Presentation on theme: "Depository Institutions"— Presentation transcript:
1Depository Institutions Take Charge of Your Finances 1.7.3
2Depository Institutions Depository Institutions – businesses which offer multiple services in banking and financeThese institutions include:BanksSavings and LoansCredit UnionsInstitutions are regulated by various state and federal agenciesThis is what the power point presentation will cover to give the students an idea of the topics.
3Depository Institutions Why consumers may use them:Why consumers may not use them:To keep money safeTo receive the advantages of interest earning accountsTo have the opportunity to receive lower cost loanFees are too highMinimum balances required are too highThey wish to keep their financial information private
4Federal Reserve BankFederal Reserve Bank – is part of the central banking system in the United StatesServices provided to depository institutions include:Collecting checksElectronically transferring fundsDistributing and receiving cash and coin
5Federal Reserve BankWhich federal reserve bank located in your region?
6Depository Institutions Commercial BankCredit UnionSavings and Loan Association
7Commercial Bank Commercial Banks Available to a variety of consumers Usually the largest depository institutionsConsidered full-service depository institutions because offer a wide variety of services and productsAvailable to a variety of consumersExamples – Wells Fargo, US Bank, Chase Bank
8Credit Union Credit Unions Owned by members who share a common bond Non-profit cooperative depository institutionOwned by members who share a common bondExamples – Rocky Mountain Credit Union, Teachers Federal Credit Union
9Savings and Loan Association (S&Ls) Focus on providing loans and mortgagesCustomers must have a savings account with themExamples – American Federal Savings Bank, Pioneer Federal Savings & Loan.
10Types of Insurance Federal Deposit Insurance Corporation (FDIC) Federal government agency which protects depository institution accountsInsures commercial banks and savings and loan associationsNational Credit Union Administration (NCUA)Provides insurance for credit unions
11Insurance Protection Insurance protection Each depositor is insured up to $250,000 for money deposited in a regular accountThe same protection is available from both FDIC and NCUAInsurance is important because the risk of loss.Risk of Loss is used to determine which party should be responsible for damage occurring to products after a service transaction has been completed but prior to delivery.
12InterestInterest – the amount of money that is either gained or lost when accessing services offered by a depository institutionTwo types of interest include:Interest earning - Money earned from an investment instrumentInterest bearing - The charge for money that a consumer borrows from a depository institution
13Interest RatesInterest rate – the percentage used annually to calculate the total interest either gained or lostType of accountInterest rateImpact on the consumerInterest earningHighMore money earned by the consumerLowLess money earnedInterest bearingMore money paid by the consumerLess money paidCredit unions typically offer rates which have the most positive impact on the consumer
15Common Services Offered Checking account (also known as a Share Draft Account at a credit union)Paper checks or debit cards that are used to withdraw moneyMay or may not be interest bearingSavings account (also known as a Share Account at a credit union)An account in which money is typically deposited to earn interestInterest bearing
16Interest Earning Accounts StockOwnership, represented by shares in a corporationCertificate of deposit (also known as a Share Certificate account at a credit union)An insured interest-earning savings instrument with restricted access to the fundsMoney market accountAn account which offers higher interest rates than a savings account and may offer limited check writing privilegesBondA debt instrument issued by an organization, such as a business or the governmentDesigned as an investment for the purchasers to earn interest
17Interest Bearing Accounts Credit cardA card used to make a purchase now and repay laterIf the balance is paid before the grace period ends, interest is not addedIf the balance is paid after the grace period, the payment of interest is requiredLoanMoney borrowed and paid back with interestMortgage – loan for a homePersonal – interest rates vary depending upon type of loanLoan types can include vehicle, school, etc.
18Additional Services Which May Be Offered Safe-deposit boxA secured box in a bank to be used for valuable and important personal itemsFinancial counselingInformation and advice is given to customers to help make financial decisions
20Review Money 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 NCUAComparison shop the financial services and interest rates offered before choosing a depository institution