Book 2: Personal Banking

Transcription

1 Math 21 Earning and Spending Money Book 2: Personal Banking Teacher Version Assessments and Answers Included

2 Edited April 2015 Year Overview: Earning and Spending Money 1. Budget 2. Personal Banking 3. Interest 4. Consumer Credit 5. Major Purchases Home 6. Scale Drawings & Ratios 7. Area & Volume 8. Angles 9. Triangles 10. Slope & Elevation Travel and Transportation Recreation and Wellness 11. Travel Project 12. Puzzles & Games 13. Understanding Statistics 14. Budgeting Recreation Topic Overview You may have already entered the workforce and have some knowledge about earning and spending money. The intent of this theme is to help you be aware of financial decision making that you face. In this section, you will learn about personal banking, the services offered, and fees. Outcomes Overlapping Outcomes in Budgeting M21.1 Extend and apply understanding of the preservation of equality by solving problems that involve the manipulation and application of formulae within home, money, recreation, and travel themes. Theme Specific Outcomes M21.9 Demonstrate understanding of financial institution services. 2

3 Edited April 2015 Contents Topic Overview... 2 Outcomes... 2 Overlapping Outcomes in Budgeting... 2 Theme Specific Outcomes... 2 Glossary of Terms... 5 Personal Banking... 6 Check What You Know... 6 Vocabulary Check-Up Service Fees... 7 A. What are Service Fees?... 7 B. How do service fees work?... 7 C. Getting Value for Your Service Fees... 8 D. How to Pay the Least Amount of Service Fees Practice Your Skills Choosing the Right Account Kinds of Bank Accounts A. Savings Accounts B. Chequing Account C. Tax-free Savings Account (TFSA) D. Combination Accounts E. Investment Savings Different Ways to Access Your Bank A. Online banking/internet banking B. Telephone banking C. Mobile banking Discuss the Ideas Show What You Know - Research Online Banking Safety Tips Discuss the Ideas Writing Cheques A. Definition of a Cheque

4 Edited April 2015 B. Writing Dollar Amounts in Words Discuss the Ideas Practice Your Skills Student Evaluation Learning Log Show What You Know Quiz or Assignment Answers Service Fees and 2.3 Show What You Know Research on Financial Institutions Practice Your Skills Writing Cheques Show What You Know Quiz or Assignment

5 Edited April 2015 Glossary of Terms account balance the amount of money available to you in a bank account ATM/ABM automated teller or bank machine allows you to deposit or withdraw money from a bank account automated money that goes into or out of an account automatically bank account a balance of money held by a bank on your behalf cheque a written note that transfers money from one person to another chequing account a bank account with a lower interest rate that you can take money out of with low fees deposit putting money into a bank account individual account a bank account owned by one person interest a charge for the use of money that is not your own joint account a bank account owned by two or more people minimum balance the smallest amount a bank account can hold and still collect interest overdraft a short term loan on a chequing account personalized cheques with a persons's name, address, and account number savings account a bank account with a higher interest rate stale-dated after 6 months a cheque can no longer be cashed stop payment when you tell the bank to prevent a cheque from being cashed transaction a banking event where money is put into or taken out of a bank account withdraw to take money out of an account 5

6 Edited April 2015 Personal Banking How do you manage your money? Do you have a bank account? Keep it in a box under the bed? Buried in an empty cereal box under a tree in the back yard? This part of the course is going to help you learn more about banks and their services. In your own life, you will have to decide if you would like to use the services of a bank or of a credit union. You will also have to decide which account is right for you. There are many different types of chequing and savings accounts, with differences in the amount of fees you pay, the number of free transactions you can make each month, and more. You should also know how to protect yourself when using a debit card or banking online. Besides using cash, debit, or online payments, you may occasionally have to write a cheque, which you will learn about as well. Check What You Know Money Accounts Bank Credit Union Savings Chequing Savings Chequing Vocabulary Check-Up Do you know the meaning of the following words? Circle all of the words that you know. bank account fee savings account debit card deposit ATM/ABM chequing account cheque interest overdraft account balance transaction Pick any 2 of the words that you know already and write down what they mean, in your own words Write down all of the words that you don t know already and find out what they mean. You might ask someone else to tell you, or look them up in the dictionary or on the internet. After doing so, write down what they mean below, in your own words. 6

7 2.1 Service Fees A. What are Service Fees? A service charge is the fee you pay to buy a service provided by the bank. Service charges vary from bank to bank. Examples of service fees: Accounts (monthly, transaction fees including ABMs, debit) Cheques (printing, NSF, stopping, certified, pre-authorized cheque) Overdraft submission Sending money to others Financial services for travelers Safety deposit boxes B. How do service fees work? Service fees are charged for different services in different ways. Sometimes service fees are charged every time you use them. Other times, service fees are paid every month regardless of how often you use them. People who use more services and a greater number of services generally pay more than someone with more basic banking needs. There are some people who pay no service fees at all because they take advantage of no-fee service packages for seniors or youth, or because they maintain a minimum monthly account balance. Figure From The cost of using an ABM depends on your bank. Banks often charge a transaction fee which is deducted from the account. You can often sign up for a monthly service plan which allows you to conduct a certain number of transactions for a set fee. This can greatly reduce the service fees you pay. Plans vary according to each financial institution. 7

8 C. Getting Value for Your Service Fees As a consumer, you need to be careful about selecting your banking services. Just like any item or service you buy, you can control how much you pay. All banks have brochures that explain their service fees and the different account plans and packages they offer. These are useful tools to compare accounts from institution to institution when you are shopping for an account. Brochures can often be found online as well as at the bank. D. How to Pay the Least Amount of Service Fees Monthly Packages Ask to pay a set fee and get a certain number of transactions and services. Some banks have low fee accounts with monthly fees between $2.95 and $3.00. Paying Bills You can usually pay bills at a lower cost if you pay bills through an ATM, by telephone, or online rather than paying at a branch counter. No Service Charges Ask if there is an account that has no service fees if you have a minimum balance. Seniors or Youth Packages Often, youth under 19 and seniors over 60 receive many free services or get a discount on service fees. Using Bank's ATM Using your own bank's ATM can save you service fees, as sometimes the guest bank you are using as well as your own bank will charge you a fee otherwise. Larger Transactions Make one larger withdrawal rather than many small ones to avoid repeated service charges. 8

9 2.1 Practice Your Skills Choosing the Right Account Base monthly fee Low-fee account Value account Unlimited account Student account $3.95 $8.95 $12.95 Free Minimum Balance needed for no fee to be charged. Maximum Number of transactions per month. Transaction fee for every transaction over the maximum. $1 000 $2 000 $ No limit No limit $0.65 $0.65 None None 1. Wilma is a set designer. In a typical month, she makes 16 transactions. She keeps a monthly balance of $650. Which chequing account should she choose? Explain. 2. Barney averages 20 transactions per month. He keeps a minimum balance of $3500 in his chequing account. Which account would you suggest? Explain. 3. Arnold withdraws cash from an ATM that is not his own bank s 8 times per month. He pays $1.50 per transaction. What is the cost per month? 9

10 2.2 Kinds of Bank Accounts Banking institutions offer various types, or kinds of accounts. The two main types are savings and chequing. These may be individual accounts or joint accounts. One or more will be useful to you and you are allowed to have more than one account. A. Savings Accounts A savings account is a method for putting aside money in a bank, credit union, or other financial institution. Most often, a savings account is used when you don t need to withdraw money often. While the money is in the account, it draws interest. After a period of time, the money you have in the savings account will include both the principal (money you originally put in) as well as the interest the bank has paid to you for keeping it there. Principal Interest Savings The amount of interest you earn in your savings account depends on a number of factors that include: Factors influencing amount of interest earned principal - the amount of money you deposit into the account interest - the rate that the bank/institution pays you time - the length of time you keep money in an account type of interest - either simple or compound type of account - what type of savings account you have Today, there are many kinds of savings accounts available. They differ from each other on the basis of the rate of interest paid, the minimum deposit required, and the length of time you are required to leave your money in the 10

11 account. A savings account may be an individual or joint account, where two or more people are able to deposit and withdraw money. B. Chequing Account A personal chequing account is used for making frequent transactions such as paying bills, withdrawing cash, and making automated bill payments. A person is issued personalized cheques for this account. A chequing account can be an individual or a joint account. From Some chequing accounts pay interest if the amount of money is above a minimum balance. Most people today have a chequing account. This provides them with a safe, simple, convenient way to pay their bills without handling a lot of cash. Many kinds of chequing accounts are now available. For example, one bank offers the following types of accounts: From After a chequing account is opened and a deposit is made into the account, cheques can be written against the account. Money in this account can also be accessed by using a banking or debit card. 11

12 C. Tax-free Savings Account (TFSA) This is a type of savings account where no income tax is paid on interest earned from money deposited into the account. You are able to invest up to $ a year. In order to have this type of account, you must be at least 18 years old. D. Combination Accounts A combination account has the features of both savings and chequing accounts. Often, these will require a minimum balance in order to earn interest. E. Investment Savings An investment savings account emphasizes higher interest rates for money growth and still flexible enough to be able to deposit or withdraw money. These accounts often have a minimum and maximum account balance. For example: From 12

13 2.3 Different Ways to Access Your Bank A. Online banking/internet banking Online banking allows customers of a bank or credit union to do their banking transactions on a secured website. B. Telephone banking Telephone banking is a service provided by a financial institution that enables customers to perform transactions over the telephone, without the need to visit a branch or automated teller machine. C. Mobile banking Mobile banking is a service that allows customers to conduct transactions with their financial institution via an app on their mobile device. 13

14 Discuss the Ideas Use the reading above to answer the following questions: 1. Define savings account. 2. List 5 factors that affect the amount of interest you earn in a savings account. 3. Explain what a person uses a chequing account for. 4. How can money in a chequing account be accessed, besides writing a cheque? 5. Explain what a service fee is and why customers are charged it. 14

15 6. List 5 methods of paying the least amount of service fees. 7. Which customers can often have a no service fees bank account? 8. How can you find out which institution offers the best services for your needs? 9. What is the difference between online and mobile banking? 10. What type of account is best for: a. daily purchases with a debit card, use a account. b. saving money from each pay cheque, use a account. 15

16 Show What You Know - Research Use this chart to compare the banking services provided by three financial institutions. Either research on the Internet or obtain brochures from various financial institutions. Provide examples. Questions Financial Institutions a) b) c) 1. What service charges are there on the account? 2. What are the fees for transactions? 3. Are there incentives or rewards with the account? 4. Is online banking service available? 16

17 Financial Institutions Questions a) b) c) 5. Is telephone banking service available? 6. Is mobile banking service available? 7. What is the interest rate for the savings account(s)? 8. Are cheques available for the accounts? What is the cost to order cheques, if you can find it? 17

18 2.4 Online Banking Safety Tips Online banking is very convenient and efficient. In order to be safe on the internet, there are a few tips to keep your information and money secure. From: a. Never login to your bank website through a link in an , even if the appears to have come from your bank. Type the web address in yourself. b. The login pages of bank websites are secured through an encryption process, so a locked padlock or unbroken key symbol should appear in your browser window when accessing your bank site. c. The beginning of your bank s internet address will change from http to https when a secure connection is made. d. Be wary of any unexpected or suspicious looking pop-ups that appear during your online banking session. e. Stop and think about the process you normally go through to make a payment to someone be suspicious if it differs from the last time you used it. 18

19 f. Check the online banking security options your bank provides; some offer free anti-virus and browser security software. g. Check your bank statement regularly and contact your bank immediately if you spot any transactions that you didn t authorize. h. When sending money via your online bank account, always double check the amount you are sending as well as the account number and sort code you are sending it to. i. Fraudsters sometimes try to trick people into making a real payment by claiming it s just a test. j. Make sure has your bank has your up-to-date contact details. k. Never give anyone your login details in full either by or over the phone your bank will never request these in this way. l. Browsers often come with security features built in. Make sure they are activated. m. Keep your PIN and passwords confidential. Discuss the Ideas 1. What are three things that you can do to be safe while using online or mobile banking? 2. What are two things you should you do if you suspect that someone has accessed your account? 19

20 2.5 Writing Cheques One way of paying for things or taking money out of your chequing account is by writing a cheque. A cheque is not money but it is used like money. A. Definition of a Cheque A cheque is an agreement between two individuals or organizations to make a payment. The banks have no involvement in the agreement between you and the person who owes you money, but simply act on the instructions provided by the cheque and withdraw the money from one account and deposit it into another. For example, if someone owes you $50 they can write you a cheque, which is their agreement to pay you $50. It is your choice to accept a cheque or another form of payment including cash or direct deposit. Many people think that banks can intervene if you have a problem with a cheque, but this is not always the case. A cheque may be cashed only by the person to whom it is written unless the person signs it over to another person or business. When using cheques be aware of: When depositing a cheque into your bank account, it will take a few days (depending on the bank) for all of the funds to be available to use. When paying with a cheque, the money will not leave your account until the payee has cashed the cheque. o It takes 6 months before the cheque becomes stale-dated, then a new cheque will need to be written. o Be sure to put a stop payment on the old cheque through your bank so they cannot cash both cheques. 20

21 B. Writing Dollar Amounts in Words There are specific rules to follow for writing numbers on cheques: Rule Example 1The words for numbers between is written as Forty-five and 100 are hyphenated when the 99 is written as Ninety-nine number has two words. The word and is reserved for the decimal point. $ is written: Seven hundred six and 10/100 The cents are written as a fraction of a dollar, since the word dollars appears at the end of the line. When there are no cents, the fraction is usually written as 00 or XX. $17.36 is written: $82.00 is written: Seventeen and 36/100 Eighty-two and 00/100 Eighty-two and XX/100 When you write a cheque, you must fill in five items. Notice the placement of each item on the blank cheque shown: 1. The date 2. The name of the person or company who is to receive payment 3. The amount written in digits 4. The amount written in words 5. Your signature **An optional line For should be filled in to remind you what the cheque was written for. Additional points to keep in mind: Be sure not to leave any blank areas on your cheque. Start at the beginning of the line when you are writing the cheque amount. Write clearly and only use ink when writing your cheque to help prevent anything from being changed on your cheque. Your cheque is not legal until you sign it. Keep your cheques in a safe place until you are ready to use them. Also, never sign a blank cheque. Make sure the amount box (in numbers) and the amount line (in words), match. If you make a mistake when writing a cheque, write VOID in big letters on the cheque and then rip it up. Make sure you record the cheque in the register and mark that it was VOID. 21

22 Discuss the Ideas 1. Why is it important to use ink when writing a cheque? 2. What are some disadvantages of using a cheque compared to other methods of payment? 3. Describe a situation where someone would use a cheque. Why would a cheque make sense in this situation? 22

23 2.5 Practice Your Skills Ask Your Teacher how many of the following questions you should complete. 1. Write out each dollar amount in words using the rules for cheque writing. a. $ b. $ c. $60.98 d. $ e. $ f. $ g. $25.86 h. $ i. $ j. $ k. $37.16 l. $

24 2. Write the cheque below with the following information: Date 12/20 Payee Reader s Choice Amt. of cheque $18.99 Payer Betty L. Rain For (optional) subscription 3. Write the cheque below with the following information: Date Payee Amt. of cheque Payer For (optional) 12/20 M& L Meats $62.75 Betty L. Rain frozen steaks 24

25 4. Write the cheque below with the following information: Date Payee Amt. of cheque Payer For (optional) 6/13 Fishing Spot $23.00 Joe Fox reel 25

26 Student Evaluation Insufficient Evidence (IE) Developing (D) Growing (G) Proficient (P) Exceptional (E) Student has not demonstrated the criteria below. Student has rarely demonstrated the criteria below. Student has inconsistently demonstrated the criteria below. Student has consistently demonstrated the criteria below. Student has consistently demonstrated the criteria below. In addition they have shown their understanding in novel situations or at a higher level of thinking than what is expected by the criteria. Proficient Level Criteria IE D G P E M21.9 Demonstrate understanding of financial institution services. [WA20.7 and WA20.8] a. I can research various types of banking services available from various banks, such as online services, different types of accounts, telephone banking, cell phone banking, ATM banking, or cheques. b. I can think about the services that banking institutes and financial advisors offer to help me plan a personal budget c. I can compare the type of bank account that best meets the needs of a person s budget. d. I can research and explain various charges acquired when using chequing accounts, ATMs, and savings accounts. e. I can describe the advantages and disadvantages of online banking, debit card purchases, chequing accounts, and savings accounts. f. I can explain the use of cheques and show how to write them. g. I can explain ways ensure the security of personal and financial information (e.g., passwords, encryption, protection of personal identification number (PIN) and other personal identity information) and their effectiveness. h. I can research and explain various investment options, such as savings accounts, Canada Savings Bonds, Guaranteed Investment Certificates, term investments, RRSPs, and RESPs. 26

27 Learning Log Date Starting Point Ending Point 27

28 Show What You Know Quiz or Assignment All-Inclusive Unlimited Every Day *the Every Day account has a fee of $1 per transaction after the first 25 free transactions From 1. Heather is choosing between the chequing accounts above. She currently has $2 000 to put into her bank account. She does an average of about 35 transactions per month. Which plan would be the best for her and why? 2. If you were getting a new bank account and wanted to pick one of these packages, which one would you pick and why? 3. What are three things that you can do to be safe while using online or mobile banking 4. What are two things you should you do if you suspect that someone has accessed your account? 28

29 5. Write the following amounts as you would on a cheque: a. $56.00 b. $ Write the cheque below with the following information: Date Payee Amt. of cheque Payer For (optional) 7/25 Mrs. Smith $ Carol Fox candles 7. Describe a situation in your life in which you have used or would use a cheque. 29

30 Answers 2.1 Service Fees 1. It would be cheapest for Wilma to get the Low-fee account and pay for the 6 extra transactions at $0.65 each. This would cost $7.86 total. 2. He could have the Value account or more likely the Unlimited account. With either account he would pay no fee because of the balance that he keeps in the account. The Unlimited account would give him the flexibility of having as many transactions as he wants even though he typically only does 20 per month. 3. $ and 2.3 Show What You Know Research on Financial Institutions Answers will vary 2.5 Practice Your Skills Writing Cheques 1. a. Two hundred thirty-five and xx/100 or 00/100 b. Two hundred and 39/100 c. Sixty and 98/100 d. One thousand eight hundred nineteen and 21/100 e. Six hundred seven and 77/100 f. Nine hundred ten and xx/100 or 00/100 g. Twenty-five and 86/100 h. One thousand three hundred twenty-seven and 56/100 i. Seven hundred five and 15/100 j. Three hundred eighty-four and 48/100 k. Thirty-seven and 16/100 l. Fifty-six and xx/100 or 00/ Refer to example to verify you have filled the cheques in properly. 30

31 Show What You Know Quiz or Assignment All-Inclusive Unlimited Every Day From 1. Heather is choosing between the chequing accounts above. She currently has $2 000 to put into her bank account. She does an average of about 35 transactions per month. Which plan would be the best for her and why? Unlimted play would be the best for her because she needs more than 25 transactions. She may also in the next few years get her savings up to $3 500 and have her fee waived. 2. If you were getting a new bank account and wanted to pick one of these packages, which one would you pick and why? Answers will vary 3. What are three things that you can do to be safe while using online or mobile banking? Answers will vary. 4. What are two things you should you do if you suspect that someone has accessed your account? Answers will vary. 31

32 5. Write the following amounts as you would on a cheque: a. $56.00 Fifty-six and 00/100 or Fifty-six and xx/100 b. $ Three hundred forty-seven 95/ Write the cheque below with the following information: Date Payee Amt. of cheque Payer For (optional) 7/25 Mrs. Smith $ Carol Fox candles 7. Describe a situation in your life in which you have used or would use a cheque. Answers will vary. 32