lesson 6.1 banking basics february 28, 2011copyright © 2007-2011 … remtech, inc … all rights...

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!


February 28, 2011


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


February 28, 2011


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


February 28, 2011


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


• How big or small a bank’s area of interest can be


February 28, 2011


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


• How the bank selects an ATM location


February 28, 2011


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


• What makes 24 x 7 x 365 banking possible


February 28, 2011


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


• 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


February 28, 2011


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


• What a cash reserve is


February 28, 2011


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


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


February 28, 2011


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?

lesson 6.1 banking basics february 28, 2011copyright © 2007-2011 … remtech, inc … all rights...

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