Leave a check to cover principal (amount borrowed) and fee– Must be employed and must have bank account– Must be at least 18 years old

• Customer receives borrowed amount

• Customer decides options by due date:– Instruct lender to deposit post-dated check– Pay cash and reclaim post-dated check– Renew loan

• Customer pays fees– High interest– Additional fees for “bounced” check

©2012 National Endowment for Financial Education | Lesson 5-4: Financial Service Provider

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Payday Loan … Good Choice?

What are other options rather than using payday loans?

©2012 National Endowment for Financial Education | Lesson 5-4: Financial Service Provider

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Principal Time Interest APR Total Owed

$500 (rent) 2 weeks 15%

$300 (car loan) 4 weeks 12%

$1,000 (household and credit card bills)

2 weeks 10%

Principal Time Interest APRTotal Owed

$500 (rent) 2 weeks 15% 390% $575

$300 (car loan) 4 weeks 12% 156% $336

$1,000 (household and credit card bills)

2 weeks 10% 260% $1,100

Services That Matter

Life Style

• In-person or ATM deposits and withdrawals

• Online or mobile banking

• Convenient hours

• Convenient location

• Number of branch locations

• Other services (overdraft, automatic savings programs, alerts/reminders, etc.)

Fees and User Requirements

• Minimum opening deposit

• Required monthly balance

• Overdraft fees

• ATM fees

• Penalties and withdrawal limitations

• Monthly maintenance fee

• Interest rates

©2012 National Endowment for Financial Education | Lesson 5-4: Financial Service Provider

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Challenge

5-B: Which is Best for Me?Use the DECIDE steps to select a

financial institution with servicesthat are right for you.

©2012 National Endowment for Financial Education | Lesson 5-4: Financial Service Provider

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Reflection

Where do you keep your money now and why?•Is it safe?•Is it growing?•Can you track it?

©2012 National Endowment for Financial Education | Lesson 5-4: Financial Service Provider

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