Type of accountWhat it is? What does it do? Risk LevelFDIC Insured? Savings/Checking Certificate of Deposit Individual Retirement Account Stock Market Investment

 Provides a safe place to store your money  Provides other financial services › Credit Cards › Loans  Privately owned › Why own a bank?  What is the incentive(s) to put your money in the bank?

 Interest is a fee paid for services given  How can interest work both for the bank and for you?

 Compounding Interest › The amount of times interest is applied to your account  When do you want interest to compound vs. when do you not want interest to compound?  What does the difference really mean? What does the difference really mean?

 Proximity and Hours  Rates  Services and Service Charges  Staff

 Federal Deposit Insurance Corporation › A government organization that provides insurance to your bank account in case the bank closes › Remember the Great Depression??  banks closes in a 2 years time period with no insurance on ppl’s accounts  Savings are lost, confidence in the banks are lost

 Savings/Checking › Usually no deposit requirements (but check to make sure!) › Low or no interest Rates › Frequent withdrawals allowed with no penalty (usually)  FDIC Insured?  YES!

 Why is it important??

 Be sure to cross check your check book and your monthly statement for accuracy and uncashed checks

_________________________ Check # 251 Stonehaven Road Fall River, MA Date: Pay To The Order Of: ____________________________________________ ____________________________________________________________________Dollars Bank of Furtado For: _______________________________ ________________________________ :: :: #

Cable bill to Comcast for $152.42

DateCheck # Check To / Purpose AmountStart Balance End Balance

 Certificate of Deposit (CD) › Slightly higher interest rates than saving › Must keep $ in for a set amount of time or else you will be penalized › The longer the term, the more interest  FDIC Insured?  YES!

Physical Bank Virtual Bank  Instant Withdrawals and Deposits  An actual place to go visit and talk to employees in person  Lower rates  A bank that exists on the internet  Cannot go to an actual branch  Higher rates  Usually takes a couple days for transfers

 Questions to consider…  Does your job have a pension?  When do you start collecting social security?  Do you have a separate IRA?

 What is a pension?  Does everyone receive a pension?  A percentage of your annual salary that will be paid to you upon your eligible retirement date until a certain time  NO!

 What is social security? › Money benefits given to working people who have paid in SS fund  Who receives SS? › 65 years and older

 Individual Retirement Account (IRA) › Set amount can be taken out of your paycheck every pay period › Tax Deductable (What?) › Usually invested in low risk areas to create higher interest than normal › 403B, 401K  FDIC Insured?  NO!

 Pension  Social Security  IRA  $  Total/Month: $

 Stock Investments › High Risk › High Earnings potential › Usually need a set amount of $ › No time requirement › Do your research!  FDIC Insured?  NO!

 Briefly explain the process in which banks make a profit.  Why are banks an important part in the success or failure of an economy?

 Annual Percentage Yield (APY) › Interest compounded more than once a year › $10,000 5% interest x ½ year = $250 › $10,250 5% interest x ½ year › $10, at the end of the year › % APY

 Annual Percentage Rate (APR) › Interest compounded only once a year › $10,000 Deposited 5% interest x 1 Year › $500 earned in interested › $10,500 at the end of the year