NOVEMBER 9, 2015
Entry task: List two, realistic unexpected events that could take place. What can you do to prepare for an unexpected event?
Target: Identify the importance of shopping around in search of a financial institution.
LEADERSHIP CARDS
Half way through the semester… should have 50 leadership points!
Options: box of Kleenex Videos that are relevant for class Anything else? Just ask!
THE SOLUTION TO RUNNING LOW ON MONEY ISN’T TO START SPENDING MORE.
OPTIONS:
1. If cash, can save and use Is this a good idea?
OR deposit into bank account
2. If check, can cash or put into bank account!What kind?What if I don’t have one?
PROS AND CONS OF CASH
Readily available You “always” know
where it is Reduces risk of
fraud You’ll never lose
more than the cash on hand
If lose wallet, typically out of luck!
Difficult to pay bills with cash
Must track own spending, no banking transactions to refer back to
Pros Cons
PROS AND CONS OF BANKING
Tracks spending Don’t have to carry
a bunch of cash Can earn interest Ease of paying bills,
especially online! If lost, can cancel
cards and spending
Increased risk of fraud
When using a card (debit card) easier to overspend
Pros Cons
BANK ACCOUNTS
Main types of bank accounts:
CheckingIntended for use of money for daily expenses
SavingsIntended to store money for later
CHECKING ACCOUNTS
Financial institutions usually have more than one type of checking account. You must decide what best meets your needs.
CHECKING ACCOUNTS
When opening a checking account at a financial institution the customer enters into a contractual agreement that allows the customer to deposit money in the bank and to write checks on that account, or use virtual checks, through a debit card
CHECKING ACCOUNTS
The financial institution agrees to maintain the account, provide records, and honor checks. Checks are safe, convenient, and provide a receipt for proof of payment.
TYPES OF CHECKING ACCOUNTS
FREE CHECKING ACCOUNTS are totally free checking accounts. There is no minimum balance requirement or service charges on these accounts. These are usually the best checking accounts for the customer.
TYPES OF CHECKING ACCOUNTS
MINIMUM BALANCE ACCOUNTS require the customer to maintain a certain balance, usually $100.00. If the depositors account balance drops below the minimum then they must pay a service charge.
TYPES OF CHECKING ACCOUNTS
COST-PER-CHECK ACCOUNTS are considered thrift accounts or minimum use accounts. The per-check fee may range from $.20 to $.25 per check/transaction. Generally one has to agree to maintain a minimum balance plus pay a fee for each check that is written or transaction made.
SAVINGS ACCOUNTS
Intended to store money you are saving for later
Can earn interest on the money in your account; making money just by having money! Interest – the amount charged, or earned,
typically expressed as a percentage, depending on the borrowing and lending of money
Example: You EARN interest on savings, You are CHARGED interest on loans
WHAT IF I DON’T HAVE A BANK ACCOUNT?
That’s ok! Bank accounts are simple to open…
But first, do some research!
LOOK FOR
Name of bank Branch information
Nearest your home Nearest your work Number of branches Number of ATMs Bank hours
LOOK FOR
Types of accounts Fees
Minimum daily balance required?Average daily balance required?Monthly maintenance charge
InterestEarned on accountHow calculated
LOOK FOR Charges
Withdrawals atTeller WindowBank owned ATMRegional network ATMNational network ATM
Special servicesFund transfer by phonePre-authorized bill payment by phone or computer
Signature guarantee
OPENING A BANK ACCOUNT (<WATCH ME)
After you have done your research… Select the right institution for you! Although can begin the process online, when
starting an account, especially for the first time, it’s best to go into your bank!
Things you need: Proof of age, must be 18, or have joint account
with parent Proof of address Proof of identification, social security number
and picture ID MONEY $$$
THEN WHAT?
Discuss with the teller your account options
ASK QUESTIONS – this stuff is serious! Sign papers, become official! Order checks, debit cards Select a PIN Make deposits! BE RESPONSIBLE – keep cards and
information safe, track spending
IMPORTANT TERMS Teller – employee of the bank who
deals with most customers Deposit – a sum of money placed or
kept in a bank accountEX: when I am paid, I DEPOSIT my
paycheck into my account Withdrawal – to take, or remove, money
from your bank accountEX: When I am going to a basketball game
and need cash for my ticket, I WITHDRAW money from my account
IMPORTANT TERMS
Debit card – electronic card which allows you to access the money in your checking account, operates like a check, or cash in plastic form
Credit card – electronic card, looks much like debit card, but uses money you borrow from the bank which you must repay
PIN – Personal Identification Number, unique to each person, used for making deposits and withdrawals with debit card, typically 4 digits
HOW TO USE MY BANK ACCOUNT
Can make deposits and withdrawals at the bank with a teller
Can utilize an ATM If you have a check, make sure to endorse, or
sign the back! Some companies/organizations use Direct
Deposit Your pay check is linked to your bank account
and the money goes straight there, you do not receive an actual check to deposit
Need to know your PIN to utilize your debit card and checking account!
DEBIT CARDS
What is a debit card?
DEBIT CARDS
Debit cards are also known as check cards. Debit cards look like credit cards or ATM
cards, but operate like cash or a personal check.
DEBIT CARDS
Debit cards are accepted at many locations, including grocery stores, retail stores, gasoline stations, and restaurants. You can use your card anywhere merchants display your card's brand name or logo. They offer an alternative to carrying a checkbook or cash
USE YOUR DEBIT CARD FOR:
Shopping ATM transactions Getting cash Immediate banking
DIFFERENCE?
What’s the difference between a debit card an a credit card?
It's the difference between "debit" and "credit." Debit means "subtract." When you use a debit card, you are subtracting your money from your own bank account. Debit cards allow you to spend only what is in your bank account. It is a quick transaction between the merchant and your personal bank account.
CREDIT CARDS
Credit is money made available to you by a bank or other financial institution, like a loan. You may use the credit with the understanding that you will repay the amount, plus interest if you do not pay in full each month. You will receive a monthly statement detailing your charges and payment requirements.
WHAT YOU SHOULD KNOW
Using a debit card instead of writing checks saves you from showing identification or giving out personal information at the time of the transaction.
Using a debit card frees you from carrying cash or a checkbook.
Debit cards may be more readily accepted by merchants than checks, especially in other states or countries wherever your card brand is accepted.
The debit card is a quick, "pay now" product, giving you no grace period.
Returning goods or canceling services purchased with a debit card is treated as if the purchase were made with cash or a check.
CONVENIENCE
Use the card for purchases anywhere that accepts Visa
Use the card for cash at ATM machines Have access to your funds 24 hours a day Avoid check-cashing hassles
SAFETY
Avoid carrying large amounts of cash Prevent the risk of a paper check being lost
or stolen in the mail
INFORMATION
Keep track of your purchases by phone or internet
Check your available balance by phone, ATM or Internet
TIPS TO USING A DEBIT CARD If your card is lost or stolen or you suspect
your card is being fraudulently used, report it immediately to your financial institution.
Hold on to your receipts from your debit card transactions. A thief may get your name and debit card number from a receipt and order goods by mail or over the telephone. Your card does not have to be missing in order for it to be misused.
If you have a PIN number, memorize it. Do not keep your PIN number with your card. Also, don't choose a PIN number that a smart thief could figure out, such as your phone number or birthday.
MORE TIPS
Never give your PIN number to anyone. Keep your PIN private.
Always know how much money you have available in your account. Don't forget that your debit card may allow you to access money that you have set aside to cover a check which has not cleared your bank yet.
Keep your receipts in one place -- for easy retrieval and better oversight of your bank account
WHAT ABOUT CHECKS?
YES they are still important! Why do we need to know how to write a
check?
HOW TO WRITE A CHECK
1. Use blue or black pen always2. Write today’s date3. Pay to the order…(name of person, company you are paying)4. Amount of check in numerical numbers5. Amount of dollars in written words6. Amount of cents in fraction7. Draw a line8. Memo / for …what is the check for? Or the purpose of the check9. Sign!
SAMPLE: EACH NUMBER IN RED ALIGNS WITH NUMBER FROM LIST YOU WROTE DOWN
Let’s Practice!