Presentation on theme: "Financial Literacy Skills"— Presentation transcript:
1 Financial Literacy Skills Unit 1: Understanding Banking
2 Objective 1: Identify services of a full-service bank Receiving depositsProviding checking and savings accountsTransferring money from one account to anotherElectronic funds transfer (EFT)Preauthorized bill paymentsMaking loansAdvising customersHaving information and transactions available onlineProviding federal insurance through the FDICProviding special services, often for a fee
3 Objective 2: Match the different types of financial institutions with their descriptions Brokerage FirmCommercial BankSavings and Loan AssociationCredit UnionMortgage CompanyMutual Savings BankLife Insurance CompanyInvestment CompanyFinance or Loan CompanyFinancial Supermarket
4 Objective 3: Explain why financial institutions pay and charge interest. Each financial institution pays interest to encourage depositors to keep their money in that institution.Depositors’ funds are not stored at the financial institution – they are loaned to other customers.Each financial institution charges interest on the various types of loans it makes in order to earn money.
5 Objective 4: Define types of interest. Simple interest is calculated on a yearly percentage rate based on the original amount of the loan.Compound interest is calculated on the amount of the account on a regularly scheduled time period.
6 Objective 5: State the functions of bank accounts. Provide a convenient way to buy goods and services and pay billsProvide legal proof of paymentProtect money from theft or lossEliminate need to carry large amount of cashProvide a record of money spentAllow access to other banking servicesProvide a record of transactionsServe as a credit reference
7 Objective 6: Select steps in opening a bank account. Receive bank documents.Provide personal identification.Fill out the signature card.Sign the signature card with the same name that will be written on checks.Deposit money using a deposit slip.Order personalized checks.Apply for ATM and debit cards if desired.
18 Objective 14: State steps in stopping payment on a check. In writingUse bank’s form or formal letterInclude your name and signature, account number, check number, date the check was written, and payee’s nameExplain why you are requesting to stop payment.By phoneTemporary measureFollow with written request
19 Objective 15: Distinguish between ATM and debit cards ATM card – a small plastic card issued by bank and activated by entering your personal identification numberA fee may be charged for each transactionProvides great flexibility in banking hours and locationsFunctions include:Withdrawing moneyMaking depositsTransferring money between accountsFinding out your balanceGetting a cash advanceMaking loan paymentsIf you lose your ATM or debit card, notify your bank immediately
20 Objective 15: Distinguish between ATM and debit cards Debit card – combines combine the functions of ATM cards and checksSome banks issue a combined ATM/debit card Debit cards are issued only by banks but accepted at stores and service providersUse of a debit card automatically deducts the money from your bank accountMoney is deducted instantly
22 Objective 17: Identify hidden costs of banking. Overdrafts have a negative effect on your credit rating.“Free” period of use can expire.Surcharges can be made each time you use your ATM card.Some banks charge a teller fee for using bank personnel to make your transactions.Debit cards often have a once-a-month “offline” fee and a per transaction fee.Many banks will charge a fee on accounts that are not active for a certain period of time.Failing to check ATM statements, debit receipts, and bank statements may cost you money.
23 Objective 18: Identify ways to protect your accounts. Lost cardIf you lose your ATM or debit card or it is stolen, report it immediately.
24 Objective 18: Identify ways to protect your accounts. Card managementSave all pertinent records in a secure place in your home. Shred all documents that have your account numbers. Memorize your PINs.Be mindful of who is watching when you transact business.Carry all receipts out of the facility and keep them to compare to your bank statements.Use your bank’s ATM exclusively to save transaction fees.Shop for low- or no-charge ATMs.
25 Objective 18: Identify ways to protect your accounts. Card management (continued)Avoid third-party ATMs found at rest stops, gas stations, and nightclubs; these charge the highest rates.Consider making larger withdrawals, therefore, fewer transactions to be charged for.Use checks, traveler‘s checks, or credit cards when traveling. Overseas ATM charges can be very high.Consider making deposits by ATM. Some banks credit customers for making deposits at ATMs.Do not take cash advances on credit cards at an ATM; you will pay fees to the bank and to the card issuer.
26 Objective 18: Identify ways to protect your accounts. Card management (continued)Check the amount on your debit card withdrawal very carefully. Using a debit card removes your right to withhold payment because money is immediately removed from the account.Consider the cost of using a debit card. Is it worth not carrying a checkbook?Keep very accurate account records.If you have both credit cards and debit cards, think about which is the least expensive to use before making each transaction.
27 Objective 18: Identify ways to protect your accounts. Bank accountsThe Federal Uniform Commercial Code places a duty on bank customers to discover and report unauthorized signatures or alterationsUniform Commercial Code places absolute liability on bank customers who cause forgery and alteration losses by their negligence.Keep checks and deposit slips in a secure place. This includes keeping your checkbook out of view in your car and not using your deposit slip to give out your address.Do not give out your account number or password.
28 Objective 18: Identify ways to protect your accounts. Bank accounts (continued)Follow the guidelines for writing and endorsing checks so they cannot be altered.Keep accurate records of your deposits and withdrawals so you can reconcile your bank statement monthly.Report errors to your bank as soon as possible after receiving the statement.