Transcript Slide 1

Financial Literacy Skills
Unit 1: Understanding Banking
Objective 1: Identify services of a fullservice bank
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Receiving deposits
Providing checking and savings accounts
Transferring money from one account to another
Electronic funds transfer (EFT)
Preauthorized bill payments
Making loans
Advising customers
Having information and transactions available online
Providing federal insurance through the FDIC
Providing special services, often for a fee
Objective 2: Match the different
types of financial institutions with
their descriptions
• Brokerage Firm
• Commercial Bank
• Savings and Loan
Association
• Credit Union
• Mortgage Company
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Mutual Savings Bank
Life Insurance Company
Investment Company
Finance or Loan
Company
• Financial Supermarket
Objective 3: Explain why financial
institutions pay and charge interest.
• Each financial institution pays interest to
encourage depositors to keep their money in
that institution.
• Depositors’ funds are not stored at the
financial institution – they are loaned to other
customers.
• Each financial institution charges interest on
the various types of loans it makes in order to
earn money.
Objective 4: Define types of interest.
• Simple interest is calculated on a yearly
percentage rate based on the original amount
of the loan.
• Compound interest is calculated on the
amount of the account on a regularly
scheduled time period.
Objective 5: State the functions of
bank accounts.
• Provide a convenient way to buy goods and
services and pay bills
• Provide legal proof of payment
• Protect money from theft or loss
• Eliminate need to carry large amount of cash
• Provide a record of money spent
• Allow access to other banking services
• Provide a record of transactions
• Serve as a credit reference
Objective 6: Select steps in opening a
bank account.
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Receive bank documents.
Provide personal identification.
Fill out the signature card.
Sign the signature card with the same name
that will be written on checks.
• Deposit money using a deposit slip.
• Order personalized checks.
• Apply for ATM and debit cards if desired.
Objective 7: Identify types of
checking accounts
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Regular Checking Account
Economy Checking Account
Check Credit Account
Interest-Bearing Checking Account
Objective 8: Identify types of savings
accounts.
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Regular Savings Account
Certificate of Deposit (CD)
Money Market Account
Money Market Mutual Fund
Objective 9: Identify types of
electronic banking services.
• Automated Teller
Machine (ATM)
• Automatic savings
• Automatic loan
payments
• Direct deposit/
automatic deposit
• Bank credit card
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Bank debit card
Electronic bill paying
Online banking
Pay-by-Phone systems
Electronic check
conversion
Objective 10: Identify correct check
endorsements.
Blank endorsement
Objective 10: Identify correct check
endorsements.
Restrictive endorsement
Objective 10: Identify correct check
endorsements.
Special endorsement
Objective 10: Identify correct check
endorsements.
Two-party check
Objective 11: Discuss the reasons for
reconciling financial records.
• To catch mistakes.
• To prevent overdrafts.
• To know exactly how much money is in your
account.
• To be in control of your finances.
Objective 12: Prepare account
documents.
Objective 13: Balance a bank
statement.
Objective 14: State steps in stopping
payment on a check.
• In writing
– Use bank’s form or formal letter
– Include your name and signature, account
number, check number, date the check was
written, and payee’s name
– Explain why you are requesting to stop payment.
• By phone
– Temporary measure
– Follow with written request
Objective 15: Distinguish between
ATM and debit cards
• ATM card – a small plastic card issued by bank and
activated by entering your personal identification number
• A fee may be charged for each transaction
• Provides great flexibility in banking hours and locations
• Functions include:
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Withdrawing money
Making deposits
Transferring money between accounts
Finding out your balance
Getting a cash advance
Making loan payments
• If you lose your ATM or debit card, notify your bank
immediately
Objective 15: Distinguish between
ATM and debit cards
• Debit card – combines combine the functions
of ATM cards and checks
• Some banks issue a combined ATM/debit
card
• Debit cards are issued only by banks but
accepted at stores and service providers
• Use of a debit card automatically deducts the
money from your bank account
• Money is deducted instantly
Objective 16: Apply for an ATM card.
Objective 17: Identify hidden costs of
banking.
• Overdrafts have a negative effect on your credit rating.
• “Free” period of use can expire.
• Surcharges can be made each time you use your ATM
card.
• Some banks charge a teller fee for using bank
personnel to make your transactions.
• Debit cards often have a once-a-month “offline” fee
and a per transaction fee.
• Many banks will charge a fee on accounts that are not
active for a certain period of time.
• Failing to check ATM statements, debit receipts, and
bank statements may cost you money.
Objective 18: Identify ways to
protect your accounts.
• Lost card
– If you lose your ATM or debit card or it is stolen,
report it immediately.
Objective 18: Identify ways to
protect your accounts.
• Card management
– Save all pertinent records in a secure place in your
home. Shred all documents that have your account
numbers. Memorize your PINs.
– Be mindful of who is watching when you transact
business.
– Carry all receipts out of the facility and keep them to
compare to your bank statements.
– Use your bank’s ATM exclusively to save transaction
fees.
– Shop for low- or no-charge ATMs.
Objective 18: Identify ways to
protect your accounts.
• Card management (continued)
– Avoid third-party ATMs found at rest stops, gas
stations, and nightclubs; these charge the highest
rates.
– Consider making larger withdrawals, therefore, fewer
transactions to be charged for.
– Use checks, traveler‘s checks, or credit cards when
traveling. Overseas ATM charges can be very high.
– Consider making deposits by ATM. Some banks credit
customers for making deposits at ATMs.
– Do not take cash advances on credit cards at an ATM;
you will pay fees to the bank and to the card issuer.
Objective 18: Identify ways to
protect your accounts.
• Card management (continued)
– Check the amount on your debit card withdrawal very
carefully. Using a debit card removes your right to
withhold payment because money is immediately
removed from the account.
– Consider the cost of using a debit card. Is it worth not
carrying a checkbook?
– Keep very accurate account records.
– If you have both credit cards and debit cards, think
about which is the least expensive to use before
making each transaction.
Objective 18: Identify ways to
protect your accounts.
• Bank accounts
– The Federal Uniform Commercial Code 4-406 places a
duty on bank customers to discover and report
unauthorized signatures or alterations
– Uniform Commercial Code 3-306 places absolute
liability on bank customers who cause forgery and
alteration losses by their negligence.
– Keep checks and deposit slips in a secure place. This
includes keeping your checkbook out of view in your
car and not using your deposit slip to give out your
address.
– Do not give out your account number or password.
Objective 18: Identify ways to
protect your accounts.
• Bank accounts (continued)
– Follow the guidelines for writing and endorsing
checks so they cannot be altered.
– Keep accurate records of your deposits and
withdrawals so you can reconcile your bank
statement monthly.
– Report errors to your bank as soon as possible
after receiving the statement.
End of Unit 2