1. Chapter 10
Banking

2. Types of Banks Commercial Banks Community Banks
Largest type, locations in multiple states, most services
Community Banks
Located in smaller area, fewer locations, “Mom & Pop” type business, Focus more local customers
Savings and loan associations
Primarily lend money for home mortgages
Credit Unions
Not-for-Profit, Membership Requirements/Criteria, NCUA insured
Online Banks
Bank located solely online, no physical location; Low/No Fees

3. Financial Security
Peace of mind comes from knowing that when needs arise, you will have adequate money to pay for them.
The amount of money you save depends on:
The amount of your discretionary or disposable income
The importance you attach to savings
Your anticipated needs and wants
Your willpower
Savings accounts FDIC Insured up to $250,000/Depositor

5. Types of Accounts Savings Accounts Checking Accounts
Certificate of Deposits (CDs)
Money Market Account

6. Savings Accounts High “Liquidity”
Speed in which you can get cash without loss of value
Used for Long Term Goals & Emergencies
Interest Bearing
The Higher the Interest, the Higher the Minimum Balance

7. Checking Accounts Used for Day-to-Day purchases
Access through ATM, Debit Card, Electronic Payments, & Checks
High Liquidity
Interest Varies
Usually no interest on accounts with no or low minimum balance; Interest Bearing require higher minimum balance

8. Certificate of Deposit
A certificate of deposit (CD), or time deposit, is a deposit that earns a fixed interest rate for a specified length of time.
A CD requires a minimum deposit.
You must leave the money in the CD for the full time period.
If you take out any part of your money early, you will pay an early withdrawal penalty.
A CD has a set maturity date, which is the date on which an investment becomes due for payment.

9. Money Market Account
A Money Market Account is a type of savings account that offers a more competitive interest rate than a regular savings account.
There are two different kinds of money market accounts:
Money market deposit account—FDIC Insured
But Require Higher Deposits
Money Market Fund—NOT FDIC Insured
Invest in Low Risk Government Securities
On average, money market funds will pay a higher interest rate than money market deposit accounts.
Not as liquid as Savings Account—May be limited to # of Withdrawals/Month

10. Direct Deposit
With direct deposit, your net pay is deposited electronically into your bank account.
You receive a nonnegotiable copy of your check and stub, notifying you of the amount deposited directly into your account
You can have your automatic deposit split between accounts, with some going into savings and some going into checking to cover your bills.