Welcome to
Banking
BASICS
a
YOU can bank on it
© 2011
MoneyWI$E
A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP
MoneyWI$E ‘Banking Basics’
MoneyWI$E
 A joint financial education project of
Consumer Action and Capital One
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What will the ‘Banking Basics’
training teach us?
We want you to have a thorough
understanding of personal
banking services and how they
can benefit you.
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You will learn about:
 Banks and credit unions
 How to select a financial
institution
 How to open an account
 How to keep account costs down
 How to get more interest on your
savings
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Participants’ folders contain:
 You Can Bank On It (brochure)
 Check Writing (class activity)
 Sample ChexSystems Report
 Sample Account Application
 Choosing a Bank or Credit Union (takehome worksheet)
 Evaluation of the MoneyWI$E Banking
Basics Seminar
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Checking and savings accounts
What are some of the advantages
to having a checking and savings
account?
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Advantages of checking and
savings accounts include:
 Your money is safe
 Each account is insured
 Checking account records provide proof
that you paid bills and help you keep
track of spending
 Money in a savings account earns
interest to help it grow
 Less expensive than check-cashing
stores and money orders
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Banks and credit unions
What is the difference between a
bank and a credit union?
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Banks
 Banks are financial institutions
that take deposits, engage in
lending and operate for a profit
 Banks offer checking and
savings accounts to the general
public
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Credit unions
 Credit unions are financial cooperatives
that are owned by and serve individuals
with a common affiliation
•
for example, a workplace, church,
employees union, neighborhood, etc.
 Credit unions offer checking and savings
accounts to members
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Account verification services
How do banks and credit unions
learn how you have handled your
accounts in the past?
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ChexSystems...
 Is the major national‘account
verification’company
• When you apply for a new checking
account, banks and credit unions
search for your name in the
ChexSystems database
• If you ever abandoned an account,
leaving a negative balance, you are
probably listed in this database
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ChexSystems records
 Reports about overdrafts or closed
accounts remain in your file for five
years
 You can get a free copy of your report
by contacting ChexSystems at
www.consumerdebit.com
 You have the right to dispute
inaccurate information in your account
verification report
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Your rights
 You can get a free copy of your
ChexSystems report if:
• you have been denied an account in
the past 60 days because of
information listed in ChexSystems
• your checks were stolen and used by
an impostor or you are the victim of
any banking or account fraud
 Get a copy anytime for about $10
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Don’t get discouraged
 If you try to open a new checking
account and are turned down by a
bank or credit union because of
your past account history, don’t
give up
 Different banks and credit unions
have different requirements, so
shop around
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ChexSystems sample report
 Let’s review the categories of the
ChexSystems sample report:
•
•
•
•
•
•
•
Reported information
Drivers license validation
Drivers license verification
Consumer-initiated inquiries
Customer-initiated inquiries
Retail information
Check printing order history
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Checking accounts
What kinds of things can you do with
a checking account?
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Checking accounts
 Checking accounts allow you to:
•
•
Pay bills with checks/online bill pay
Get cash, transfer money and make
purchases using your debit card
 Access your checking account:
•
•
•
At an ATM or bank branch
On your computer (online banking)
By phone or using a data-ready mobile
device (mobile banking)
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Banking/checking online
 Also known as Internet banking
 Via a secure website operated by your
financial institution (or via an “app”)
 Pay bills, view transactions, transfer funds
between accounts
 Benefits: convenient, low or no acct fees,
quick access to info, savings on postage
and checks
 But, may still need to visit the ATM
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Safe Internet banking
 Make sure the institution is legitimate
 Create a strong password
 Keep your ID and password private
 Don’t fall for phishing scams
 Be careful when using public wireless
networks (Wi-Fi) or shared computers
 Monitor account activity regularly
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Keeping checking account fees in
check
 Shop around for free or low-cost
checking accounts
• e-Accounts
• Electronic transfer accounts
(ETAs)
• Basic (Lifeline) accounts
• Low-cost accounts for seniors or
students
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Debit cards
 You can use your debit card in
these ways:
• Enter your personal identification
number (PIN) at an ATM or at a
retailer’s point-of-sale (POS) terminal
• Sign a receipt
• Swipe without a signature or PIN on
purchases under $25 at some stores
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Debit cards
 If your debit card is lost or stolen:
• Alert your bank or credit union as
soon as possible. The longer you
wait, the more money you might be
responsible for if an unauthorized
person uses your card to buy things.
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Check writing activity
In this activity you will practice
writing a check and entering it into a
sample checking account register.
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Check writing
Why is it important to enter your
checks and debit transactions in
your account register?
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Keep a record of your transactions:
 So that you don’t forget checks, cash
withdrawals, and purchases with your debit
card
•
If you forget to record a transaction, it could
overdraw your account. This could lead to a
fee for “non-sufficient funds” (bounced
check) being charged to your account.
 So that you know how much money you have
in your account
 So that you can track your spending and
stick to a budget
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Savings accounts
How is a savings account different
from a checking account?
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What is interest?
 Interest is the cost of borrowing money
•
•
When a bank/credit union gives you a
loan, you pay interest to them
When you keep your savings in a
bank/credit union, they pay interest to
you
 APR, or annual percentage rate, is the
annual amount of interest, expressed
as a percentage of the amount loaned
or borrowed
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Types of interest
 There are two types of interest:
• Simple interest means that you only
earn interest on your initial deposit
• Compound interest allows you to
earn interest not only on your initial
deposit, but also on the interest you
earn as you go along
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Interest
 Simple interest
•
$100 on deposit for 10 years at a 1% APR
would earn $10 in interest
 Compound interest
•
The same deposit, compounded monthly,
would earn $10.51 (51¢ more because of
compounding)
•
Compounding earns more, especially if
you save regularly
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In the second half of Banking
Basics, we’ll discuss:
•
•
•
•
•
How to earn more interest
Safe deposit boxes
Choosing and opening an account
Managing your checking account
How to resolve any issues with your
account
 See you then!
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Certificates of deposit (CDs)
What is a certificate of deposit?
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Certificates of deposit (CDs)
 A certificate of deposit, or CD, is a kind of
savings account in which you leave your
money on deposit for a set period of time
in order to earn interest
 The longer the term of your CD, the higher
your interest rate will be
 If you withdraw your money before the
term ends, you will lose interest and might
have to pay a penalty
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Safe deposit boxes
 What is a safe deposit box?
 What are some things that you might
keep in a safe deposit box?
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What to keep in a safe deposit box
 Copies of insurance policies
 Birth, marriage and death certificates
 Mortgages, leases and other
important contracts
 Stock and bond certificates and
certificates of deposit (CDs)
 Valuable jewelry
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Safe deposit boxes
What should you not keep in a safe
deposit box?
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Safe deposit boxes
 The originals of your will and life
insurance policies should not be
kept in a safe deposit box
 The box might be sealed at the time
of your death and your survivors
would need a court’s permission to
open it
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Opening an account
 Questions to ask:
• What is the minimum to open an
account?
• What is the interest rate on the
account?
• Is there a monthly fee?
• Is there any way to avoid monthly
fees?
-
(more questions on next slide)
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More questions to ask when
opening an account
• Is there a maximum number of
checks I can write each month?
• Is there a fee for using your ATMs?
• What happens if my balance falls
below the minimum requirement?
 TIP: Use the MoneyWI$E worksheet in
your folders as a guide when you apply
for an account
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Opening an account
What should you bring with you when
you are opening a new account?
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Identification
 When you go to a financial institution
to open a new account, bring:
•
Photo identification, such as a driver’s
license, state ID card or passport
•
Proof of your address, such as a utility
bill or lease
•
Your Social Security number for tax
purposes
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Activity
Sample savings account application
 This is a sample application for an
interest-bearing account at MoneyWI$E
Bank
 Lets walk through the activity together
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Savings account application
 Ownership
 W-9 certification
 Optional services
•
ATM cards
•
Linking accounts
 ATM fees
 Sign and date your application
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Keeping your account straight
 Once you have an account, write down
and deduct in your check register:
•
•
•
•
•
•
•
Every check you write
Every debit card transaction you make
(including “cash back” at stores)
ATM cash withdrawals
Any bank fees you pay
Any online transactions
Any automatic payments/deductions
All deposits and credits
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Account costs
How can you save money on
account costs?
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Ideas to keep account costs down
 Combine checking and saving balances to
avoid monthly fees
 Save on ATM fees by using your own
bank’s machines
 If you can’t avoid an ATM fee, take out
larger sums less frequently
 Use direct deposit for your paycheck or
government benefits check
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Ideas to keep account costs down
 Ask your local bank or credit union about
accounts with free checks
 Order from a reputable mail-order company
 Check with the Better Business Bureau
before buying checks from a company
you are not familiar with
 Write down all transactions and reconcile
your account so you don’t overdraw your
account and incur overdraft fees
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Standard overdraft protection
 Your overdraft transaction is covered if you
pay a fee
 There is a separate fee for each overdraft
transaction
 You must give your permission (opt in) to
allow overdrafts on debit card and ATM
transactions
 If you don’t opt in, you can’t be charged but
your overdraft debit transactions will be
declined
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Overdraft protection plans
 An optional bank service called overdraft
protection waives overdraft fees
 It can work with a loan or line of credit or
with your savings account
•
•
•
For the line of credit, you must have a good
credit history
You will be charged a small transaction fee
when you overdraw your account
You’ll pay interest on funds from the credit
line when you use them
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Resolving problems
 Mistakes happen!
 Bring issues or errors on your
account or account statements to
the attention of your bank or credit
union
 Don’t delay—waiting too long
could make a situation worse
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Solving an account problem
 Contact the financial institution as soon as
you can
 Write down the date of all calls and the
names of the people who help you resolve
the issue
 Send a summary letter (by registered mail,
receipt requested, or by email) to establish a
“paper” trail on your problem (and keep
copies of email)
 Offer a solution and a date by which you
hope to resolve the issue
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Escalating your issue
 Give your bank or credit union time to solve
or report back to you on your problem
 If you are not able to resolve your issue with
your bank or credit union after a reasonable
time, you can contact the institution’s
regulator
 Call the FDIC at 877-275-3342 to find the
name and contact info for your institution’s
regulator
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Now you can grade us
 Please fill out the evaluation form
and hand it to the trainer before you
leave
 The information helps us provide
you with better programs
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Congratulations
By attending the MoneyWI$E
‘Banking Basics’ training, you’ve
empowered yourself to make good
decisions about your account needs.
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Visit money-wise.org
for additional information and to access
free financial education materials
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