1. Topics Classification of financial institutions
Depository
Non-depository
Common payment services
Electronic Funds Transfers
Online Bill Pay
Checking Accounts
Specialty checks
Money Orders 1

2. Classification of Financial Institutions
Depository
Earns money to finance their business by accepting deposits from customers
Types include:
Commercial banks- full service - offer many different services, including savings, loans, and checking accounts.
Savings and Loan associations (S&Ls) -traditionally specialize in savings and home loans, but now are very similar to commercial banks.
Mutual savings banks- owned by the depositors and specialize in savings and home loans.
Credit unions- not-for profit, serve their members only, and are owned by their depositors. 2

3. Classification of Financial Institutions
Non-depository
Earns money to finance their business by selling specific services such as policies, investments, and loans
Types include:
Life insurance companies -term, whole, universal
Investment companies - stocks, bonds, mutual funds
Consumer finance companies – higher rates if bad credit
Mortgage companies – loan $ for land, buildings, homes
Check-cashing outlets –fee based if do not have bank acct
Pawnshops –loan $ based on value of item pawned 3

4. How To Compare Financial Institutions
Which characteristics of financial institutions are of interest?
Services offered
Safety
Convenience
Fees and charges
Restrictions
What kinds of questions may be asked about each characteristic? 4

5. Comparative Questions
Services – Does the institution offer needed services?
Savings
Depository for payroll taxes
Checking
Various options to meet customer needs
Loans
Short term - working capital
Long term - mortgage
Credit cards
Debit cards
Safe deposit boxes
Trust management

6. Comparative Questions
Safety – Is the institution insured against losses?
Federal Deposit Insurance Corporation (FDIC) Created by Congress to maintain stability and public confidence in the nation’s financial system: insures deposits, supervises financial institutions
National Credit Union Administration
(NCUA) Charters and supervises credit unions

7. Comparative Questions
Convenience – Does the institution offer the access desired?
Physical locations available
Online services
Easy to access & use
ATM machines

8. Comparative Questions
Restrictions – Are there minimum balances that must be kept, or other restrictions?
Minimum balance- $ amount required to stay in account at all times
If account keeps minimum balance, fees are often waived (eliminated)

9. Comparative Questions
Fees and Charges – What are the short and long-term costs of the services?
Flat monthly fees
Fees per transaction
NSF (Non-sufficient funds) fees
Checks written
Debit transactions
# of transactions allowed before fees begin
Minimum balance required to eliminate fees

10. Common Payment Services
Electronic Funds Transfers
Online Bill Pay
Checking Accounts
Personal, business
Specialty checks
Certified, Cashier’s, Traveler’s
Money Orders
Postal, Express, Telegraphic

11. Online Bill Pay Use the web to make payments Often fee based
Privacy can be issue
Change PIN frequently
Use only “safe” sites
Write Online Bill Pay questions 1-3 from next slide on notebook paper. Use the website to answer the questions.

12. Online Bill Pay Questions
What are the two types of online bill pay?
What is automatic bill pay?
Choose link Banking 101
Choose link 3 reasons to avoid online banking.
List 3 reasons given.