2 Types of Banks Commercial Banks Community Banks Largest type, locations in multiple states, most servicesCommunity BanksLocated in smaller area, fewer locations, “Mom & Pop” type business, Focus more local customersSavings and loan associationsPrimarily lend money for home mortgagesCredit UnionsNot-for-Profit, Membership Requirements/Criteria, NCUA insuredOnline BanksBank located solely online, no physical location; Low/No Fees
3 Financial SecurityPeace 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 incomeThe importance you attach to savingsYour anticipated needs and wantsYour willpowerSavings 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 valueUsed for Long Term Goals & EmergenciesInterest BearingThe Higher the Interest, the Higher the Minimum Balance
7 Checking Accounts Used for Day-to-Day purchases Access through ATM, Debit Card, Electronic Payments, & ChecksHigh LiquidityInterest VariesUsually 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 AccountA 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 InsuredBut Require Higher DepositsMoney Market Fund—NOT FDIC InsuredInvest in Low Risk Government SecuritiesOn 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 DepositWith 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 accountYou can have your automatic deposit split between accounts, with some going into savings and some going into checking to cover your bills.