Personal Finance Chapter 5

Financial Institutions Basic Banking Concepts Why do I need a bank? Place to store your money and other valuables safely Place to open a convenient checking account Place to apply for loans © EMC Publishing, LLC

Financial Institutions Kinds of Financial Institutions Commercial banks Savings and loans (mutual savings banks) Credit unions Payday lenders and check cashing companies © EMC Publishing, LLC

What do you think? Discussion Is using a payday lender a good idea? Why might someone have to use a payday lender? Why might you need to use a check cashing company? © EMC Publishing, LLC © EMC Publishing, LLC

Which of the following is not a kind of financial institution? Commercial bank Savings and loan Credit union Retail store Payday lender © EMC Publishing, LLC

Which of the following is not a kind of financial institution? Commercial bank Savings and loan Credit union Retail store Payday lender © EMC Publishing, LLC

Financial Institutions Kinds of Financial Transactions Deposit Withdrawal Debit Credit Transfer Loan ACH Point of Sale (POS) © EMC Publishing, LLC

Financial Institutions Kinds of Checking Accounts Regular checking account Free Fee Interest-earning checking account © EMC Publishing, LLC

Financial Institutions Check v. Debit Checks delay called “float" Debit cards immediate Electronic Funds Transfer (EFT) Note: Some stores now use EFT to take funds immediately, even when using a check. © EMC Publishing, LLC

Financial Institutions ATM Automated teller machine Fees? © EMC Publishing, LLC

What do you think? Discussion Why are more stores installing point-of-sale devices that accept debit and credit cards? Do we still need cash today? Will we become a cashless society soon? Why or why not? © EMC Publishing, LLC © EMC Publishing, LLC

Financial Institutions Checking Account Fees Monthly fees ATM fees Online bill-paying fees Overdraft and NSF fees Overdraft protection Stop-payment fees © EMC Publishing, LLC

Financial Institutions Opening a Checking Account Research financial institutions for fees © EMC Publishing, LLC

Financial Institutions Opening a Checking Account Signature authorization form Social Security card Driver’s license © EMC Publishing, LLC

Financial Institutions Checking Account Activity Writing a check © EMC Publishing, LLC

Financial Institutions Checking Account Activity Writing a check Making a deposit © EMC Publishing, LLC

Financial Institutions Checking Account Activity Writing a check Making a deposit Reconciling your account (advance to see example) © EMC Publishing, LLC

Reconciling Account Mark checks that have cleared and deposits that have been recorded. Instructor click for check marks to appear © EMC Publishing, LLC

Reconciling Account Record missing checks. Instructor click to start animation © EMC Publishing, LLC

Which of the following is not a possible fee involved in financial transactions? Checking account fee NSF fee Online banking fee ATM fee Poll tax fee © EMC Publishing, LLC

Which of the following is not a possible fee involved in financial transactions? Checking account fee NSF fee Online banking fee ATM fee Poll tax fee © EMC Publishing, LLC

Financial Institutions Online Banking © EMC Publishing, LLC

Financial Institutions Online Banking Be safe when using the Internet. Use secure sites (shttp or https) to send financial information. Don’t use “hot spots” or WiFi to send personal information. © EMC Publishing, LLC

Financial Institutions Online Banking Registration and PINs (improve safety) Money transfers (are convenient) Bill pay feature One-time vs. auto bill-pay Fee vs. free © EMC Publishing, LLC

What do you think? Discussion How many of you have used the Internet to conduct a financial transaction? Do you think it is safe? Why or why not? What tips do you have for using the Internet for financial transactions? © EMC Publishing, LLC © EMC Publishing, LLC

The End © EMC Publishing, LLC