how to use a financial institution · how to use a financial institution latino community credit...

HOW TO USE A

FINANCIAL

INSTITUTION BUILDING

A better

FUTURE®

How to use a financial institution Latino Community Credit Union 2

HOW TO USE A FINANCIAL

INSTITUTION

LATINO COMMUNITY CREDIT UNION & LATINO COMMUNITY DEVELOPMENT CENTER

Copyright©2011 Latino Community Credit Union


TABLE OF CONTENTS

INTRODUCTION 4 WHY SHOULD I USE A FINANCIAL INSTITUTION? 5 CREDIT UNIONS VS. BANKS 6 WHAT DO I NEED TO OPEN AN ACCOUNT? 7

GENERAL DOCUMENTS 7 INDIVIDUAL TAX IDENTIFICATION NUMBER (ITIN) 7 HOW CAN I APPLY FOR THE ITIN? 7

WHAT QUESTIONS SHOULD I ASK? 8 HOW DO I USE MY CHECKING ACCOUNT? 9

WRITE A CHECK 9 DEPOSIT A CHECK 9 ENDORSE A CHECK 10 BALANCING MY CHECKBOOK 10 DEBIT CARD 11 OVERDRAFT PROTECTION 13 DIRECT DEPOSIT 14

HOW CAN I ACCESS MY ACCOUNTS? 16

PHONE 16 INTERNET 16 ATM 17

MYTH BUSTERS 18


In this chapter, we will learn how to begin working with a financial institution. You may wonder if

you should keep your money at home instead of a financial institution. We will discuss why financial

institutions are the safest option.

Using a financial institution offers you a safe place to save and grow your money. In the United

States, financial institutions offer many important services including savings accounts, checking

accounts and loans. It is important to know how they work to find the best services for you.

INTRODUCTION

DISCUSSION TOPIC

If I am an immigrant, is my money safer here or in my home country?

Your money is safest in a reliable financial institution, whether here or in

your home country, where it is federally insured and you can access it

easily. A financial institution allows you to manage and grow your

money.


The interest rate is written as a percentage (%) of your money or your loan. Interest works in two ways. First, if you deposit your money in an account, you can earn interest. To earn interest means that your financial institution pays you to keep money in your account. Second, if you borrow money (a car loan, for example), you will have to pay interest.

I AM SAFE

If you keep your money under the mattress or carry a lot of cash in your pocket, you could lose

your money or be robbed. It is much safer for you and your family to keep your money in a

financial institution.

MY MONEY IS SAFE

The money you save in your credit union or bank is insured by the federal government up to

$250,000. This means that you cannot lose your money, even if the financial institution closes.

An account in a financial institution is the safest way to save your money for the future.

MY MONEY CAN GROW

Saving money with my financial institution will allow my money to grow over time to help reach

my goals. Financial institutions offer different types of accounts with a variety of terms, fees,

and interest rates.

You can save money since financial institutions are typically much less expensive than using

check cashers or payday lenders. You will also be able to access credit when you create a

relationship with a financial institution. This means that you can buy things now and pay for

them later. When you manage your credit well, you can build a strong credit history. This will

allow you to make important purchases, such as a home, to build wealth for yourself and your

family.

WHY SHOULD I USE A FINANCIAL INSTITUTION?


Banks and credit unions are both regulated by the federal government. This means that your deposits are insured up to $250,000.

In the United States, there are various types of financial institutions. Two of the main types of

financial institutions are credit unions and banks. Both of them offer similar types of services and a

safe place to save your money. But, different financial institutions offer varying interest rates and

fees.

CREDIT UNIONS: are non-profit financial institutions.

exist to serve their members and work for the benefit of the community.

use the money the organization makes to provide more benefits to their members, such as

lower fees and better interest rates.

CREDIT UNION MEMBERS: have something in common, such as an employer, association, or community. They must

join the credit union to use its services.

obtain a share of the credit union by opening a savings account and become owners of the

organization.

participate in a democratic process to elect leaders of the organization who are part of the

board of directors.

CREDIT UNIONS VS. BANKS


GENERAL DOCUMENTS

Each financial institution may request different types of documentation. Here are some examples:

THE INDIVIDUAL TAX IDENTIFICATION NUMBER (ITIN)

The Individual Tax Identification Number (ITIN) is a number that the Internal Revenue Service (IRS) issues to people who cannot get a valid social security number so that they can file their taxes. With this number, you can file your taxes, receive interest on your bank accounts, start a credit history, or apply for a loan with some financial institutions.

HOW CAN I APPLY FOR THE ITIN?

Go to your local Internal Revenue Service (IRS) office and get the form W-7 with the corresponding instructions. You can complete the application yourself or ask for help from your local non-profit organizations. Usually your financial institution or local community center can help you apply for this number.

WHAT DO I NEED TO OPEN AN ACCOUNT?

An ITIN or a Social

Security number

A driver’s license or

another form of

official

identification with

your photo and

your signature

A bill to verify

your address

A minimum deposit

of $10 for a savings

account

Be aware!

Do not pay a lot of money for someone to help you fill out your ITIN paperwork.

The ITIN is NOT a work permit.


While each financial institution offers similar products and

services, their rates, fees, minimum balances and deposits

can vary. It is important to ask the right questions before

opening your account.

WHAT SHOULD I ASK WHEN I OPEN AN ACCOUNT?

ARE THERE ANY

FEES/CHARGES?

DOES THE

ACCOUNT EARN

INTEREST?

DO I NEED TO MANTAIN A MINIMUM BALANCE?

IS THERE A MINIMUM DEPOSIT?

You should ask how much interest the account earns. To earn interest means the financial institution pays you for keeping money in your account. All savings accounts should earn interest. There are different types of savings accounts with different interest rates. Some checking accounts earn interest too.

Sometimes you have

to pay a monthly

maintenance fee for

having an account.

Most checking

accounts have

monthly fees, but they

should be very low.

Some financial

institutions have no

monthly fee, but have

different types of fees

instead. For example,

you might have to pay

when you use the ATM

machines or visit the

teller.

Minimum balance is

the amount of money

that you need to have

in your account at all

times. Many financial

institutions charge

you a fee if your

balance goes below

the minimum

balance.

Minimum deposit is

the amount of

money you must

deposit to open an

account.

Be aware!

Fees and charges for account management, overdraft and ATM use might

change and can be very high. Be aware of new fees and penalties charged to

your account and compare.


You can use a checking account to write checks, to pay bills, or to use a debit card to buy things in

stores.

WRITE A CHECK

Learn how to write a check:

DEPOSIT A CHECK

Learn how to deposit a check:

123 Miguel Rodríguez 111 Street Durham, NC 00011

111111111

HOW DO I USE MY CHECKING ACCOUNT?

Today’s

Date

*Name

person to

receive

cpayment

. *

Write today’s

date here.

Use numbers to

write the check

amount.

Name of person or

company who will

receive the money

Write the amount

in words

Note the purpose

of the check

Sign here

Check number

Write today’s date

here

Write your

name here

Indicate cash to be

deposited

Indicate here checks

to be deposited

Write here the amount

of each check to be

deposited

Total cash and

checks to deposit

Total cash you want

to receive

Subtotal minus

cash received

Write here your

account number


If there is more than one owner of the account it is recommended that one person tracks the balance in the account using the check register in order to avoid NSF, overdraft and other unnecessary fees.

ENDORSE A CHECK

Sign your name on the back of the check where it says “ENDORSE HERE”. Remember, after your

check is endorsed it is the same as cash. So, wait until you cash your check to sign it, in case it is lost

or stolen.

BALANCING MY CHECKBOOK

1. Record and subtract all DEBITS - withdrawals using the ATM, debit card or other automatic payments deducted from your account, checks, and service fees.

2. Record and add up all CREDITS - deposits, including direct deposit or electronic funds transfers.

3. Calculate your BALANCE in your register - add your deposits and subtract your withdrawals.

Date Number Description of

transaction

Debit/Payment

(-)

Credit/Deposit

(+)

Balance

1/20/09 Previous balance 435.00 435.00

1/21/09 90 Groceries 42.35 392.65

1/2/09 91 Newspaper 17.61 375.04

1/22/09 92 Felipe Fuentes 25.80 349.24

1/23/09 Paycheck 300.00 649.24

Your check register helps you monitor the amount of money in your checking account. This will

help you to avoid fees for using more money than you have in your account. It is important to

record in your check register every checking account transaction.

END

OR

SE H

ERE

Do

no

t si

gn b

elo

w t

his

lin

e

Sign here


PIN stands for “personal identification number.” This number is normally sent to your home by mail in a separate envelope when you apply for a debit card. You use this number to access your accounts at the ATM or make purchases with your debit card at stores. The PIN is a safety feature; it is like an electronic signature.

DEBIT CARD

When you open a checking account, you can request a debit

card. Debit cards can be used to make purchases almost

anywhere. You can also use a debit card to withdraw money

from the ATM. In most cases you will need to enter a

Personal Identification Number (PIN) that your financial

institution will provide you. When you use your debit card, it

takes money directly from your checking account to make

the payment. It acts like a check, but faster.

ADVANTAGES

DISADVANTAGES

You do not need to carry cash.

If your purse or wallet is lost or stolen

your money is safe since a PIN number is

required to access your funds.

You do not need to visit your financial

institution every time you need cash.

You can use your card just about

anywhere you go and if you need cash,

you can access your money at an ATM

machine any time.

If you do not use your check register to

track the money in your account, you

could spend more than you have.

Your debit card provides direct access to

your checking account. So, be sure to

protect your Personal Identification Number

(PIN) and debit card number. Do not carry

your PIN with your card and do not allow

anyone to watch you enter your PIN at the

ATM.

YOUR PIN IS PERSONAL, DO NOT SHARE IT

WITH ANYONE!

BE AWARE!

If your card is lost or stolen or you detect any fraudulent use, contact your financial institution

immediately. In some cases, such as online purchases, credit cards have more protection than debit

cards in case of fraud.


ATM CARD, DEBIT CARD AND CREDIT CARD ATM card Debit card Credit card

To obtain it you need to have: A savings account A checking account Any account, but your

application needs to be

approved first.

Can I withdraw money from

the ATM?

Yes Yes Yes

Do I need a PIN to use the

ATM?

Yes Yes Yes. It is possible you will be

charged more interest for a

cash advance.

Can I use it for purchases? No Yes Yes

Do I need a PIN to make

purchases?

You cannot make

purchases

Yes No. You only need to sign the

receipt.

When you use your card to

withdraw money or make

purchases, the money …

… is withdrawn

immediately from

your account.

… is withdrawn

immediately from

your account.

…is borrowed from your

financial institution and you pay

it back the following month.

Limit you can spend The amount in your

account.

The amount in your

account.

Credit limit previously

approved.

It is very important to understand that the amount you have in your account determines the

maximum amount you can spend. If you spend more than you have in your account, you will be

charged a Non-Sufficient Funds (NSF) fee.

To avoid spending more than you actually have, it is important to keep a record of your expenses,

writing each transaction in your check register and carefully checking the transactions in your

printed or online monthly statement.

The amount in your checking account =

The limit you can spend on your debit card


It is good to have overdraft protection, but you should try not to use it. You should always know how much money you have in your checking account. Do not withdraw or write checks or make purchases for more than that amount.

If you do not manage your accounts carefully, they could be closed and it could be difficult to open an account in another financial institution.

OVERDRAFT PROTECTION

Overdraft protection helps you if you spend more money than you have available in your checking

account. There are two types of overdraft protection:

One type takes money from your savings account and puts it into your checking account.

The other type gives you a small loan to pay the check.

While overdraft is less expensive than incurring non-sufficient funds fees, there is still typically a fee

for overdraft protection and a maximum number of transfers that can be made each month from

your savings to your checking account to fund overdrafts. These restrictions and fees vary by

financial institution.

SAVINGS ACCOUNT

CHECKING ACCOUNT

FINANCIAL INSTITUTION


DIRECT DEPOSIT

Direct deposit allows your employer to deposit your salary directly in your account. You receive a payment stub with all the information about your hours worked and salary. Your money is safe, you save time waiting in line to deposit your check, and your money begins to earn interest right away.

Direct deposit also allows you to receive your Social Security and other federal benefit payments.

You can sign up at http://www.godirect.org or calling 1-800-333-1795.

Ask your employer if

they offer direct

deposit.

Ask for a direct

deposit form from a

representative at your

financial institution and

give it to your employer.

If the answer is yes

Name and address of your

bank or credit union

Choose the account type where you

want your money to be deposited

Account in

which you

want your

money to

be

deposited

Number that

identifies your

bank or credit

union

Account #1 Account Type: □ Checking □ Savings □ Money Market

Bank Name: LATINO COMMUNITY CREDIT UNION_________________________________

Bank Address: 201 West Main Street _____ City, State, Zip: Durham, NC 27701________

Routing # (9 digits): _________________________ Account#: _________________________

Requested amount for this account:

□ % of Net Pay: _________ □ Specific Amount $____________ □ Entire Balance

Amount you want

to deposit in this

account

http://www.godirect.org/


ADVANTAGES OF DIRECT DEPOSIT

1. Your salary is available automatically and starts to generate interest immediately. Even if you are sick, on vacation, or traveling, you continue to receive your money automatically

2. It is convenient. You won’t miss going to the branch and waiting in a long line to deposit or cash a check.

3. Your money is safe. There is no risk of being robbed or losing your money.

4. It is a trustworthy service. Millions of people use this service in the United States. Payments always arrive on time and you can enjoy your money immediately.

5. It is confidential because there is not a printed check and thus no one can see what you earn. You will receive a check stub from the employer with the same information you receive in your regular check (how much you are paid and how many hours you worked).

6. Direct deposit can help you manage your finances and develop a habit of saving. You can decide to deposit your money directly into one account, or divide your salary into various accounts. This way, you can deposit a portion of your paycheck into your checking account and the remainder in one or more savings accounts.

7. Fewer problems. Problems with direct deposit are very infrequent. If a problem arises, you can call the financial institution and it can be fixed with a phone call. Normally, a problem with a lost or stolen check takes much longer to resolve.

8. It is better for the environment because electronic services save paper and this helps save our forests.


Of course, at the branch your representative can help you with anything you need, but there are

other quicker and easier ways to do basic transactions such as check your balance and transfer

money between accounts. You can handle many types of transactions over the phone or mobile

phone, using the Internet or the ATM.

PHONE

Almost all financial institutions have a phone system that allows you to:

1. View your account balances.

2. Review your account transactions.

3. Transfer money between accounts.

4. Compare interest rates for deposits and loans.

5. Find the closest ATM.

6. Make a report of a lost or stolen card.

Ask your financial institution how to access your accounts by phone.

INTERNET

Through the internet you can access your accounts and make almost exactly

the same transactions as you would in your branch, except for withdrawing or

depositing checks or cash. You just need a computer with internet access and

your personal passwords.

MOBILE PHONE

Using your cell phone, you can check your balance, recent transactions and

more.

You can also receive alerts via text message when there is a deposit or

withdrawal in your account or when your balance is getting low.

HOW CAN I ACCESS MY ACCOUNTS?


ATM

Automatic Teller Machines (ATM) give you access to your accounts 24 hours a day, 7 days a week. You can check your balance, deposit and withdraw money and transfer money between your accounts. To use the ATM, you need an ATM card or debit card and your PIN.

To withdraw money To deposit money Transfer money between accounts

1. Insert your card

2. Select a language

3. Type in your code or “PIN”

4. Press “withdraw cash”

5. Selecta an account

6. Type the amount to withdraw

7. Take the money, your card, and the

receipt

8. Document the amount you took out in

your check register

1. Take an envelope and complete the

part on the back with your name and

amount of your deposit

2. Insert your card



5. Press “Deposit”

6. Selecta an account

7. Type the amount you are depositing

8. Put the money or the endorsed check

in the envelope

9. Insert your envelope

10. Take out your card and receipt

11. Document the amount in your check

register

1. Insert your card



4. Press “Transfer”

5. Select an account from where the

money is transferred

6. Select an account to where the

money is transferred

7. Enter the amount to transfer

8. Take your card and the receipt

9. Document the transaction in your

check register

B

A

D

G

C

F

A = Card Slot

B = Menu Keys

C = Key Pad

D = Envelopes

E = Cash Withdrawal

F = Deposit Envelope

G = Receipt Slot


It is more expensive to use a financial

institution than a check-cashing outlet or a

payday lender.

In fact, it is much less expensive to use a

financial institution. Ask the right

questions and look for a credit union or

bank that does not charge many fees.

Credit unions tend to offer the low fees

and better interest rates.

When you deposit money in a financial

institution you can be sure that your

money is safe. The federal government

insures individual deposits up to $250,000

at both banks and credit unions.

MYTH BUSTERS

My money might not be safe in a financial

institution.

I will not be able to access my money in a

credit union or bank.

You can access your money at any time in a

number of ways – at the branch, at an

ATM, by telephone, cell phone, or on the

internet.

What happens with my money if I have to

return to my country or if I die?

You can access your money using your

credit card or you can send your money

wherever you are. In the event that you

die, the beneficiaries designated in your

account would have access to the money in

the account.

how to use a financial institution · how to use a financial institution latino community credit...

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