1. Banking Services & Savings
Chapter 7 & 8
Banking Services & Savings

2. Where do YOU keep your Money?

3. Why NO Shoebox under the Bed?
Deposit Insurance
Protected up to $250,000
FDIC (Federal Deposit Insurance Corporation)
Interest

4. Interest ROCKS!!! Interest Principal
Money you receive for keeping your $ in an account
Showed as percentage
Higher your interest rate, the more money you will make
Principal
$ you have deposited in your account

5. Simple Interest
Interest paid once a year on the money you deposit (starting principal)
Paid at end of year
Deposit
Interest Rate
Simple Interest
New Principal
After 1 Year
$750 3%
$750 x 0.03 = $22.50
$750 + $22.50 = $772.50
4.5%
$750 x = $33.75
$750 + $33.75 = $783.75
6.75%
$750 x = $50.63
$750 + $50.63 = $800.63

6. Simple Yr Balance Interest Rate Compound Interest End of Year Balance1
$750 3%
$750 x 0.03 = $22.50
$750 + $22.50 = $772.50 2
$ $ = $795.00 3
$ $22.50 = $817.50

7. Compound Interest
Interest paid on your principal and on previously earned interest
“Interest earns interest”
Interest must be left in account
Compounded…
Annually (every year)
Semiannually (every 6 months)
Quarterly (every 3 months)
Monthly
Daily

8. Compound (ANNUALLY) Yr Beg Balance Interest Rate Compound Interest
End of Year Balance 1
$750 3%
$750 x 0.03 = $22.50
$750 + $22.50 = $772.50 2
$772.50
$ x 0.03 = $23.18
$ $ = $795.68 3
$795.68
$ x 0.03 = $23.87
$ $23.87 = $819.55

9. Simple vs. Compound Interest
Principal: $750, 3% interest Yr
Simple Interest
End of Year Balance 1
$22.50
$772.50 2
$795.00 3
$817.50 Yr
Compound Interest
End of Year Balance 1
$22.50
$772.50 2
$23.18
$795.68 3
$23.87
$819.55

10. Principal = $10,000 Yr Beg Balance Interest Rate Simple Interest
End of Year Balance 1
$10,000 3%
$10,000 x 0.03 = $300
$10,000 + $300 = $10,300 2
$10,300 + $300= $10,600 3
$10,009 x 0.03 = $300
$10,600 + $300 = $10,900 Yr
Beg
Balance
Interest Rate
Compound Interest
End of Year Balance 1
$10,000 3%
$10,000 x 0.03 = $300
$10,000 + $300 = $10,300 2
$10,300
$10,300 x 0.03 = $309
$10,300 + $309= $10,609 3
$10,609
$10,609 x 0.03 = $318
$10,609 + $318 = $10,927

11. Savings Institutions 4 basic types of financial businesses
Commercial Banks
Savings Banks
Savings & Loan Associations
Credit Unions

12. Commercial Banks Largest institutions in the US Serves… Services
Individuals
Businesses
Services
Savings & checking accounts
Consumer & business loans
Investment services

13. Credit Unions Non-profit organizations Serves… Services…
Members who share common bond
Profession, company, union, church, etc
Receive extra benefits
Services…
Savings & checking accounts
Loans

15. Checking accounts
A bank account that allows depositors to write checks to make payments
Make payment by writing checks
Cash or deposit checks
Transfer money and checks
Use debit cards & ATMs
Opening a Checking Account
Over 18 or joint account?
Interest-bearing or Noninterest-bearing?
Fees – maintenance, service charges?
Application, signature card, initial deposit

16. Deposit Slips

17. Deposit slips

18. Endorsing Checks What is the purpose of endorsing?
To accept the transfer of someone else’s money to you.
When must you endorse?
Cash a check
Deposit a check

19. Writing a Check One hundred and 00/100
Ninety-nine and 54/

20. Writing a check

21. Using Debit Cards Connected to checking account Like writing a check
Money is taken out of checking account

22. Using a Check Register
Sally recording a check (#301) that she wrote to Gas N’ Go for the
amount of $ She subtracted that amount from her balance of
$ to get a new balance of $

23. What to record on a check register...
Deposits
Checks
Debit Card Purchases
ATM Transactions
Fees
Interest

24. Why use a check register?
Record/have record of your transactions.
Record transactions
Record fees
Record interest
Calculate new balance
Prevent overdrawing
Writing a check for more than you have in your account
Check will “bounce”
Bank will charge you a fee

25. Bank Statements Receive at the end of each month
Shows transactions, fees, and interest that have been recorded by the bank
Balancing or Reconciling
Compare your records to the banks records
Use the “√” column of your register
Check for bank errors

26. Electronic Banking Electronic Funds Transfer
Move $ from one account to another by computer
EFTs commonly made through…
ATM (automated teller machines)
Direct Deposits
Automatic Bill Payments
Online Banking

27. Automated Teller Machines
Computer terminal…
Make deposits
Withdraw cash
Transfer money
Check account balances
Pay some bills
Must have ATM card & pin number
Be aware of fees
Using “foreign bank” ATMs can lead to double fees

28. Responsibility
Laws protect consumers but require them to use EFTs responsibly
Lose ATM card
Report loss within 2 business days of loss or after receiving statement
Liability limited to $50
Report within 60 days
Liability up to $500
Report after 60 days
Responsible for ALL losses

29. Other EFTs Direct Deposit Debit Cards Automatic Bill Payments
Aka “check cards”
Balance of checking account is immediately checked
Automatic Bill Payments
By Phone or Internet
Automatic Bill Withdrawals
Online Banking

30. Other Banking Services
Checks
Certified
Cashier’s
Money Orders
Traveler’s Checks
Why
Accepting personal checks can be risky for businesses
No guarantee check will clear (i.e. will there will be enough money in person’s account to cover check?)

31. Checks… Certified Checks Cashier’s Checks
Personal check that has been stamped and signed by a bank officer
Bank withdraws the $ from your account to cover the check and any fees; sets it aside for the payee
Fees - $5 to $20
Cashier’s Checks
Bank’s own check signed by the bank’s cashier
Banks name on check, NOT yours
You pay the bank the amount that the check is being written for plus the fee ($25)
Cash or automatic withdrawal from account

32. Checks Money Orders Traveler’s Check Like a cashier’s/certified check
1 main differences
Can get other places than a bank
Post office, check-cashing business, Western Union, bank
Traveler’s Check
For travel purposes; denominations of $20, $50, $100
Pay for in advance (including small fee 1%)
Replaced if lost or stolen

33. Other Services Wire Transfers Safe Deposit Boxes
Large transfers of money between distant locations
Moves $ from an account in one bank to an account in another
Fee of $20-$40
Safe Deposit Boxes
Locked boxes that are rented
from a bank
Keep valuable items
Costs $30 to $50/year