middle tennessee state university1 banking relationships $building your financial future$
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Middle Tennessee State University 1
Banking Relationships
$Building Your Financial Future$
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Establish a Banking Relationship
Why and does it really matter??
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WHY BOTHER WITH A BANK?
Reason for Banks-
Banks are the medium that enable individuals to enter and interact with the economy and market via personal and commercial transactions.
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Why Establish a Banking Relation?• Financial transactions that allow you and
your money to interact with the global economy.
• This affords you financial
– Protection and security
– Convenience
– Opportunities
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WHAT DOES YOUR BANK DO ?
CheckingSavingsLoansFinancial advisement
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“I’m about to give you all my money….and all I ask is a little R-E-S-P-E-C-T.”
The Banking relation is one built on trust and respect.
So what do you want in a banking relationship?
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How to Establish that Relationship
• Have an idea of what you want – Convenience ?– Service ?– Costs ?– Long term relation ?– “A free toaster” ?
KEY POINT: SHOP AND COMPARE
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The First Step in the Relationship• Open an Account
– Usually a checking or savings account
Why?– Safe place to keep your money– Tools that help you establish and stick to a spending plan– Interest earning– Inexpensive way to cash and write checks– a way to establish a relationship with a financial institution.
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7 Steps to follow in opening an account
1) Research your options2) Gather personal information3) Go to the bank of your choice4) Complete necessary paperwork5) Sign a signature card6) Make an opening deposit (minimum)7) Read the customer agreement and account
material
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The Anatomy of a Check
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Reconciliation of your Account
• Very important to maintain account balance and integrity
• Reconcile often (at least monthly)• Tips
– Keep a file for canceled checks and transactions– Enter transactions immediately-– Be detailed– Use a pencil- be neat
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Debit Cards
• Banking cards used like a credit card for Point of Service transactions
• Very convenient• Safe- (may be asked to show ID).• Drawn against balance in account.• Don’t forget to enter transaction into
register.
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Debit Card Trend-What’s in Your Wallet?
Number of Credit vs. Debit Card transactions
1999- 20.71 billion 69% Credit, 31% Debit
2004- 38.84 billion 49% Credit, 51% Debit
2009 (Projected)- 61.09 billion42% Credit, 58%
DebitSource: Newsday, November 13,2005- (Lexis-nexis.com)
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Check 21• New legislation that allows Banks (financial
institutions) to accept and use a digital copy of the check to transact the business instead of the original paper.
SO WHAT?
The transactions clear the bank faster---
Can cost YOU if funds are not available.
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Credit and Credit Cards
Just the facts ma’m…. Americans have Over 1.2 Billion cards Outstanding balances $500 Billion Every year almost 4 billion solicitations for credit
cards Average College student has 4 cards with an
average of >$2700- (on top of student loans averaging $19,400).
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How is My Credit History Used?
• Measurement of your Ability to pay your debt.
Who uses this information?
Future lendersFuture EmployersFuture LandlordsFuture Service Providers
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5 C’s of Credit
Are you creditworthy?
• Character
• Capacity
• Capital
• Collateral
• Conditions
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Types of Credit
• Revolving or Open Credit
• Installment Credit
• Non-installment Credit
Credit comes in two forms-•Secured•Unsecured
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Different Cards for Different Needs
• Bank Credit cards (Visa & MasterCard) Premium or Prestige Cards, affinity cards, secured credit cards
• Travel & Entertainment Cards (American Express, Diners Club)
• Single Purpose Cards- (Gasoline Cards or store only)
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Smart Credit Tips
• Manage your Credit WISELY-Remember credit commits future income.
• BE DISCIPLINED!• Shop around-compare rates and features• Build a trustworthy relationship with
creditors-financial future depends on it.
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Credit Resources
EquifaxPO Box 105873Atlanta, GA 30348800-685-1111www. equifax.com
Trans Union Corp.PO Box 390 Springfield, PA 19064-0390800-916-8800www. transunion.com
ExperianPO Box 2350Chatsworth, CA 91313-2350888-397-3742www.experian.com
www.fanniemaefoundation.org
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