Building Bucks
Basic Financial Services
Financial Institutions
• 3 Main Types
– Banks
– Credit Unions
– Savings and Loan
Associations (S&L)
• Advantages
– Convenient access to
your money
– Security
– Saves money
– Access to knowledgeable
people
– Building block of credit
– Earn interest
Types of Saving
• Regular Savings Account
– Interest paid monthly
– May require a minimum
deposit
• Certificates of Deposit (CDs)
– Money must remain in
account for a term
– Higher interest rate than a
savings account
• Electronic Transfer Account
– Direct deposits for
government payments
• Money Market Account
– Limited check writing and
withdrawals
– Pay higher interest than
regular savings accounts
– Interest rate may change
• U.S. Government Securities
– Often offers highest
return with lowest risk
Choosing a Savings Account
• How much will my
savings earn?
• How easy is it for me to
access my money?
• What’s the minimum
amount needed to
open the account?
• Is there a minimum
balance to keep the
account open?
• Does the account have
a maturity date?
• Is the account “liquid”
or “long-term”?
Checking Account Basics
Advantages
• Convenient—money
available
Disadvantages
• Cost of over-drafting
account can be costly
• Safer than carrying cash
• Greater responsibility for
record keeping
• Proof of payment
• Easier budgeting
• Minimum balance or fee
requirements
Choosing a Checking Account
• What types of checking accounts are
available?
• Is a minimum balance needed on an account
and is it able to earn interest?
• Does the account have ATM or Debit cards
available?
• Are overdraft protection plans available?
• What are account disclosures?
Maintaining a Checking Account
1. Record all transactions in your register
– Checks
– Debits
– ATMs
2. Keep a running balance of your account
3. Balance your checkbook with your monthly
statement
4. Subtract checks and ATM withdrawals from
your checkbook right away
Overdrafts
• “Overdrafting” or “Bouncing a check”
– Spending more than you have using a check
• “Overdrafting” with ATM or Debit Card Use
– Spending more than you have using your card
– Your ATM/Debit Card is not a Credit Card
• Standard overdraft practices
– Transaction covered for a flat fee-$20/$30 each
time you overdraw
Overdraft Protection
• Overdraft protection
– Offered by some financial institutions
– Moves money from savings to checking in cases of
overspending
• Options Include
– Transfer from savings, line of credit, tied to a
credit card
• New Rules:
– Rather than auto enrollment in overdraft plans
customers must “opt in” to this coverage for
ATM/debit card use
Savings and Checking Accounts
• Opening an account
– Identification
– Social Security number
– Money to put in the account
• Using an ATM
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Deposit money
Withdraw money
Check your balance
Transfer money between accounts
Savings and Checking Accounts
• Direct Deposit and Electronic Transfer Account
– Automatically deposit checks directly into a
savings or checking account
• Pre-Authorized Transactions
– Scheduled payments automatically pulled from
your account
• Online banking
– Manage all accounts with a secure website
Go Direct
• All federal benefit payments are moving to electronic
payments by March 1, 2013.
1. Direct deposit to a bank or credit union account or
2. Direct Express® card account (default)
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Prepaid debit card
Make purchases, pay bills and get cash back
No bank account required
No sign-up fees or monthly account fees, but…
See: Fee_Schedule.pdf.
Optional text message notifications and alerts.
Looking Ahead
• Electronic Wallet (smart phone transactions)
• Continued movement from paper
– Fewer paper checks or statements
• Electronic monitoring and management
• Shifting fees – al la cart – need to watch
• Blurring of banked and under-banked
– Retail financial services at stores
– Convenience services – check cashing, bill
payment—more popular and competitive