Andrea Morgan, Gary Moore, and Melissa Greenslade
Program Coordinators
University of Arkansas
Office of Financial Aid

Bank


 “For-Profit” organizations in business to make money for their stockholders
Serve the general public
Deposits federally insured up to $250,000 by the Federal
Deposit Insurance
Corporation (FDIC) www.fdic.gov
Credit Union




“Not-For-Profit” organizations that exist to serve their members
Some require you to be a member of a certain group to join (i.e. teachers, police, etc.)
Many are now open to anyone who wishes to join
Deposits federally insured up to $250,000 by the National
Credit Union Administration
(NCUA) www.ncua.gov

 Savings Accounts
 Checking Accounts
 CDs (Certificates of Deposit)
 Money Market Accounts
 Safe Deposit Boxes
 Consider Liquidity— how easily or quickly you can/want to withdraw your money

 Basic “deposit” account with most banks and credit unions to earn interest on savings
 Interest rates are usually about 1-2%
 How is interest calculated?
 Simple Interest – interest is calculated only on the principal
 Compound Interest – interest is calculated on the principal plus any interest already paid
 Pros: low risk, high liquidity
 Cons: low interest rate

 Convenient “transactional” account to deposit and withdraw money and write checks to pay for purchases and bills
 Usually do not pay any interest
 Single vs. Joint Checking Accounts


Single : you are the only person with access to the account
Joint: you share the account and money in the account with one or more persons
 Be careful about having joint checking accounts!
 Pros: low risk, high liquidity
 Cons: low/no interest rate, balance required to avoid fees

 Like combined checking and savings accounts
 Can write checks (although may be limited each month) and earn higher interest than a typical savings account
 Usually require a minimum balance of $10,000 or more and may charge fees if balance drops below a certain level
 Pros: better interest rates, high liquidity
 Cons: greater initial deposit required, may have limited transfers/withdrawals

 Fixed interest rate for a specified term, from three months up to five years or longer
 Best suited for those with funds that can remain untouched for longer periods of time
 If you withdraw your money before the term ends, you will lose interest and may be charged a penalty fee
 Pros: higher interest rates, often insured by the government
 Cons: low liquidity

 A metal drawer in a bank vault that is rented out on an annual basis as storage for important papers and small items of value
 Cost between $15-100 per year

 To open a bank account you will need:
 Identification



Photo ID
Social security card
And/or certified copy of birth certificate
 Cash or check for deposit
 The bank will have you complete paperwork and sign an account agreement and a signature card

 ATM Cards are linked to your checking and/or savings account and allow you to withdraw money from your account using your bank’s (and other banks’)
Automatic Teller Machines (ATMs).
 Debit Cards are upgraded ATM/credit cards. Money spent using your debit card is withdrawn immediately from your checking account and sent straight to the company you are paying.
 PIN (Personal Identification Number) is a secret code that only you should know that grants access to the money in your account at ATMs and merchants

 Never have your Social Security Number, Driver’s
License Number, or Phone Number printed on your checks
 Many checks are now processed electronically

1.
2.
3.
4.
5.
6.
Date
Payee Name
Amount in numbers
Amount written in words
Memo (optional)
Payer Signature

 Available in the back of your checkbook or at the bank, used for making deposits at your bank

 Automatic deposit of wages into a consumer’s bank account
 Convenient and safer than paper check deposits

 Checking Fee – fee for having a checking account open; often based on balances
 Some banks offer free checking with direct deposit or certain minimum balances
 Minimum Balance Fee – fee for failing to keep a certain minimum balance in your checking or savings account
 ATM Fee– fee charged for using another bank’s ATM
 NSF Fee – non-sufficient funds (bounced check) – fee for over withdrawing on your account; around $35 per instance

 Funds Availability Policy – how long before your deposit is available for you to use
 Automatic Withdrawals – bill payments or savings transfers are made automatically; best for fixed payments
 Overdraft Protection – bank will cover payment over the amount you have in your bank account
 New Regulations require that you opt in to this; it is not automatic
 Debit Card purchases will be declined if you are overdrawn
 Some banks have a charge for this

 Make it a habit to record EVERY checking account deposit, payment, or withdrawal in your checking account register (checkbook)
 Reconciliation – comparing your checkbook and monthly bank statement to ensure the balances match

1.
2.
3.
4.
5.
Check number
Date of Transaction
Title of Transaction
Payment
Deposit

 Internet-only banks without physical offices
 Online branches of brick and mortar banks
 Benefits of online banking:
 Access to account information at any time
 Ability to transfer money easily between accounts

 Must find ways to cash a check.
 Check cashing store
 Fee ranging from 1.75% to 3% of the check

$300 check, 2% fee = $6 each time. 24$/month
 Must find ways to pay bills.
 Cashier’s checks or money orders cost money


Immediately withdraw money from an account or have cash available to pay bank or merchant to write a guaranteed check to pay a bill
Fees around $5 each.





 Office of Financial Aid; Andrea, Gary, and Melissa
 Campus location: 114 Silas Hunt Hall
 Phone: 479-575-3806
 Fax: 479-575-7790
 E-mail: finaid@uark.edu
 Website: http://finaid.uark.edu/
 And find us on Facebook at University of Arkansas
Financial Aid!