1. Depository Institutions
Take Charge of Your Finances 1.7.3

2. 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
This is what the power point presentation will cover to give the students an idea of the topics.

3. Depository Institutions
Why 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

4. Federal Reserve Bank Distributing and receiving cash and coin
Federal Reserve Bank – is part of the central banking system in the United States
Collecting checks
Electronically transferring funds
Distributing and receiving cash and coin
Services include:

5. Federal Reserve Bank
Which federal reserve bank is located in your region?

6. Life of a Deposited Check
Step 1: A check is deposited…
Step 2: The depositor’s bank encodes, endorses, and sends the check to the reserve bank in the region or to a private clearing house
Step 3: Then the check makes its way to the regional reserve bank, or the clearinghouse for the region where the check originated
Step 4: From here it goes to the check writer’s bank
Step 5: The check writer’s bank deducts the amount from the account

7. Depository Institutions
Commercial Bank
Credit Union
Savings and Loan Association

8. Commercial Bank Commercial Banks
Usually the largest depository institutions
Considered full-service depository institutions
Available to a variety of consumers
Examples – Wells Fargo, US Bank, Chase Bank

9. Credit Union Credit Unions Owned by members who share a common bond
Non-profit cooperative depository institution
Owned by members who share a common bond
Examples – Rocky Mountain Credit Union, Teachers Federal Credit Union

10. Savings and Loan Association (S&Ls)
Focus on providing loans and mortgages
Customers must have a savings account with them
Examples – American Federal Savings Bank, Pioneer Federal Savings & Loan.

11. 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

12. 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

13. Interest Type of account Interest rate Impact on the consumer
Interest - the amount of money that is either gained or lost when accessing services offered by a depository institution
Interest rate - the percentage used annually to calculate the total interest either gained or lost
Type of account
Interest rate
Impact on the consumer
Interest bearing - money earned from an investment instrument
High
More money earned by the consumer
Low
Less money earned
Interest bearing - the charge for money that a consumer borrows from a depository institution
More money paid by the consumer
Less money paid
Credit unions typically offer rates which have the most positive impact on the consumer

14. Depository Institution Services

15. Common 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 money
May or may not be interest earning
Savings account
Also known as a Share Account at a credit union
An account in which money is typically deposited to earn interest
Interest earning

16. Interest Bearing Accounts
Ownership, represented by shares in a corporation
Stock
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

17. Interest Bearing Accounts
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.

18. 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.

19. Conclusion& Review

20. Review 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 NCUA
Comparison shop the financial services and interest rates offered before choosing