Banks Next Slide © Annie Patton

Aim of Lesson To understand the services provided by a bank. Next Slide Previous Slide © Annie Patton

Banks Takes in ones savings Gives out loans Next Slide Previous Slide © Annie Patton

Interest rates Banks normally talk about two types of interest, that they give people with money in the bank and that they charge people who have loans from them. So banks borrow from savers and give them a lower rate of interest, than they charge those who have taken out loans from them. This is how they make some of their profits. Next Slide Previous Slide © Annie Patton

2 Types of accounts Current account. You are given a cheque book and can withdraw money from the hole in the wall, however you get no interest. Deposit account. You get interest, but no cheque book, debit card and you cannot use the hole in wall. Bank now often offer customers a combination of these two types of accounts. Next Slide Previous Slide © Annie Patton

ATM Most banks now allow one to withdraw money 24 hours per day 365 days per year, using a machine placed outside the building. The machine is known as an ATM (Automatic Teller Machine). The customer identifies themselves using their ATM card and a number called a PIN (Personal Identification Number). Next Slide Previous Slide © Annie Patton

Cheque Book A customer, who has a current account or equivalent is given a book containing a number of cheques. These cheques are personalised with their name for their use only. If it is a couple, who have the account both parties names will be on the cheques, or if it is a company the company’s name will be on the cheques and only certain people would be allowed to sign the cheques. When they write a cheque, it is an instruction to their bank to take that amount of money out of their account and give it to the bank of the person named on the cheque, who in turn will put it in the account of the person named on the cheque. The process that the cheque goes through from the time it is presented by the payee until the money appears in their account is known as Clearing a Cheque Next Slide Previous Slide © Annie Patton

Parties of a cheque The person, who writes the cheque is the Drawer. The person, to whom the cheque is written to is called the Payee. The bank that the drawer has their account in is called the Drawee. Next Slide Previous Slide © Annie Patton

Cheque ABC 52 New Street Dublin 8 Date Pay………………………………or order …………………………………………. Joe Bloggs …………….. 4557888 678788 45589903 € Next Slide Previous Slide © Annie Patton

Numbers at the bottom of a cheque There are three sets of numbers at the bottom of a cheque. One identifies the bank and branch that the drawer has their account in. One is the account number of the person named on the cheque. One is the actual number of that cheque. Next Slide Previous Slide © Annie Patton

Types of cheques Order cheques. Most cheques have the words ‘or order’ after the payee’s name, this means the payee has to sign the back of the cheque (Endorse it) before lodging it or passing it on to someone else as payment for a debt. Crossed Cheques. This a cheque with two parallel lines drawn on it, meaning the cheque cannot be cashed in a bank, but must be lodged in an account. Open Cheque. This is a cheque that is not crossed. Blank Cheque. This cheque has something missing, like the amount, date, payee’s name or signature. Next Slide Previous Slide © Annie Patton

Endorsed Cheque One can pay their debts by endorsing a cheque they have received from a third party, but anyone receiving such a cheque needs to be careful because the third party may not have the funds to pay or the cheque could be stolen. Next Slide Previous Slide © Annie Patton

Cheque Card This card is issued by the bank and the customer signs it. Then when the customer is signing a cheque it acts as proof that the signature on the cheque is who it should be. Cheque books and cheque cards should kept apart, otherwise the thief knows what the signature on the cheque should look like. Next Slide Previous Slide © Annie Patton

When will a bank refuse to pay the money stated on the cheque? If there is insufficient funds in the account. The drawer has stopped the cheque. The drawer has died or been declared bankrupt. The date on the cheque has not yet arrived. The cheque is stale, i.e. 6 months has passed since the date on the cheque. Words and figures do not agree. Next Slide Previous Slide © Annie Patton

Overdraft One cannot withdraw or write cheques for more than they have in their accounts unless they have special permission to do so called an Overdraft. Special permission has to be sought to get this privilege. Next Slide Previous Slide © Annie Patton

Bank Draft Sometimes a business is not prepared to exchange goods for a personal cheque, so they demand a Bank Draft. The buyer must go to the bank, give the bank the money, plus extra called commission and in return the bank gives the customer a cheque from the bank, known as a Bank Draft. Next Slide Previous Slide © Annie Patton

Credit Transfer When someone puts money into your account on your behalf, it is known as a credit transfer. You can lodge money from another bank in this way into your own account. Parents sometimes have to use this method to put money into their children’s accounts, if they are away from home and are running out of money. Next Slide Previous Slide © Annie Patton

Direct Debit This is where you give permission for your bank to pay different sums of money from your account on a regular basis to another named account. For example you can pay your ESB or Phone bill in this way. Next Slide Previous Slide © Annie Patton

Pay Path This is where an employer pays their employees wages into the employee’s account, rather than giving them cash. It is safer and cheaper, as the employer does not have to accumulate large amounts of cash. The employee can take it out of the account using an ATM, 24 hours per day, 7 day a week. Next Slide Previous Slide © Annie Patton

Bank Charges In addition to charging interest on loans banks make their profits by charging their customers for each: Cheque ATM withdrawal Overdraft facility Credit Transfer Pay Path Transaction Direct Debit Next Slide Previous Slide © Annie Patton

Bank Statement Periodically banks sent out bank statements to current account holders showing all the transactions that has taken place through their account in the last period. Next Slide Previous Slide © Annie Patton

Missing Items on Bank Statements However when a customer receives their bank statement, there can be a difference in what they thought was in their account and what the bank says they have, due to one of the following reasons: Some cheques being lodged since the statement was printed Cheques were written to people , but the people have not yet cashed them. People paid money into your account by credit transfer and did not tell you. You gave permission for Direct Debit, but forgot. The bank has charged you bank charges and did not tell you, although they normally send you a letter telling you they are charging you bank charges nowadays. Next Slide Previous Slide © Annie Patton

Bank Reconciliation Statement It is recommended that all customers on receiving a bank statement, make a list of all the difference that has occurred between, what they thought was in their bank account and what the bank says is in their bank account. They then start a Bank Reconciliation Statement for themselves. Next Slide Previous Slide © Annie Patton

Bank Reconciliation Statement continued Balance as per Bank statement 1200 Add Cheques written not yet presented 600 1800 Minus cheques lodged last week, but not shown 300 1500 Add bank charges 20 1520 Minus Credit Transfer from Aunt Mary 100 1620 This figure should be the amount you thought or had in the Bank, if not either you or the bank have made a mistake. Next Slide Previous Slide © Annie Patton

Paying on line Nowadays one can pay a bill using the Internet. This saves time and is cheaper than writing a cheque. Next Slide Previous Slide © Annie Patton

Traveller’s Cheques When one is abroad a foreign bank or business will not normally accept one’s normal cheques. Hence one has to buy Traveller’s Cheques in a bank. You tell the bank what value of cheques you want in the currency of the country you are going to and they charge you in euros plus a commission for themselves. You sign the cheques before leaving the bank. When using the cheques in the foreign country, you normally have to have your passport and you sign the cheque again, as evidence that you are the person, who bought the cheques. Next Slide Previous Slide © Annie Patton

Traveller’s Cheques continued Travellers cheques can be used in shops, hotels and banks abroad. If traveller’s cheques are stolen when you are abroad, you must report this and your money will be reimbursed. Nowadays rather than use travellers cheques a lot of people pay money into their Credit Card account and then use the credit card abroad and because they have paid the credit card in advance will not be charged interest, but will normally be charged for the privilege of using their card abroad. Next Slide Previous Slide © Annie Patton

Conclusion Are Banks useful or not? Previous Slide © Annie Patton