online banking
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
Online Banking
Take Charge of your Finances
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
Checks – Demand Deposits
What Does Demand Deposit Mean?An account from which deposited funds can be withdrawn at any time without any notice to the depository institution.
• This account allows you to "demand" your money at any time, unlike a term deposit, which cannot be accessed for a predetermined period (the loan's term).
• Most checking and savings accounts are demand deposits, accessible by the account holder at any time.
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of ArizonaSlide 1 – Formal and Informal Financial Services
Lesson Reference: Introduction to Financial Services, Activity 2 – Overhead 1
INFORMAL FINANCIALSERVICES
• Payday lenders• Check cashing services• Rent-to-own stores• Pawn shops• Title lenders• Loans from family/friends• Cultural savings clubs• Remittances offered through
nonfinancial institutions
FORMALFINANCIAL SERVICES
• Accounts• Credit cards• Loans• Investment vehicles• Direct deposit• Wire transfers/ remittances
3
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
PLACES TO SAVE MONEY
Would you save your money in any of these places? Why? Why not? Can you think of other places to save money?
• Bed & Mattress• Cookie Jar• Pillow• Wallet• Money Belt• Small House Safe
Slide 1 - Placesto Save MoneyLesson Reference: Introduction to Financial Services, Activity 2 – Overhead 14
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of ArizonaSlide 2 - Alternative Financial Services
Lesson Reference: Introduction to Financial Services, Activity 1 – Handout 1
ALTERNATIVE FINANCIAL SERVICES
•Check-Cashing Services
•Check-Deferrals, Cash Advances, Payday Loans
•Pawn Shops
•Rapid Tax Refunds
•Rent-to-Own
•Other Financial Services
5
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
• To cash a paycheck or government check, these businesses charge a percentage of the amount of the check as a fee.
• For example, cashing a $200 paycheck could cost as much as $8 each week. In a year, that adds up to $416.
Check-Cashing Services
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
Check-Deferrals, Cash Advances, Payday Loans
• Whichever name is used, these are considered short-term, high interest-rate loans.
• The customer writes a personal check, including a fee (interest rate). The lender cashes the check for the customer and agrees to hold the check until the next payday.
• Oftentimes, the borrower will need to take out additional loans to cover the fees and to make it through to the next payday. This can lead to a vicious cycle of debt that can be difficult to pay off.
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
Pawn Shops
• Here you can get loans at very high interest for the value of goods, including electronics and jewelry.
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
Rapid Tax Refunds• To get your tax refund early from
someone you pay to prepare and receive your tax return, you may have to pay a significant portion of your refund for the service.
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
Rent-to-Own• Renting items such as home
appliances or entertainment systems before buying them from the same business can add up to fees much higher than the cost of using credit to pay for the same items.
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
The Cost of Alternative Financial ServicesIf you wanted to purchase a television set that cost $500 with sales tax, it could end up costing you much more depending on the financial service you use to pay for it. Consider the following options.
Cash Rent-to-Own Store
Payday Lenders
If you purchasethe television withcash, it will costyou $500.
Pay $13.99 per week for 18 months, it would cost you a total of $1,091.22.
If you get a $500loan at a paydaylender with abiweekly interestrate of 20%, youwould pay $100.07every two weeksfor 21 months,costing you a totalof $4,425.01
$500 $1,091.22 $4,425.01
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of ArizonaSlide 2 – How a Bank Can Save You Money
Lesson Reference: Introduction to Financial Services, Activity 2 – Handout 2
HOW A BANK CAN SAVE YOU MONEY
Monthly Fees without a Bank Monthly Fees with a Bank*
12
• $80 to cash paychecks• $3.81 on money orders and
stamps to pay bills• $15 to send money to family
with a wire transfer company
Monthly cost: $98.81 Annual cost: $1,185.72
• $0 to directly deposit
paycheck• $0 to get cash from bank's
ATMs or make debit card purchase
• $0 to pay monthly bills using electronic bill payment
• $5 to send money to family
Monthly cost: $5.00 Annual cost: $60.00Annual Savings by Using a Bank: $1,125.72
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
Cashier’s Check• a check written by a bank on its own
funds
• Check over 6 months old may not be honored by a bank
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
Certified Check• A personal check that the bank
guarantees to be good.
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
Safe deposit box• Important papers –
– Mortgage– Insurance Policies– Stocks and Bonds– Deed– Birth certificates
– Do NOT keep cash
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
FINANCIAL SERVICESMODERNIZATION ACT (1999)
Transformed the banking industry. Eliminated many
restrictions among companies in the securities, banking, and insurance industries.
Results?• Banks may offer some insurance and
investment services.
• Investment and insurance companies may offer some traditional banking services. Investments are not insured by FDIC.Slide 3 - Financial Services Modernization Act
Lesson Reference: Introduction to Financial Services, Activity 3 – Overhead 3 16
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
Check Details11 22 33 44 55 99887766 1010
This is the Routing Number for your bank (used for electronic This is the Routing Number for your bank (used for electronic transfers of funds from your account to the payee’s account)transfers of funds from your account to the payee’s account)This is your Account Number. (Note that sometimes these two This is your Account Number. (Note that sometimes these two numbers are the reverse of what is shown here.)numbers are the reverse of what is shown here.)This is just your check number again (see above right).This is just your check number again (see above right).Here is where you write the name of the party you are writing your Here is where you write the name of the party you are writing your check to (the payee). Be sure to write or print legibly!check to (the payee). Be sure to write or print legibly!On the lower line, write out the amount like this.On the lower line, write out the amount like this.Legibly print the amount of money this check is for. Legibly print the amount of money this check is for. Enter the date you write each check.Enter the date you write each check.Place to add any information you want to related to this check.Place to add any information you want to related to this check.Put your personal signature here.Put your personal signature here.Make sure your personal information on the check is correct.Make sure your personal information on the check is correct.Here is the number of this Check.Here is the number of this Check.
1111
5-F5-F
Click the numbers
John M. Smith
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
Parts of a Check
071000741 08 40 856 0581
581ARDYS JOHNSONPhone: 555-01004250 West 18th AvenueChicago, IL 60601-2190
SKY CENTRAL BANKChicago, Illinois
PAY TO THEORDER OF
DOLLARSFor Classroom Use Only
MEMO
DATE 2-74710
$
July 1, 20--Food Mart 36.12
Thirty-six and 12/100
groceries Ardys Johnson
ABA NumberPayee
DrawerDrawee
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
Checking Account• Check - A written order to a bank to pay a stated
amount to the person or business named on it.
• Demand deposit -Money on deposit in a bank that can be withdrawn at any time
• Canceled check -A check that bears the bank’s stamp, indicating that it has cleared
• Overdraft - A check written for more money than the writer’s account contains
• Floating a check - Intentionally writing a check on an account without sufficient funds in the hope of making a deposit before the check is cashed.
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
100100 1/11/155
Fine FoodsFine FoodsGrocerieGroceriess
DepositDeposit
AutoAuto 1/111/11
1/111/11
23 23 1111
Deposit to CheckingDeposit to Checking
Charge for Personalized ChecksCharge for Personalized Checks
200 00200 00
20 0020 00
23 23 1111
200 00200 00200 00200 00
156 89156 89
Keep a RecordClick HereClick Here
5-G5-G
20 0020 00 180 00180 00WDWD
11 22 33
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of ArizonaSlide 4 - Making a Deposit - Completing a Deposit Slip
Lesson Reference: Basic Banking Services, Activity 6 – Handout 2
MAKING A DEPOSIT - COMPLETING A DEPOSIT
SLIP
21
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
Reading a Bank Statement
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of ArizonaSlide 3 - Making a Deposit - Endorsing a Check
Lesson Reference: Basic Banking Services, Activity 6 – Handout 2
MAKING A DEPOSIT - ENDORSING A CHECK
Restrictive Endorsement(most secure)
Blank Endorsement(least secure)
Endorsement to a third party
The Back Side of a Check
23
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
Online Banking
• In the year 2006, 63 million Americans reported that they used online banking
• 43% of internet users in the United States bank online
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
Online Banking• Online banking – also known as
internet banking, allows consumers to complete transactions with wireless technology. Wireless technology includes: – Personal Computers (PCs) – Personal Digital Assistants (PDAs)– Cellular phones
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
Online Banking• Consumers can access account
information and statements
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
Online Banking• Consumers can transfer funds
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
Online Banking• Consumers can manage bills and
apply for credit
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
Online Banking• Advantages of online banking include:
– Decreased cost of paper and postage– Storing all statements online instead of keeping a
paper copy – Convenience – Paying bills online– Ability to access account anytime – No waiting for a monthly statement
• Disadvantages of online banking include: – Not as personal – Not able to access without technology – Decrease in safety features – Increase in risk for fraud
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
Online Banking
Advantages• Decreased cost of
paper and postage• Storing all statements
online instead of keeping a paper copy
• Convenience • Paying bills online• Ability to access
account anytime • No waiting for a
monthly statement
Disadvantages• Not as personal • Not able to access
without technology • Decrease in safety
features • Increase in risk for
fraud
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
Online Bill Payment• Online bill payment – allows
consumers to send money from one account to a vendor – Usually occurs automatically – Consumers need to check with the
vendors regarding their policy of when the payment will be processed
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
Online Bill Payment• Examples of companies that use online bill
payment include: – Retailer banks– Credit card companies– Insurance companies– Energy and utility companies– Health care– Transportation companies– Education expenses
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
Online Bill Payment
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
Online Bill Payment • Important financial aspects include:
– Checking with the vendor or company to understand their policy of when transactions are complete
– Confirming there are enough funds in the account to cover the expense of the bill
– Confirming bill will be paid, money will be taken out of the account, and the transaction will be completed
– Their financial information is secure and it is safe to make online transactions
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
Determine Security • The Uniform Resource Locator (URL)
ends in “s” which stands for secure • A closed lock to the right of the URL or
in the bottom right hand corner of the web browser to indicate a secure site
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
Insecure Practices• Email accounts are not secure
– Do not send important information such as:•Social security numbers •Bank account numbers•PIN numbers
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
Consumer Protection• The Federal Bank of Chicago suggests the
following: – Passwords are a combination of letters and
numbers – Change passwords once a month– Keep all receipts and compare them to bank
statements monthly – Log out of depository institution Web sites
immediately after you finish working – Contact the depository institution directly with
any questions or concerns
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
Recurring Payment • Recurring payment – bills are set to
be paid on the due date or a previous date set by the consumer – Payment will happen automatically
electronically
• Advantages of recurring payment include: – Save money on postage – Saves time for the consumer – Bills are paid on time
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
Regulation E• Regulation E – covers all electronic
fund transfers including transfers occurring through an electronic terminal, computer, telephone, or magnetic tape – The transfer must be conducted with the
purpose of authorizing a depository institution to debit or credit a consumer's account
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
Consumer Protection• Privacy Policy outlines how a
consumer’s information will be used and protected
• Opting out of a financial policy allows a consumer to request a depository institution to share only a limited amount of personal information
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© Family Economics & Financial Education –March 2008 – Financial Institutions – Online BankingFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at
the University of Arizona
Conclusion• Review
– Define online banking – Review what transactions can be
completed through online banking– Discuss advantages and disadvantages of
online banking– Discuss online bill payment – What are secure and insecure online
banking practices?
• Any questions?
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