FINANCIAL SERVICES AND INSTITUTIONS

Financial Services

Services offered by banks and other financial institutions

1. Savings and Investment

2. Payment Services

3. Borrowing

Services for Short Term Needs

Daily cash needs Check Cashing Automated teller machines (ATM’s) Prepaid cards

Savings Regular savings account Money market account

Services for Short Term Needs

Checking Regular checking account Online payments, payment by phone Automatic preauthorized payments Cashier’s checks, Money orders

Credit Cards

Services for Long Term Needs

Savings Certificates of Deposit (CD’s) U.S. Savings Bonds

Credit Services Loans for cars, educations, etc. Home equity loans Mortgages

Services for Long Term Needs

Investment Services Mutual funds Financial advice

Other Services Tax preparation Insurance

Types of Financial Institutions

Deposit Institutions

Commercial Banks

Savings and Loans

Mutual Savings Banks

Credit Unions

Types of Financial Institutions

Non-Deposit Institutions

Life Insurance Companies

Investment Companies

Finance Companies

Others?

Electronic Banking / Payment

Direct deposit Automatic payments ATM’s

Fees Debit cards

Cash card and point of sale Overdraft “protection”

Prepaid cards and gift cards Electronic cash

Savings Plans

Type of Account Benefits Drawbacks

Regular Savings Account

- Low minimum balance- Ease of withdrawal- Insured

- Low rate of return

Certificates of Deposit (CD’s)

- Guaranteed rate of return- Insured

- Penalty for early withdrawal- Minimum deposit

Money Market Account

- Good rate of return- Some check writing- Insured

- Minimum balance- Penalties if below minimum

U.S. Savings Bond - Low minimum deposit- Guaranteed by gov’t- No state/local taxes

- Lower rate of return if cashed in early

Truth in Savings Law

Financial institutions must provide: Fees on deposit accounts Interest rates Annual percentage yield Terms and conditions

Banking Vocabulary

APY

ATM

Bad check

Cashier’s check

CDs

Certified check

Check

Checking account

Commercial bank

Credit union

Debit card

Demand deposits

EFT transaction fee

FDIC

Joint account

Money-market account

Money order

Savings and Loan Association

Sweep

Trust

Checking Accounts

Regular checking accounts

Interest earning checking accounts

Special types Student Activity accounts

Checking Accounts

Key Factors Restrictions

Minimum balance? Maximum number of transactions or checks

Fees and charges Monthly service charge Check printing Overdraft protection Stop payment order

Interest

Writing Checks

Routing number

Account number

Your name

Cashing Checks

Endorsements Blank endorsement Restrictive endorsement Special endorsement

Tips Do not endorse until ready to cash Use a pen Use exact same name as on front Give time for check to clear

Check Writing Simulation

You have $1,000 to spend – do not spend more Buy the items you wish (3 total) by writing checks Be sure to put your name at the top of the check Keep an active register with current and final

balances Hand in both sheets properly labeled Scoring

Checks properly written (7 pts) Register properly written (7 pts) Balances correct (6 pts)