1. Types of Money
How should I pay?

2. Types of money
I listed these in the order I think you are most likely to encounter them.
Cash
Debit card (use for a Debit or Credit transaction)
Credit card (use for a Credit transaction or a cash advance)
Electronic Funds Transfer (EFT)
Check
Money Order
Cashier’s Check
Certified Check
Traveler’s Check
Alternatives

3. Cash Bills and coins Advantages: Disadvantage:
Allows anonymity - no purchase tracking
Mindful spending (cash can seem more real than plastic)
Disadvantage:
No paper trail (without a receipt)
No purchase protection
Dr. Kerby uses for tipping at restaurants, flea markets/yardsales, or anywhere I want to be anonymous

4. Debit Card
Debit cards are associated with your checking or savings account; money is deducted right away.
Purchases can be made two ways
As a Debit.
Enter your pin number
May get cash from purchase
May be extra fee
As a Credit. It is still a debit transaction; funds are directly deducted from your checking or savings account.
Signature may be required
I use my debit card when it offers cash-back rewards or to get cash from the ATM or checkout.

5. Credit Card
Credit transaction which means you pay with someone else’s money – usually a bank
Credit purchases will be added to your credit card balance; you pay when the monthly statement comes.
Dr. Kerby uses her credit card for everything she can to get the cash-back rewards.
Video: Difference between Debit and Credit cards
Image taken from

6. Electronic funds transfer
EFTs are payments made from one person or organization to another using a computerized device; no paper is exchanged.
EFTs include:
ATM withdrawals
Direct-debit / direct deposit transactions
Online bill pay / repeat payments
Sending and receiving money with friends/family (see PayPal)
Note: It costs the U.S. government $1.03 to issue each check payment, it costs only 10.5 cents to issue an EFT payment.
Transactions are processed through the Automated Clearing House (ACH) network, the secure transfer system of the Federal Reserve that connects all U.S. banks, credit unions and other financial institutions.
Source: investinganswer.com
Image taken from

7. Check
“A check is a written, dated and signed instrument that contains an unconditional order from the drawer that directs a bank to pay a definite sum of money to a payee. The money is drawn from a banking account, also known as a checking account Investopedia.com
At some point in your life you will need to write a personal check (groceries, rent, etc.)
You may also receive checks for:
Gifts
Working
Rebates on purchases
Stuff you sell to other people
Dr. Kerby uses for charitable contributions
Gift picture from
Paycheck image from:
Rebate check image:
Other image:

8. Money order Alterative to using a personal check
Safe – don’t have to share your checking account information
Purchase with cash, debit or credit at banks, Post Office, convenience stores.
Fees apply – $1.25 – 1.50 for domestic
Maximum $1000 face value
Can use stop payment and tracking just like a check
Find out what you need to know about “Accepting Money Orders” at usps.com
Dr. Kerby uses money orders for online purchases when Paypal is not an option.
Sources: about.com and USPS.com
Image from

9. Cashier’s check
As good as cash because clear immediately (personal check sometimes take a few days to clear before you can withdraw the funds)
Guaranteed by the bank it’s drawn on; banks issue cashier’s check with bank funds and signs it.
Can be more secure than a personal check.
Required for certain transactions such as real estate transfers.
You have to go to a bank to get a cashier’s check. More info at wikihow.com
You also have to pay a fee, from $0 to $10
I have used for real estate; transferring $$$
Image from

10. Certified check
A personal check can be certified by the bank they are drawn on; the bank where the check payer's funds are deposited.
The bank puts a hold on the payor’s account equal to the check amount.
May be required for a car purchase.
You can get one from your bank
Fees apply ($5 - $10)
More at mybanktracker.com
Image from

11. Traveler’s check
Traveler’s checks are paper money that can be used like cash; usually used for travel.
Can protect you from identity theft because there is no personal information on them.
Safer than carrying cash plus no ATM fees
Unlike cash, they can be replaced if lost or stolen as long as you have your receipt.
Fees apply, usually 1-2%
Purchase at a bank or through American Express or AAA.
Video: American Express Traveler's Checks Ad
Image taken from

12. Alternative Currencies
Bitcoin
Cash cards
Points
See more at Ted Blog

13. Assignment
Create a comparison table. List each type of money we talked (cash, check, etc.) on one side. On the other side list the situation where that type of money would be the best choice for you. For example, you might use cash when you go to the Flea Market; everyone’s answers will be different. Note: Don’t just used my examples … I want you to put some thought into it and say where you would use these different payment options. Create the table in Word and upload to Moodle, Unit 3 “3.7 Types of Money Comparison Table". You may work with a partner.