Depository Institution Essentials Advanced Level

Transcription

1 Depository Institution Essentials Advanced Level Family Economics & Financial Education October 2010 The Essentials to Take Charge of Your Finances Depository Institution Essentials Slide 1

2 2 What is a Depository Institution? Depository Institutions Are businesses which offer multiple services in banking and finance Commercial Banks Credit Unions Savings & Loan Investment Brokerages Loan Agencies Banks & Credit Unions are the most common types of depository institutions. What is the name of a? depository institution in your community?

3 3 Advantages and Disadvantages of Using a Depository Institution Do you use a depository institution?? Assists in managing finances and reaching financial goals Protection from loss (insurance) Opportunity to earn interest May have to pay fees May have required minimum balances Sharing financial information

4 4 Choosing a Depository Institution Savings Tools Each ins;tu;on offers different services, interest rates, loca;ons, and special features Financial Counseling Safe- Deposit Boxes Services Offered by Depository Institutions Credit Investment Tools

5 Types of Depository Institutions Commercial Bank Credit Union Description Full service institutions- may offer all of the services provided by depository institutions Non-profit cooperative institution that is owned by the members and often provides more customer friendly interest rates than commercial banks Used by? Open to anyone who wants to utilize a depository institution Members must possess a common bond Type of Insurance Coverage Federal Deposit Insurance Corporation (FDIC) National Credit Union Administration (NCUA) Insurance Protects Will restore the lost funds in savings tool accounts up to $250,000 per account Will restore the lost funds in savings tool accounts up to $250,000 per account Family Economics & Financial Education October 2010 The Essentials to Take Charge of Your Finances Depository Institution Essentials Slide 5

6 6 Services Many services offered by depository institutions are interest bearing Interest - the price of money Interest bearing accounts either charge the consumer interest for money borrowed or earn interest for the consumer Interest rate - percentage rate used annually to calculate the total interest either gained or lost from an account Look for high interest rates on interest-earning accounts and low interest rates when borrowing money.

7 7 Savings Tools Checking Account Used to transfer funds deposited into the account to make a cash purchase Interest or non-interest earning Savings Account Hold money not spent on current consumption Interest earning At a credit union a checking account is known as a share draft account and a savings account is known as a share account.

8 8 Savings Tools Money Market Deposit Account Offers higher interest rates than a savings account Have a minimum balance requirement Limited to a certain number of transactions each month Certificate of Deposit Interest earning Restricted access to the funds

9 Credit Credit is when goods, services, or money is received in exchange for a promise to pay a definite sum of money at a future date Consumer is charged interest Loans Credit Cards? What might a person need a loan to purchase? Family Economics & Financial Education October 2010 The Essentials to Take Charge of Your Finances Depository Institution Essentials Slide 9

10 10 Other Services Safe-Deposit Boxes A secured box to store valuable and important personal items Financial Counseling Information and advice is given to customers to help them make financial decisions What services offered by depository institutions would you use??

11 11 Depository Institution Features Electronic Banking (E-Banking) Allows 24 hour access to move money electronically in a fast and paperless way 24-hour access Fast transactions Paperless transactions Convenience Worldwide access Increased risk of fraud and identity theft if consumers are not careful with their personal information

12 E-Banking Safety If a consumer feels his or her funds have been accessed without permission Report the problem immediately to the depository institution involved To take full advantage of e-banking: Keep personal security as your first priority Know how to protect your personal information Family Economics & Financial Education October 2010 The Essentials to Take Charge of Your Finances Depository Institution Essentials Slide 12

13 13 Types of E-Banking Will vary among depository institutions Will vary between services and accounts at the same depository institution Debit Cards ATM s Direct Deposit & Direct Payment Online Banking

14 14 Debit Card Safety Tips Keep receipts and check statements carefully and frequently for any unauthorized or incorrect charges Sign the back of the card in the signature box with Please see ID in addition to a signature Do not make a PIN number one that reveals a birth date, social security number, address, or telephone number Keep PIN numbers safe If a debit card is lost, report it to the depository institution as soon as possible

15 15 Fraudulent Debit Card Charges If reported within 2 days, the consumer is held responsible for no more than $50 in fraudulent charges If reported within 60 days, the consumer is held responsible for no more than $500 in fraudulent charges After 60 days, the consumer is held liable for no more than the amount of unauthorized transfers

16 16 Direct Deposit & Direct Payment Direct Deposit Direct Payments Allows paychecks and benefit checks to be directly deposited into a specified depository institution account (savings or investment tools) Authorize bills to be paid electronically by a specified depository institution account (savings or investment tools)