Personal Finance Unit: Banks, Credit, and Credit Unions

 It’s really about understanding how much money you have, where it goes, and then planning how to best allocate those funds. EOC study guide Personal Finance #3

If they are Federal Deposit Insurance Corporation (FDIC) members Since the start of FDIC insurance on January 1, 1934, no depositor has lost a single cent of insured funds as a result of a failure Depositors are insured for up to $250,000 How does FDIC work? EOC study guide Personal Finance #8  FDIC Shuts Down Syringa Bank in Boise FDIC Shuts Down Syringa Bank in Boise

Bank Commercial Bank ▫ Provides transactional savings, money market accounts ▫ Like all businesses, their goal is to maximize corporate profits. EOC study guide Personal Finance #2

Credit Union ▫ Financial institution that is not-for-profit and customers are members EOC study guide Personal Finance #2

 Big banks  ATMs are typically plentiful and branches are open on the weekend  Most offer a wealth of mobile and online tools  Credit unions  Meant to serve local communities, often not available outside the area  Branded ATMs are practically nonexistent, most offer to reimburse customers for ATM fees if customers have to go out of network

 Big banks  Notorious for levying major fees against customers— from overdrafts to monthly maintenance fees  According to MoneyRates.com the average monthly maintenance fee is $12.26  Typical charge for out-of-network ATMs is $2.60  Credit unions  Fewer fees across the board, for the most part  Overdraft fees are $20-$30, but usually only required to keep $30 in an account  70% offer free checking (39% of banks do)  Many charge a $2-$5 maintenance fee

 Big banks  Interest-yielding bank accounts are rare now  Credit unions  70% do not pay interest on checking accounts  those that do pay 0.17%

 Big banks  In 2012 they scored a 77 on the American Customer Satisfaction Index  Credit unions  Scored an 82 on the American Customer Satisfaction Index in 2012

ARE YOU A GOOD RISK? Financial institutions care about your character!!!  It matters what kind of "financial citizen" you have been  How do they know? By looking at your credit history What is a credit score?

WHAT DO THEY CARE ABOUT MOST? Factors that impact personal credit: 1. Payment history—have you paid your bills on time 2. Amounts owed—charge no more than 25% of your limit 3. Length of credit history—have you ben reliable for years? 3 important credit score factors EOC study guide Personal Finance #10

 Unexpected things that lower your credit score Unexpected things that lower your credit score

Principal— a sum of money lent or invested on which interest is paid. Interest— money paid regularly at a particular rate for the use of money lent EOC study guide Personal Finance #11

$150,000

Month Balanced Owed Payment Interest portion of payment (.17/12 x balance) Portion applied to principle (payment - interest portion) New Balance January$1,000$20 February March April May June July August September October November December