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Lesson 6.1Banking Basics
February 28, 2011
Copyright © 2007-2011 … REMTECH, inc … All Rights Reserved 1
Introduction
Banks provide a safe place to keep your money and they encourage the flow of money in your community!
In a sense, banks grow money within a community by recycling the money people deposit in the form of loans to others in the
community!
The “multiplier effect” magically turns every dollar you deposit in a local bank into $7 to $8 dollars of economic activity in your
community!
Banks seem to be easy targets for jokes, but make no mistake – we need them and the services they offer!
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Lesson 6.1Banking Basics
February 28, 2011
Copyright © 2007-2011 … REMTECH, inc … All Rights Reserved 2
Objectives
• Explain what a bank is and how a bank works
You should be able to do following after completing this lesson
• Discuss how a bank, saving & loan and credit union are similar
• Explain how you can have more access to banks with fewer banks
• Summarize how online banking works
• Review what is the normal business hours for a bank
• Explain how a bank makes money off the concept of interest
• List the ways you can withdraw money from a bank
• Identify why banks are important to your financial future
• Define the important banking terms introduced in this lesson
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Lesson 6.1Banking Basics
February 28, 2011
Copyright © 2007-2011 … REMTECH, inc … All Rights Reserved 3
6.1.1 – What is a Bank?
• What the definition of a bank is
• Why banks are in business
• Why the term bank is considered generic
• Typical services offered by banks today
In this section, you will learn:
• Why a saving & loan and credit union are sometimes called banks
• Who is responsible for overseeing the operation of banks
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Lesson 6.1Banking Basics
February 28, 2011
Copyright © 2007-2011 … REMTECH, inc … All Rights Reserved 4
6.1.2 – A Bank on Every Corner
• How many banks existed in 1934 and 2008
• Why you have more access to banking services today even though there are significantly fewer banks
• What a branch bank is
• What the area of interest for a bank is
In this section, you will learn:
• How big or small a bank’s area of interest can be
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Lesson 6.1Banking Basics
February 28, 2011
Copyright © 2007-2011 … REMTECH, inc … All Rights Reserved 5
6.1.3 – Bank Locations
• Areas where banks are typically located
• How a bank selects a new location
• The reason banks select new locations
• What an ATM is
• Where banks place ATMs
In this section, you will learn:
• How the bank selects an ATM location
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Lesson 6.1Banking Basics
February 28, 2011
Copyright © 2007-2011 … REMTECH, inc … All Rights Reserved 6
6.1.4 – Operating Hours
• What the term “normal business hours” means
• Why the definition of normal business hours is changing
• Why a bank might be open on Saturday
• What 24 x 7 x 365 banking is
In this section, you will learn:
• What makes 24 x 7 x 365 banking possible
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Lesson 6.1Banking Basics
February 28, 2011
Copyright © 2007-2011 … REMTECH, inc … All Rights Reserved 7
6.1.5 – How Does a Bank Work?
• What concept makes it possible for both you and the bank to make money when you deposit money in the bank
• Why the bank pays you interest when you deposit money
• Evolution of US Banks Example
In this section, you will learn:
• About recent trends in the number of banks, bank branches and bank profits
You will run the following Interactive Example
• What a financial transaction is
• How deposit and withdrawal transactions work
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Lesson 6.1Banking Basics
February 28, 2011
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6.1.6 – Withdrawing Your Money
• What banks do with the money you deposit
• Why a bank is required to have a cash reserve
• How much of a cash reserve a bank must have
• How a bank provides access to your money when the bank is not open for business
In this section, you will learn:
• What a cash reserve is
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Lesson 6.1Banking Basics
February 28, 2011
Copyright © 2007-2011 … REMTECH, inc … All Rights Reserved 9
6.1.7 – The Importance of Banks
• What happens when your money at home is stolen
• What happens when your money in a bank is stolen
• Who can provide the financial services you will need
• How banks help you put your money to work
• Putting Your Money to Work Exercise
In this section, you will learn:
You will run the following Interactive Exercise:
• Common reasons for using a bank’s services
• How the financial services offered by banks can help grow your money
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Lesson 6.1Banking Basics
February 28, 2011
Copyright © 2007-2011 … REMTECH, inc … All Rights Reserved 10
Discussion Questions
Is it better to have a single bank in your neighborhood or multiple banks in your neighborhood?
Do banks really make money off issuing credit cards to their customers?