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E High School Financial Planning Program E High School Financial Planning Program 5 – Your Money: Keeping it Safe and Secure 1. What are the benefits to balancing a checking account? 2. Why should the Federal Reserve oversee financial institutions and the money circulation in the economy? 3. What are the benefits to comparing financial institutions and the services they provide?

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What are the benefits to balancing a checking account? Why should the Federal Reserve oversee financial institutions and the money circulation in the economy? What are the benefits to comparing financial institutions and the services they provide?. BANKING. Financial Institutions. - PowerPoint PPT Presentation

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Credit Unions & BanksUnit 5 – Your Money: Keeping it Safe and Secure
What are the benefits to balancing a checking account?
Why should the Federal Reserve oversee financial institutions and the money circulation in the economy?
What are the benefits to comparing financial institutions and the services they provide?
NEFE High School Financial Planning Program
Unit 5 – Your Money: Keeping it Safe and Secure
Depository Institutions: Businesses which accept deposits and offer multiple services in banking and finance.
Bank: A for-profit financial institution owned by investors in its stock that provides financial services to any customers.
Credit Union: A not-for-profit financial institution owned by its members that provides services to its members at low fees.
5-A-2
Unit 5 – Your Money: Keeping it Safe and Secure
Depository Institutions
Fees are
Safety
Interest
Automated Teller Machine: Electronic machine that customers/members can use to withdraw cash and make other financial transactions.
NEFE High School Financial Planning Program
Unit 5 – Your Money: Keeping it Safe and Secure
Commercial Bank
loans, investments, debit cards
Not-for-profit, member owned
NCUA insured
Examples: First Community, American Eagle
Credit Union
Unit 5 – Your Money: Keeping it Safe and Secure
Interest Earning Accounts
Savings Account: An account that helps you save money and earn a small amount of interest at the same time (Share Account @ Credit Union)
2. Checking Account (sometimes): An account that allows withdrawals by means of check, debit card, etc. (Share draft account @ Credit Union)
3. Certificate of deposit (also known as a Share Certificate account at a credit union)
Insured interest-earning savings account w/ restricted access to the funds
4. Money market account: A deposit account, which has a relatively high rate of interest, typically requires a higher minimum balance to earn interest or avoid monthly fees, and has a restricted # of transactions
*
Unit 5 – Your Money: Keeping it Safe and Secure
Credit Unions and Banks
For-profit companies owned by shareholders
Not-for-profit institutions owned and controlled by their own customers, who are known as members
Managed by a paid board of directors elected by the bank’s shareholders
Managed by a member and volunteer board of directors, who are elected by other members
Offer their services to everyone; anyone can become a customer
Offer their services to special groups of people and may be employer-, church-, community-, or alumni-sponsored (among others); customers must qualify for credit union membership through their membership with these special groups of people
NEFE High School Financial Planning Program
Unit 5 – Your Money: Keeping it Safe and Secure
Credit Unions and Banks
Credit Unions
Owned by shareholders; customers do not have ownership or voting privileges unless they also own stock in the bank
Owned by each credit union member, who has equal ownership and one vote, regardless of how much money a member has on deposit
Profits benefit a small group of stockholders
Profits are returned to members in the form of lower fees and loan rates and higher interest on deposits
Accounts are federally insured up to $100,000 by the Federal Deposit Insurance Corporation (FDIC)
Accounts are federally insured up to $100,000 by the National Credit Union Administration (NCUA)
NEFE High School Financial Planning Program
Unit 5 – Your Money: Keeping it Safe and Secure
Savings and Loan Association (S&Ls)
Loans and mortgages to customers w/ savings account
Generally higher interest rate than commercial banks
Offer interest-earning checking accounts
Services: Checking/savings/retirement accounts, CDs, loans, investing
NEFE High School Financial Planning Program
Unit 5 – Your Money: Keeping it Safe and Secure
Financial Services
All of these services can be found in most banks or credit unions
Online Banking, Online Brokerage, Checking Accounts,
Savings Accounts, Certificates of Deposit (CDs),
Individual Retirement Accounts (IRAs), Savings Bonds,
Credit Cards, Check Cards, Gift Cards, Payroll Cards,
Commercial Prepaid Cards, Auto Loans, Boat Loans, RV Loans, Student Loans, Other Loans, Home Mortgages,
Mortgage Refinance Loans, Home Equity Loans, Military Bank, Student Centers, Accessible Banking,
Small Business Banking Services, Merchant Services ,
Home Buying, Investment Services, IRAs, Mutual Funds,
529 College Savings Plans, Life Insurance (various types),
Long-Term Care Insurance, Homeowner’s Insurance,
Renter’s Insurance, Condo Insurance, Auto Insurance, Supplemental Income Insurance, Foreign Currency Exchange, Traveler’s Checks, International Wire Transfers, and More
5-B
Unit 5 – Your Money: Keeping it Safe and Secure
Types of Insurance
Protects depository institution accounts
National Credit Union Administration (NCUA)
Provides insurance for credit unions
Federal Savings and Loan Insurance Corporation (FSLIC)
Provides insurance for savings and loan
*
Unit 5 – Your Money: Keeping it Safe and Secure
Methods of Payment
Cash: Money in the form of paper currency or coin
Personal Check: Written order to a financial institution directing the financial institution to pay stated amount of money, from the customer’s account.
Credit Card: Specially coded plastic card issued by banks & businesses authorizing the holder to purchase goods & services on credit.
Debit Card: Specially coded plastic card issued by a financial institution that allows the cardholder to transfer funds electronically and immediately from his/her checking account. As if were paying w/ check
NEFE High School Financial Planning Program
Unit 5 – Your Money: Keeping it Safe and Secure
Methods of Payment
Point-of-sale (POS) terminals: are located at stores and allows the consumer to use a debit card to make purchases.
Personal Identification Number: Pass-code # you use to get access to your savings and/or checking account
Money Order: A written order for the payment of a sum to a named individual; obtainable and payable at a bank, post office, or convenient store. For a fee usually $.99-$5 Usually smaller amounts of $. Less than $1,000
NEFE High School Financial Planning Program
Unit 5 – Your Money: Keeping it Safe and Secure
Methods of Payment
Cashier’s Check: A check drawn by a bank (for a fee) on its own funds and signed by the bank's cashier. Guaranteed funds (larger amounts)
Traveler’s Check: An internationally redeemable draft (check) purchased in various denominations from a bank or traveler's aid company and payable only upon the purchaser's endorsement against the original signature on the draft.
Smart Card: A prepaid smart card contains stored value which the person holding it can spend at retailers. As well as personal info and other data
Contactless Payment: Swiping in front of sensor, (RF). May require signature if purchase is over $25.
NEFE High School Financial Planning Program
Unit 5 – Your Money: Keeping it Safe and Secure
Opening an Account
Social Security Number
Unit 5 – Your Money: Keeping it Safe and Secure
Deposit Slip
Print Your Name Here
Print Your Address Here
Sign Your Name Here
Unit 5 – Your Money: Keeping it Safe and Secure
NEFE High School Financial Planning Program
Unit 5 – Your Money: Keeping it Safe and Secure
Completing a Deposit Slip
Checks
If more checks are being deposited than number of spaces on the front, use the back
List each check
*
Unit 5 – Your Money: Keeping it Safe and Secure
http://www.google.com/imgres?q=parts+of+a+check&hl=en&gbv=2&biw=1366&bih=629&tbm=isch&tbnid=KAk5_qzEivM2wM:&imgrefurl=http://www.gcflearnfree.org/moneybasics/6.5&docid=t9pT9UVgPmmeJM&w=550&h=300&ei=YlyTqmvIOKKsgKtpZnXCQ&zoom=1&iact=hc&vpx=706&vpy=323&dur=4578&hovh=166&hovw=304&tx=117&ty=87&page=1&tbnh=101&tbnw=172&start=0&ndsp=23&ved=1t:429,r:13,s:0
NEFE High School Financial Planning Program
Unit 5 – Your Money: Keeping it Safe and Secure
Check Details
This is the Routing Number for your bank (used for electronic transfers of funds from your account to the payee’s account)
This is your Account Number. (Note that sometimes these two numbers are the reverse of what is shown here.)
This is just your check number again (see above right).
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!
On the lower line, write out the amount like this.
Legibly print the amount of money this check is for.
Enter the date you write each check.
Place to add any information you want to related to this check.
Put your personal signature here.
Make sure your personal information on the check is correct.
Here is the number of this Check.
5-F
Unit 5 – Your Money: Keeping it Safe and Secure
Endorsements
Signature of payee w/ words “For Deposit Only” & account number
Endorse: To sign the back of a check to make it payable to the specified payee.
Student Name
Students Name
Endorse Here
Unit 5 – Your Money: Keeping it Safe and Secure
Special Endorsement: Forwarding a check to someone by writing “pay to the order of” + their name and then putting your blank endorsement
Endorsements
Student Name
Unit 5 – Your Money: Keeping it Safe and Secure
How Check 21 Works
Prior to Check 21
Paper checks physically moved from customer to business to various banks and the transfer of money from customer’s bank to business’ bank took days
After Check 21
Paper checks are scanned into a computer system at the place of business and immediately returned to the customer. This electronic copy of the check is called a substitute check. The substitute check is then transferred electronically to various banks and the transfer of money customer’s bank to business’ bank takes hours
NEFE High School Financial Planning Program
Unit 5 – Your Money: Keeping it Safe and Secure
Overdraft
Overdraft: A deficit in a bank account caused by drawing more money than the account holds(debit card, ATM withdrawal, or check)
Overdraft charge typically between $20-$35
Over 50 million Americans overdraw annually costing 24 billion in overdraft fees
Overdraft protection: which draws from a savings account, credit card, or another checking account
This usually costs $5-$10
New regulation will decline transaction unless specified otherwise
Stop payment order: request to not fulfill payment on a check you have written. Typically costs between $20-$30
NEFE High School Financial Planning Program
Unit 5 – Your Money: Keeping it Safe and Secure
Reading a Bank Statement
NEFE High School Financial Planning Program
Unit 5 – Your Money: Keeping it Safe and Secure
Check Register
The date the check was written or transaction was made
(B&PF p.142)
Unit 5 – Your Money: Keeping it Safe and Secure
Check Register
Check Number
*
Unit 5 – Your Money: Keeping it Safe and Secure
Check Register
Description of Transaction
The person/business the check was written to or where the debit card was used
Gray line can be used to write the memo
*
Unit 5 – Your Money: Keeping it Safe and Secure
Check Register
Unit 5 – Your Money: Keeping it Safe and Secure
Check Register
Unit 5 – Your Money: Keeping it Safe and Secure
Check Register
√ T
*
Unit 5 – Your Money: Keeping it Safe and Secure
Check Register
Listed on the bank statement
*
Unit 5 – Your Money: Keeping it Safe and Secure
Check Register
Keep this updated
Unit 5 – Your Money: Keeping it Safe and Secure
100
1/15
Unit 5 – Your Money: Keeping it Safe and Secure
Reconciling a Checking Account
Reconcile: Comparing the bank statement to your checkbook register and accounting for any differences.
Step 1: Obtain the current balance from your bank statement.
Step 2: Add any deposits that you have recorded in your check register but that are not on this statement.
Step 3: Subtract any outstanding checks (checks you have written but that have not yet cleared the banking system).
step 4: Compare result with the current balance in your check register
* Helps you avoid bouncing checks
* Lets you know how much is in your account
* Keeps you in control of your finances
(B&PF p.145)
Unit 5 – Your Money: Keeping it Safe and Secure
Steps for Reconciling
$275.00
$275.00
$74.94
Unit 5 – Your Money: Keeping it Safe and Secure
Place a check mark in the √ T column for all transactions that have been cleared and are shown on the bank statement
$275.00
Unit 5 – Your Money: Keeping it Safe and Secure
Determine the current account balance from the bank statement
$275.00
Unit 5 – Your Money: Keeping it Safe and Secure
Add any outstanding deposits – transactions that have not cleared the bank
Calculate the Subtotal
Unit 5 – Your Money: Keeping it Safe and Secure
Subtract any outstanding withdrawals and calculate
*