Financial Institutions Information on Financial Institutions & Services © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at The University of Arizona

Financial Institutions Outline Introduction Definitions Financial Institutions & Services Available Benefits & Advantages Financial Services Review This is what the power point presentation will cover to give the students an idea of the topics. © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Introduction Why should a person learn about money management? It’s a daily routine. Everyone is involved with money. Education saves time and money. To become a millionaire! © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Definitions © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Financial Institutions Definition – businesses which offer multiple services in banking and finance Services may include savings & checking accounts, loans, investments, and financial counseling © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Depository Institutions Usually referred to as banks Follow state and federal regulations Offer banking services and loans Serves both individuals and businesses Examples – commercial banks, savings & loan associations, and credit unions © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Insurance for Financial Institutions Federal Deposit Insurance Corporation (FDIC) Federal government agency which protects bank accounts Each depositor is insured up to $100,000 Savings Association Insurance Fund (SAIF) A branch of the FDIC Provide insurance for Savings & Loan Associations Same insurance level as the FDIC © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Insurance for Financial Institutions continued National Credit Union Administration (NCUA) Same safety as deposits insured by the FDIC Provides insurance for Credit Unions A sign will be posted if a bank is insured OR may say “Backed by the Full Faith and Credit of the United States Government” which insures each depositor up to $100,000 © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Financial Institutions Commercial Bank Savings and Loan Association Credit Union Brokerage Firm © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Commercial Bank Full-service financial institutions Wide variety of services and products Operate under state and federal laws Usually the largest financial institutions FDIC insured Examples – Wells Fargo, US Bank, First Interstate Bank © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Commercial Bank Services Checking Accounts They are the only financial institution allowed to offer non-interest paying checking accounts Savings Accounts Safe-Deposit Boxes Credit cards Certificate of Deposit (CDs) Financial Services Investments Loans Mortgages © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Savings and Loan Association (S&Ls) Focuses on providing loans and mortgages to customers which hold a savings account Generally pay a higher interest rate than commercial banks Offer interest-earning checking accounts SAIF insured Examples – American Federal Savings Bank, Pioneer Federal Savings & Loan © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

S&L Services Checking Accounts Savings Accounts Certificate of Deposit (CDs) Retirement Plan Accounts Financial Counseling Investments Loans Mortgages © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Credit Union Non-profit cooperative financial institution, member owned Members may have a common bond such as same employer, union, location, etc. Usually charge lower fees and loan rates and offer higher interest rates May offer free financial counseling NCUA insured Examples – Rocky Mountain Credit Union, Montana Federal Credit Union © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Credit Union Services Share Draft Accounts (checking) Share Accounts (savings) Share Certificate Accounts (CDs) Safe-Deposit Box Credit Card Financial Counseling Investment Loan Mortgage Retirement Plan Account © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Brokerage Firm Relatively new to the marketplace Licensed institutions Offer money management plans for investing Provide financial assistance and advice Monthly statements provided to track account activity Examples – DA Davidson & Co., Merrill Lynch © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Brokerage Firm Services Investments Bonds Stocks Mutual Funds Financial Counseling Real Estate Investment Retirement Plan Accounts **Customers can move money between accounts easily © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Benefits & Advantages to using Financial Institutions © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Benefits of Financial Institutions Convenience Quick and easy access to money Different ways to access money Teller’s window, drive-up window, automated teller machine (ATM), and electronic banking Cost savings Less expensive to purchase money orders and to cash checks Other businesses may charge to cash checks Having a checking account instead of buying money orders saves money © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Benefits continued Safety Security Protection from fire, theft, & loss Money is protected by the federal government in federally insured institutions Up to $100,000 for each depositor Signs are displayed if institutions are insured stating: FDIC, NCUA, or Backed by the Full Faith and Credit of the United States Government Not all are insured – look for the sign and ask! © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Advantages Using one financial institution may include these advantages: Simplicity – having all accounts at one place can simplify banking Relationship – establishing relationships can be beneficial when applying for loans Lower interest rates on loans may be offered to loyal customers! © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Remember Shop around for the best service, rates, products, and locations before choosing a financial institution!!! © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Financial Institution Services © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Definition of Services Bonds Lending money to an organization as an investment, an “IOU” Purchased at a fixed interest rate and period of time Certificate of Deposit (CD) An insured interest earning savings instrument with restricted access to the funds. An investment with no risks and no fees © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Services continued Checking Account Credit Card Paper checks or debit cards are used to withdraw money deposited into the account to pay for items May be interest or non-interest bearing Credit Card A plastic card used to make a purchase now to be repaid later usually with interest to the credit card company © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Services continued Financial Counseling Investment Loan Information and advice given to customers to help them make decisions about financial issues Investment A commitment of money to achieve long-term financial goals Many different types are available Loan Borrowed money consumers apply for at financial institutions Paid back at various interest rates in payments Investment examples – stocks, bonds, CDs, mutual funds, etcl Examples of loans – car loans, mortgages, personal loans, etc. © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Services continued Mortgage Mutual Fund Real Estate Investment A long-term loan to purchase real estate such as a house Mutual Fund Groups of stocks, bonds, and other investments managed by an investment firm Real Estate Investment Purchasing real estate as an investment May buy a lower priced house, make improvements, and sell at a higher price © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Services continued Retirement Plan Account Safe-Deposit Box Plans to set aside money for retirement Money is tax-deferred until withdrawn May be offered through an employer or set up through a financial institution Safe-Deposit Box A secured box in a bank to be used for valuable and important personal items Items are safe from theft and fire © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Services continued Savings Account Share Account Money is deposited into an account to earn interest Funds are easily accessible and safe Share Account A savings account at a Credit Union Share Certificate Account A certificate of deposit at a Credit Union Share Draft Account A checking account at a Credit Union © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Services continued Stock Ownership in corporation Represented by shares © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Review © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Review Money management is part of everyday life! Financial institutions offer multiple services – shop around for the one which best fits your needs! Check to see if the financial institution is insured by the FDIC, SAIF, or the NCUA. Learn about the financial services before choosing one. Example – checking, savings, investments, etc. © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

The End © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona