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
•
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
•
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
•
$100 on deposit for 10 years at a 1% APR
would earn $10 in interest
 Compound interest
•
The same deposit, compounded monthly,
would earn $10.51 (51¢ more because of
compounding)
•
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
•
Proof of your address, such as a utility
bill or lease
•
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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