Transcript Slide 1
Welcome to
Banking
BASICS
a
YOU can bank on it
© 2011
MoneyWI$E
A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
MoneyWI$E ‘Banking Basics’
MoneyWI$E
A joint financial education project of
Consumer Action and Capital One
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What will the ‘Banking Basics’
training teach us?
We want you to have a thorough
understanding of personal
banking services and how they
can benefit you
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You will learn about:
Banks and credit unions
How to select a financial
institution
How to open an account
How to keep costs down
How to get more interest on your
savings
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Participants’ folders contain:
You Can Bank On It (brochure)
Check Writing (class activity)
Sample ChexSystems Report
Sample Account Application
Choosing a Bank or Credit Union (takehome worksheet)
Evaluation of the MoneyWI$E Banking
Basics Seminar
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Checking and savings accounts
What are some of the advantages
to having a checking and savings
account?
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Advantages of checking and
savings accounts include:
Your money is safe
Each account is insured
Checking account records provide
proof that you paid bills and help you
keep track of spending
Money in a savings account earns
interest to help it grow
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Banks and credit unions
What is the difference between a
bank and a credit union?
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Banks
Banks are financial institutions
that take deposits, engage in
lending and operate for a profit
Banks offer checking and
savings accounts to the general
public
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Credit unions
Credit unions are financial cooperatives
that are owned by and serve individuals
with a common affiliation
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For example, a workplace, church,
employees union, neighborhood, etc.
Credit unions offer checking and savings
accounts to members
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Account verification services
How do banks and credit unions
learn how you have handled your
accounts in the past?
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ChexSystems...
Is the major national‘account
verification’company
• When you apply for a new checking
account, banks and credit unions
search for your name in the
ChexSystems database
• If you ever abandoned an account,
leaving a negative balance, you are
probably listed in this database
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ChexSystems records
Reports about overdrafts or closed
accounts remain in your file for five
years
You can get a free copy of your report
by contacting ChexSystems at
www.consumerdebit.com
You have the right to dispute
inaccurate information in your account
verification report
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Your rights
You can get a free copy of your
ChexSystems report if:
• You have been denied an account in
the past 60 days because of
information listed in ChexSystems
• Your checks were stolen and used by
an impostor or you are the victim of
any banking or account fraud
Get a copy anytime for about $10
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Don’t get discouraged
If you try to open a new checking
account and are turned down by a
bank or credit union because of
your past account history, don’t
give up
Different banks and credit unions
have different requirements, so
shop around
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ChexSystems sample report
Let’s review the categories of the
ChexSystems sample report:
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Reported information
Drivers license validation
Drivers license verification
Consumer-initiated inquiries
Customer-initiated inquiries
Retail information
Check printing order history
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Checking accounts
What kinds of things can you do with
a checking account?
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Checking accounts
Checking accounts allow you to:
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Pay bills with checks/online bill pay
Get cash, transfer money and make
purchases using your debit card
Access your checking account
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At an ATM or bank branch
On your computer (online banking)
By phone or using a data-ready mobile
device (mobile banking)
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Banking/checking online
Also known as Internet banking
Via a secure website operated by your
financial institution
Pay bills, view transactions, transfer funds
between accounts
Benefits: convenient, low or no acct fees,
quick access to info, savings on postage
and checks
But, may still need to visit the ATM
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Safe Internet banking
Make sure the institution is legitimate
Create a strong password
Keep your ID and password private
Don’t fall for phishing scams
Be careful when using public wireless
networks (Wi-Fi) or shared computers
Monitor account activity regularly
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Keeping checking account fees in
check
Shop around for free or low-cost
checking accounts
• Electronic transfer accounts
(ETAs)
• Basic (Lifeline) accounts
• Low cost accounts for seniors or
students
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Debit cards
You can use your debit card in
these ways:
• Entering your personal identification
number (PIN) at an ATM or at a
retailer’s point-of-sale (POS) terminal
• Sign a receipt
• Swipe without a signature or PIN on
purchases under $25 at some stores
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Debit cards
If your debit card is lost or stolen:
• Alert your bank as soon as possible.
The longer you wait, the more money
you might be responsible for if an
unauthorized person uses your card
to buy things.
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Check writing activity
In this activity you will practice
writing a check and entering it into a
sample checking account register.
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Check writing
Why is it important to enter your
checks and debit transactions in
your account register?
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Keep a record of your transactions:
So that you don’t forget checks, cash
withdrawals, and purchases with your debit
card
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If you forget to record a transaction, it could
overdraw your account. This could lead to a
fee for “non-sufficient funds” being charged
to your account.
So that you know how much money you have
in the bank
So that you can track your spending and
stick to a budget
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Savings accounts
How is a savings account different
from a checking account?
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What is interest?
Interest is the cost of borrowing
money
• When a bank gives you a loan, you
pay interest to them
• When you keep your savings in a
bank, they pay interest to you
APR, or annual percentage rate, is
a full year’s interest
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Types of interest
There are two types of interest:
• Simple interest means that you only
earn interest on your initial deposit
• Compound interest allows you to
earn interest not only on your initial
deposit, but also on the interest you
earn as you go along
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Interest
Simple interest
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$100 on deposit for 10 years at a 1% APR
would earn $10 in interest
Compound interest
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The same deposit, compounded monthly,
would earn $10.51 (51¢ more because of
compounding)
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Compounding earns more, especially if
you save regularly
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Session One Wrap-up
Next time we will discuss:
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ways to earn more interest
safe deposit boxes
what to consider when you are looking
for a bank or credit union
how to resolve any issues with your
account
See you then!
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Banking Basics
Session Two
(2 hours)
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Banking Basics
Session Two
• Today we’ll learn
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How to earn more interest on your
money
What to keep in a safe deposit box
Things to consider when you are
looking for a bank or credit union
How to resolve any issues with your
account
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Certificates of deposit (CDs)
What is a certificate of deposit?
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Certificates of deposit (CDs)
A certificate of deposit, or CD, is a kind of
savings account in which you leave your
money on deposit for a set period of time
in order to earn interest
The longer the term of your CD, the higher
your interest rate will be
If you withdraw your money before the
term ends, you will lose interest and might
have to pay a penalty
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Safe deposit boxes
What is a safe deposit box?
What are some things that you might
keep in a safe deposit box?
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What to keep in a safe deposit box
Copies of insurance policies
Birth, marriage and death certificates
Mortgages, leases and other
important contracts
Stock and bond certificates and
certificates of deposit (CDs)
Valuable jewelry
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Safe deposit boxes
What should you not keep in a safe
deposit box?
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Safe deposit boxes
The originals of your will and life
insurance policies should not be
kept in a safe deposit box
The box might be sealed at the time
of your death and your survivors
will need a court’s permission to
open it
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Opening an account
Questions to ask:
• What is the minimum to open an
account?
• What is the interest rate on the
account?
• Is there a monthly fee?
• Is there any way to avoid monthly
fees?
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(more questions on next slide)
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More questions to ask when
opening an account
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Is there a maximum number of checks I
can write each month?
Is there a fee for using your ATMs?
What happens if my balance falls below
the minimum requirement?
TIP: Use the MoneyWI$E worksheet in
your folders as a guide when you apply
for an account
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Opening an account
What should you bring with you when
you are opening a new account?
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Identification
When you go to a financial institution
to open a new account, bring:
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Photo identification, such as a driver’s
license, state ID card or passport
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Proof of your address, such as a utility
bill or lease
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Your Social Security number for tax
purposes
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Keeping your account straight
Once you have an account, write down
and deduct in your check register:
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Every check you write
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Every debit card transaction you make
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ATM cash withdrawals
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“Cash back” at stores
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Any bank fees you pay
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Account cost
How can you save money on
account costs?
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Ideas to keep account costs down
Combine checking and saving balances to
avoid monthly fees
Save on ATM fees by using your own
bank’s machines
If you can’t avoid an ATM fee, take out
larger sums less frequently
Write down all transactions and reconcile
your account so you don’t overdraw your
account and incur overdraft fees
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Ideas to keep account costs down
Use direct deposit for your paycheck or
government benefits check
Ask your local bank or credit union about
accounts with free checks
Order from a reputable mail-order
company
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Check with the Better Business Bureau
before buying checks from a company you
are not familiar with
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Standard overdraft protection
Your overdraft transaction is covered if you
pay a fee
There is a separate fee for each overdraft
transaction
You must give your permission (opt in) to
allow overdrafts on debit card and ATM
transactions
If you don’t opt in, you can’t be charged but
your overdraft debit transactions will be
declined
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Overdraft protection plans
An optional bank service called overdraft
protection waives overdraft fees
It can work with a loan or line of credit or
with your savings account
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For the line of credit, you must have a good
credit history
You will be charged a small transaction fee
when you overdraft
You’ll pay interest on funds from the credit
line when you use them
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Activity
Sample savings account application
This is a sample application for an
interest-bearing account at MoneyWI$E
Bank
Lets walk through the activity together
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Savings account application
Ownership
W-9 certification
Optional services
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ATM cards
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Linking accounts
ATM fees
Sign and date your application
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Resolving problems
Mistakes happen!
Bring issues or errors on your
account or account statements to
the attention of your bank or credit
union
Don’t delay—waiting too long
could make a situation worse
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Solving an account problem
Contact the financial institution as soon as
you can
Write down the date of all calls and the
names of the people who help you resolve
the issue
Send a summary letter (registered mail,
receipt requested) to establish a paper trail
on your problem (and keep copies of email)
Offer a solution and a date by which you
hope to resolve the issue
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Escalating your issue
Give your bank or credit union time to solve
or report back to you on your problem
If you are not able to resolve your issue with
your bank or credit union after a reasonable
time, you can contact the institution’s
regulator
Call the FDIC at 877-275-3342 to find the
name and contact info for your institution’s
regulator
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Now you can grade us
Please fill out the evaluation form
and hand it to the trainer before you
leave
The information helps us provide
you with better programs
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Congratulations
By attending the MoneyWI$E
‘Banking Basics’ training, you’ve
empowered yourself to make good
decisions about your account needs.
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Visit money-wise.org
for additional information and to access
free financial education materials
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