MoneyCounts: A Financial Literacy Series Banking 11-A Grange Building University Park, PA 16802 financialliteracy.psu.edu finlit@psu.edu 814-863-0214

Description Banking: business activity of accepting and safeguarding money owned by other individuals and entities, and then lending out this money in order to conduct economic activities (e.g., making profit, covering operating expenses) 

Learning Outcomes Know the key terms you need for banking Understand what a bank is and what a credit union is Understand how to decide who should safeguard your money Expect what would happen if you do not use a bank or a credit union Understand how to get the most of your banking experience

What is Banking?

Banking System in the USA?

Federal Reserve System – 12 Central Map of the twelve Federal Reserve Districts, with the twelve Federal Reserve Districts enumerated in black circles and the twelve Federal Reserve Banks marked as black squares. Branches within each district are marked as red circles. The Washington, D.C. headquarters is marked with a star enclosed in a black circle.

Why use a financial institution? Safeguard your cash Use debit and credit card services Manage your finances (Record keeping and budgeting) Earn interest Receive your paycheck quickly using direct deposit Borrow loans Facilitate financial transactions Invest your money Establish a credit history to generate a FICO credit score instrumental in borrowing funds and building wealth Insure your liquid assets

Key terms you need to know Checking account & Saving account Routing number Certificate of Deposit Account number Money market account Debit card & Credit card Automatic bill payment & bill-pay Online banking Payroll direct deposit Automated teller machine (ATM)

Banks Can be central, commercial, retail, and investment financial institutions Insured by the Federal Deposit Insurance Corporation Can have multiple locations (national and international) Eligibility to join has little restrictions to none Convenience and numerous ATM machines Sophisticated electronic banking technology Wide range of choices in services and products Profit-driven to satisfy shareholders They serve customers

Credit Unions Can be federally or State chartered Insured by different insurance corporations other than FDIC Have limited locations by region or state Eligibility to join is restricted to individuals affiliated with certain groups Limited ATM locations Limited online banking services, depending on size Limited range of choices in services and products, depending on size not-for-profit driven to satisfy members/owners They serve members/ de facto owners

Side by side! Bank Credit Union Types Central, commercial, retail, and investment financial institutions Federally or State chartered Insured by Federal Deposit Insurance Corporation (FDIC) Different insurance corporations other than FDIC Locations Multiple locations (national and international) Limited locations by region or state Eligibility to join Little restrictions to none Restricted to individuals affiliated with certain groups ATM Convenience and numerous machines Limited ATM locations Online Sophisticated electronic banking technology Limited online banking services, depending on size Choice Wide range of choices in services and products Limited range of choices in services and products, depending on size Profit Profit-driven to satisfy shareholders Not-for-profit driven to satisfy members/owners For whom Serve customers Serve members/ de facto owners Side by side!

Who should guard your money? In-person or online Your lifestyle Services you want/need Your occupation Price or convenience Current location Temporary or long-term YOUR decision

Un-Banked?

Tips to get the most of banking experience! Adopt an emergency fund Know the value of each institution Know what you “need” and “want” Find free services for students Find the highest interest rate on a saving account Consider the cost of using ATM Know that you are free to deposit financial aid refund checks Seek trusted information!

MoneyCounts: A Financial Literacy Series Comments and questions 11A Grange Building University Park, PA 16802 financialliteracy.psu.edu finlit@psu.edu 814-863-0214