Transcript Banking and Money Mangemenet PowerPoint

Andrea Morgan, Gary Moore, and Melissa Greenslade
Program Coordinators
University of Arkansas
Office of Financial Aid
Bank or Credit Union?
Bank
 “For-Profit” organizations in
business to make money for
their stockholders
 Serve the general public
 Deposits federally insured up
to $250,000 by the Federal
Deposit Insurance
Corporation (FDIC)
www.fdic.gov
Credit Union
 “Not-For-Profit”
organizations that exist to
serve their members
 Some require you to be a
member of a certain group to
join (i.e. teachers, police, etc.)
 Many are now open to anyone
who wishes to join
 Deposits federally insured up
to $250,000 by the National
Credit Union Administration
(NCUA) www.ncua.gov
Types of Bank Accounts
 Savings Accounts
 Checking Accounts
 CDs (Certificates of Deposit)
 Money Market Accounts
 Safe Deposit Boxes
 Consider Liquidity—
how easily or quickly you
can/want to withdraw your money
Savings Accounts
 Basic “deposit” account with most banks and credit
unions to earn interest on savings
 Interest rates are usually about 1-2%
 How is interest calculated?
 Simple Interest – interest is calculated only on the
principal
 Compound Interest – interest is calculated on the
principal plus any interest already paid
 Pros: low risk, high liquidity
 Cons: low interest rate
Checking Accounts
 Convenient “transactional” account to deposit and
withdraw money and write checks to pay for purchases
and bills
 Usually do not pay any interest
 Single vs. Joint Checking Accounts
 Single : you are the only person with access to the account
 Joint: you share the account and money in the account
with one or more persons
 Be careful about having joint checking accounts!
 Pros: low risk, high liquidity
 Cons: low/no interest rate, balance required to avoid fees
Money Market Accounts
 Like combined checking and savings accounts
 Can write checks (although may be limited each
month) and earn higher interest than a typical savings
account
 Usually require a minimum balance of $10,000 or more
and may charge fees if balance drops below a certain
level
 Pros: better interest rates, high liquidity
 Cons: greater initial deposit required,
may have limited transfers/withdrawals
Certificates of Deposit (CDs)
 Fixed interest rate for a specified term, from three
months up to five years or longer
 Best suited for those with funds that can remain
untouched for longer periods of time
 If you withdraw your money before the term ends, you
will lose interest and may be charged a penalty fee
 Pros: higher interest rates,
often insured by the government
 Cons: low liquidity
Safe Deposit Boxes
 A metal drawer in a bank vault that is rented out on an
annual basis as storage for important papers and small
items of value
 Cost between $15-100 per year
Opening a Bank Account
 To open a bank account you will need:
 Identification



Photo ID
Social security card
And/or certified copy of birth certificate
 Cash or check for deposit
 The bank will have you complete paperwork and sign
an account agreement and a signature card
ATM and Debit Cards
 ATM Cards are linked to your checking and/or savings
account and allow you to withdraw money from your
account using your bank’s (and other banks’)
Automatic Teller Machines (ATMs).
 Debit Cards are upgraded ATM/credit cards. Money
spent using your debit card is withdrawn immediately
from your checking account and sent straight to the
company you are paying.
 PIN (Personal Identification Number) is a secret code
that only you should know that grants access to the
money in your account at ATMs and merchants
Checks
 Never have your Social Security Number, Driver’s
License Number, or Phone Number printed on your
checks
 Many checks are now processed electronically
Writing a Check
1.
2.
3.
4.
5.
6.
Date
Payee Name
Amount in
numbers
Amount written in
words
Memo (optional)
Payer Signature
Deposit Slips
 Available in the back of your checkbook or at the bank,
used for making deposits at your bank
Direct Deposit
 Automatic deposit of wages into a consumer’s bank
account
 Convenient and safer than paper check deposits
Banking Fees
 Checking Fee – fee for having a checking account open;
often based on balances
 Some banks offer free checking with direct deposit or
certain minimum balances
 Minimum Balance Fee – fee for failing to keep a certain
minimum balance in your checking or savings account
 ATM Fee– fee charged for using another bank’s ATM
 NSF Fee – non-sufficient funds (bounced check) – fee for
over withdrawing on your account; around $35 per
instance
Other Bank Policies and Services
 Funds Availability Policy – how long before your deposit
is available for you to use
 Automatic Withdrawals – bill payments or savings
transfers are made automatically; best for fixed
payments
 Overdraft Protection – bank will cover payment over the
amount you have in your bank account
 New Regulations require that you opt in to this; it is not
automatic
 Debit Card purchases will be declined if you are overdrawn
 Some banks have a charge for this
Balancing a Checkbook
 Make it a habit to record EVERY checking account
deposit, payment, or withdrawal in your checking
account register (checkbook)
 Reconciliation – comparing your checkbook and
monthly bank statement to ensure the balances match
Balancing a Checkbook
1.
2.
3.
4.
5.
Check number
Date of Transaction
Title of Transaction
Payment
Deposit
Sample Bank Statement
Internet Banking
 Internet-only banks without physical offices
 Online branches of brick and mortar banks
 Benefits of online banking:
 Access to account information at any time
 Ability to transfer money easily between accounts
To Bank or Not to Bank?
Other Options?
 Must find ways to cash a check.
 Check cashing store

Fee ranging from 1.75% to 3% of the check
 $300 check, 2% fee = $6 each time. 24$/month
 Must find ways to pay bills.
 Cashier’s checks or money orders cost money


Immediately withdraw money from an account or have cash
available to pay bank or merchant to write a guaranteed check
to pay a bill
Fees around $5 each.
Any Questions?
Before you go…
 Evaluation Forms
 PowerPoint will be posted on our website
Thank You!
 Contact Information:
 Office of Financial Aid; Andrea, Gary, and Melissa
 Campus location: 114 Silas Hunt Hall
 Phone: 479-575-3806
 Fax: 479-575-7790
 E-mail: [email protected]
 Website: http://finaid.uark.edu/
 And find us on Facebook at University of Arkansas
Financial Aid!