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Banking Relationships

$Building Your Financial Future$

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Establish a Banking Relationship

Why and does it really matter??

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WHY BOTHER WITH A BANK?

Reason for Banks-

Banks are the medium that enable individuals to enter and interact with the economy and market via personal and commercial transactions.

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Why Establish a Banking Relation?• Financial transactions that allow you and

your money to interact with the global economy.

• This affords you financial

– Protection and security

– Convenience

– Opportunities

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WHAT DOES YOUR BANK DO ?

CheckingSavingsLoansFinancial advisement

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“I’m about to give you all my money….and all I ask is a little R-E-S-P-E-C-T.”

The Banking relation is one built on trust and respect.

So what do you want in a banking relationship?

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How to Establish that Relationship

• Have an idea of what you want – Convenience ?– Service ?– Costs ?– Long term relation ?– “A free toaster” ?

KEY POINT: SHOP AND COMPARE

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The First Step in the Relationship• Open an Account

– Usually a checking or savings account

Why?– Safe place to keep your money– Tools that help you establish and stick to a spending plan– Interest earning– Inexpensive way to cash and write checks– a way to establish a relationship with a financial institution.

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7 Steps to follow in opening an account

1) Research your options2) Gather personal information3) Go to the bank of your choice4) Complete necessary paperwork5) Sign a signature card6) Make an opening deposit (minimum)7) Read the customer agreement and account

material

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The Anatomy of a Check

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Reconciliation of your Account

• Very important to maintain account balance and integrity

• Reconcile often (at least monthly)• Tips

– Keep a file for canceled checks and transactions– Enter transactions immediately-– Be detailed– Use a pencil- be neat

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Debit Cards

• Banking cards used like a credit card for Point of Service transactions

• Very convenient• Safe- (may be asked to show ID).• Drawn against balance in account.• Don’t forget to enter transaction into

register.

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Debit Card Trend-What’s in Your Wallet?

Number of Credit vs. Debit Card transactions

1999- 20.71 billion 69% Credit, 31% Debit

2004- 38.84 billion 49% Credit, 51% Debit

2009 (Projected)- 61.09 billion42% Credit, 58%

DebitSource: Newsday, November 13,2005- (Lexis-nexis.com)

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Check 21• New legislation that allows Banks (financial

institutions) to accept and use a digital copy of the check to transact the business instead of the original paper.

SO WHAT?

The transactions clear the bank faster---

Can cost YOU if funds are not available.

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Credit and Credit Cards

Just the facts ma’m…. Americans have Over 1.2 Billion cards Outstanding balances $500 Billion Every year almost 4 billion solicitations for credit

cards Average College student has 4 cards with an

average of >$2700- (on top of student loans averaging $19,400).

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How is My Credit History Used?

• Measurement of your Ability to pay your debt.

Who uses this information?

Future lendersFuture EmployersFuture LandlordsFuture Service Providers

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5 C’s of Credit

Are you creditworthy?

• Character

• Capacity

• Capital

• Collateral

• Conditions

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Types of Credit

• Revolving or Open Credit

• Installment Credit

• Non-installment Credit

Credit comes in two forms-•Secured•Unsecured

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Different Cards for Different Needs

• Bank Credit cards (Visa & MasterCard) Premium or Prestige Cards, affinity cards, secured credit cards

• Travel & Entertainment Cards (American Express, Diners Club)

• Single Purpose Cards- (Gasoline Cards or store only)

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Smart Credit Tips

• Manage your Credit WISELY-Remember credit commits future income.

• BE DISCIPLINED!• Shop around-compare rates and features• Build a trustworthy relationship with

creditors-financial future depends on it.

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Credit Resources

EquifaxPO Box 105873Atlanta, GA 30348800-685-1111www. equifax.com

Trans Union Corp.PO Box 390 Springfield, PA 19064-0390800-916-8800www. transunion.com

ExperianPO Box 2350Chatsworth, CA 91313-2350888-397-3742www.experian.com

www.fanniemaefoundation.org