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Financial Literacy Skills

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Presentation on theme: "Financial Literacy Skills"— Presentation transcript:

1 Financial Literacy Skills
Unit 1: Understanding Banking

2 Objective 1: Identify services of a full-service bank
Receiving deposits Providing checking and savings accounts Transferring money from one account to another Electronic funds transfer (EFT) Preauthorized bill payments Making loans Advising customers Having information and transactions available online Providing federal insurance through the FDIC Providing special services, often for a fee

3 Objective 2: Match the different types of financial institutions with their descriptions
Brokerage Firm Commercial Bank Savings and Loan Association Credit Union Mortgage Company Mutual Savings Bank Life Insurance Company Investment Company Finance or Loan Company Financial Supermarket

4 Objective 3: Explain why financial institutions pay and charge interest.
Each financial institution pays interest to encourage depositors to keep their money in that institution. Depositors’ funds are not stored at the financial institution – they are loaned to other customers. Each financial institution charges interest on the various types of loans it makes in order to earn money.

5 Objective 4: Define types of interest.
Simple interest is calculated on a yearly percentage rate based on the original amount of the loan. Compound interest is calculated on the amount of the account on a regularly scheduled time period.

6 Objective 5: State the functions of bank accounts.
Provide a convenient way to buy goods and services and pay bills Provide legal proof of payment Protect money from theft or loss Eliminate need to carry large amount of cash Provide a record of money spent Allow access to other banking services Provide a record of transactions Serve as a credit reference

7 Objective 6: Select steps in opening a bank account.
Receive bank documents. Provide personal identification. Fill out the signature card. Sign the signature card with the same name that will be written on checks. Deposit money using a deposit slip. Order personalized checks. Apply for ATM and debit cards if desired.

8 Objective 7: Identify types of checking accounts
Regular Checking Account Economy Checking Account Check Credit Account Interest-Bearing Checking Account

9 Objective 8: Identify types of savings accounts.
Regular Savings Account Certificate of Deposit (CD) Money Market Account Money Market Mutual Fund

10 Objective 9: Identify types of electronic banking services.
Automated Teller Machine (ATM) Automatic savings Automatic loan payments Direct deposit/ automatic deposit Bank credit card Bank debit card Electronic bill paying Online banking Pay-by-Phone systems Electronic check conversion

11 Objective 10: Identify correct check endorsements.
Blank endorsement

12 Objective 10: Identify correct check endorsements.
Restrictive endorsement

13 Objective 10: Identify correct check endorsements.
Special endorsement

14 Objective 10: Identify correct check endorsements.
Two-party check

15 Objective 11: Discuss the reasons for reconciling financial records.
To catch mistakes. To prevent overdrafts. To know exactly how much money is in your account. To be in control of your finances.

16 Objective 12: Prepare account documents.

17 Objective 13: Balance a bank statement.

18 Objective 14: State steps in stopping payment on a check.
In writing Use bank’s form or formal letter Include your name and signature, account number, check number, date the check was written, and payee’s name Explain why you are requesting to stop payment. By phone Temporary measure Follow with written request

19 Objective 15: Distinguish between ATM and debit cards
ATM card – a small plastic card issued by bank and activated by entering your personal identification number A fee may be charged for each transaction Provides great flexibility in banking hours and locations Functions include: Withdrawing money Making deposits Transferring money between accounts Finding out your balance Getting a cash advance Making loan payments If you lose your ATM or debit card, notify your bank immediately

20 Objective 15: Distinguish between ATM and debit cards
Debit card – combines combine the functions of ATM cards and checks Some banks issue a combined ATM/debit card   Debit cards are issued only by banks but accepted at stores and service providers Use of a debit card automatically deducts the money from your bank account Money is deducted instantly

21 Objective 16: Apply for an ATM card.

22 Objective 17: Identify hidden costs of banking.
Overdrafts have a negative effect on your credit rating. “Free” period of use can expire. Surcharges can be made each time you use your ATM card. Some banks charge a teller fee for using bank personnel to make your transactions. Debit cards often have a once-a-month “offline” fee and a per transaction fee. Many banks will charge a fee on accounts that are not active for a certain period of time. Failing to check ATM statements, debit receipts, and bank statements may cost you money.

23 Objective 18: Identify ways to protect your accounts.
Lost card If you lose your ATM or debit card or it is stolen, report it immediately.

24 Objective 18: Identify ways to protect your accounts.
Card management Save all pertinent records in a secure place in your home. Shred all documents that have your account numbers. Memorize your PINs. Be mindful of who is watching when you transact business. Carry all receipts out of the facility and keep them to compare to your bank statements. Use your bank’s ATM exclusively to save transaction fees. Shop for low- or no-charge ATMs.

25 Objective 18: Identify ways to protect your accounts.
Card management (continued) Avoid third-party ATMs found at rest stops, gas stations, and nightclubs; these charge the highest rates. Consider making larger withdrawals, therefore, fewer transactions to be charged for. Use checks, traveler‘s checks, or credit cards when traveling. Overseas ATM charges can be very high. Consider making deposits by ATM. Some banks credit customers for making deposits at ATMs. Do not take cash advances on credit cards at an ATM; you will pay fees to the bank and to the card issuer.

26 Objective 18: Identify ways to protect your accounts.
Card management (continued) Check the amount on your debit card withdrawal very carefully. Using a debit card removes your right to withhold payment because money is immediately removed from the account. Consider the cost of using a debit card. Is it worth not carrying a checkbook? Keep very accurate account records. If you have both credit cards and debit cards, think about which is the least expensive to use before making each transaction.

27 Objective 18: Identify ways to protect your accounts.
Bank accounts The Federal Uniform Commercial Code places a duty on bank customers to discover and report unauthorized signatures or alterations Uniform Commercial Code places absolute liability on bank customers who cause forgery and alteration losses by their negligence. Keep checks and deposit slips in a secure place. This includes keeping your checkbook out of view in your car and not using your deposit slip to give out your address. Do not give out your account number or password.

28 Objective 18: Identify ways to protect your accounts.
Bank accounts (continued) Follow the guidelines for writing and endorsing checks so they cannot be altered. Keep accurate records of your deposits and withdrawals so you can reconcile your bank statement monthly. Report errors to your bank as soon as possible after receiving the statement.

29 End of Unit 2


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