Life Transitions
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2.
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6.
Opportunity Cost
Errors
Make the most of our money
Plan for the future
Financial Plan
Build our credit rating
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Banking Basics
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Services
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Types of Accounts and Managing your Account
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Other
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Types of financial institutions
Terminology
Types of services, charges, and accounts
How to open an account
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Ways of banking
Deposit Services
Cards
Loans
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Chequing and Saving
Interest
Bank Statement
maintaining such accounts
◦ Consumer Tips
◦ High Cost Financial Services
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Financial Institution
◦ Is an organization that provides banking or other
financial services for customers.
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Banking
◦ Refers to the deposit, loan and similar services that
these financial institutions offer.
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There are many types of financial institutions
◦ Banks, credit unions, caisses populaires and trust
companies. Banks and trust companies are owned
by investors, credit unions and caisees populaires
are owned by their members.
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Account
◦ An arrangement with a financial institution to let
you deposit, transfer and withdraw money, subject
to terms that are defined in the account agreement.
◦ Two main types of accounts: savings and chequing
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Account Agreement
◦ An agreement that lists your rights and
responsibilities and the financial instruction's rights
and responsibilities regarding the account.
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Transaction
◦ Any business done through your account (deposit,
cash withdrawal, cheque or bank charge)
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Direct deposit
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Automatic payments
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Automatic teller machines (ATMs)
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Point-of-sale transactions
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Store-value cards
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Internet/Cyberbanking
◦ Earnings or government payments automatically deposited into
bank accounts.
◦ Utility companies, loan payments, and other businesses use an
automatic payment system with bills paid through withdrawal
from a bank account.
◦ Allow customers to obtain cash and conduct banking transactions.
◦ Acceptance of ATM/debit cards at retail stores and restaurants for
payment of goods and services.
◦ Prepaid cards for telephone service, transit fares, store prepaid
cards (starbucks, chapters, etc.)
◦ Online services – cyber branches allow customers to check
balances, pay bills, transfer funds, compare savings plans and
apply for loans on the internet.
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http://www.youtube.com/watch?v=txOt6gftB
e4
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Two pieces of ID.
Some chequing accounts have a monthly fee of $4 or
less.
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Rights:
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Responsibilities:
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◦ When you open a deposit account, you have a right to see
the complete account agreement, any interest paid and how
it is calculated; any charges on the account, hold policy on
cheques (how long they will hold it before they give you
access), and what to do if you have a complaint.
◦ Any changes to account must be given in writing.
◦ Right to cash a cheque issued form the Govt of Canada for
free at any bank.
◦ Read and understand the terms of your account agreement
◦ Check your account statement regularly and report
anything
◦ Keep your accounts documents, passwords and PINS secure
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Main ones:
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Ways to do banking
Deposit services
Card services
Loans
How you bank
In Person
By Phone
Internet/Mobile
Device
ATM
Advantages
Disadvantages
When to use
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Deposit your money to keep it safe until you need it.
Deposits in most financial institutions are guaranteed
up to a certain amount
◦ Deposit Insurance - Canadian Banks are one of the best for
regulations, in the bank fails, and unable to pay, your
money to a certain amount is insured – double check
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Interest
◦ Savings – higher rates, may be charged for withdraws
◦ Chequing – low or no interest at all
◦ http://www.tdcanadatrust.com/document/PDF/accounts/td
ct-accounts-int-calc.pdf
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Deposit a cheque – will hold onto the money for a
few days, then transfer money and ensure it is there.
Fees associated with accounts.
You can use it in two main ways:
 You can make deposits, withdraw cash, pay bills, transfer
money from one account to another and view your account
at your financial institution's automated teller machine (or
ATM, also called an automated banking machine or ABM).
You can also use it to withdraw cash from another
financial institution's ATM (fees $1 - $8).
 You can pay for purchases at a store or other merchant
that offers debit card payment services. You can also ask
the merchant to take out more than you need for the
purchase and give you the extra cash back. When you use
the merchant's card reader, the bank sends money from
your account to the merchant's to pay for what you
bought.
 PIN!!!
◦ Usually necessary, keep it confidential
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The Canadian Code of Practice for Consumer Debit Card Services is a
voluntary code that outlines the responsibilities of consumers and the
financial industry. It helps to protect you when you use debit card
services in Canada.
Under the code, it is your responsibility to use a secure personal
identification number (PIN) and to keep it secure.
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Choose a PIN that is hard to guess.
Don't tell it to anyone, and if you write it down, keep it separate from your debit card.
Check your account statements frequently.
If your card is lost, stolen or stuck in an ATM, or if there has been a transaction you
did not authorize, immediately report it to your financial institution.
For more information about keeping your PIN and debit card safe, see
the Fraud Protection module.
If you are a victim of debit card fraud, it is usually up to the financial
institution to show that you are responsible for the charge, and not the
other way around. Financial institutions will usually cover any losses if
you have taken the appropriate steps to protect your card and your PIN.
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Mortgages:
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Lines of credit:
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Credit cards:
◦ Loans, usually for buying a home or property, in which the lender
can take possession of the property if you default on your
mortgage payments. Your property is a security or guarantee for
the loan. Buying used cars – check the bank for a lien on the car
you want to buy.
◦ An arrangement that lets you borrow money when you need it (up
to a limit) and pay it back when you are able, provided that each
month you pay a minimum amount established by the financial
institution. Student line of credit is a good tool for post-secondary
students.
◦ An arrangement under which a financial institution pays a seller
for purchases you make, and you pay the institution back. You pay
interest if you don't pay the entire amount on time. (This is
different from a debit card: with a debit card, the financial
institution takes money directly from your account to pay the
seller. With a credit card, the financial institution uses its money
to pay the seller, and you later pay it back.)
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When buying moveable forms of property, most
people don’t check to see if there are any liens
registered against it. Buying the item anyway
means they may be purchasing the previous
owner's legal obligations as well. If the old debt
stays unpaid, a creditor or secured party may
seize the property out from under you!
Source: http://www.isc.ca/SPPR/Pages/SearchLiens.aspx
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To take out a loan from a financial institution,
you fill out an application that lets the
institution judge whether you are able to pay
it back on time, based on criteria that it has
defined. If it agrees to lend you money, you
have to pay it back with added interest.
Usually you have to make a payment every
week, every two weeks or every month
according to what your loan agreement
specifies.
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Financial institutions in Canada offer a wide
variety of deposit accounts. To match your
needs to the services they offer, they need to
know a bit about you and how you expect to
use a banking account. For example, they
need to know:
Required balance; monthly fees, interest
earned, cost of printing cheques, and charges
for other fees and services
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if you are a member of a special group, such as students, youth
or seniors (they may charge lower fees for some groups)
the minimum balance you will have in the account each month
(they may not charge regular fees if you keep a minimum
amount in the account)
the number of transactions you expect to do in a month
(sometimes it's cheaper to pay for each transaction, sometimes
it's better to pay a flat monthly fee)
if you need any special services on a regular basis, such as:
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certified cheques
money orders and bank drafts
stop payments
travellers' cheques
personalized cheques
overdraft protection
cheque returns
safety deposit box
access to bank machines that are not owned by your financial institution
email money transfers.
Financial
institutions usually
calculate the
amount of interest
to pay each month.
Some calculate the
amount daily and
pay the amount
into your account
at the end of the
month. Some
calculate it on the
lowest amount you
had in the account
over the month. If
they calculate it
daily, you'll save a
little faster.
Interest on Accounts – TD Canada Trust
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Cheques – What you need to know!
◦ How to write them.
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Even with online and card payments – there is
still 1 billion cheques that get processed a year.
Cheque – agreement b/w two people
NSF –non-sufficient funds
Post-dated cheques (cashed early/what is it)
Cheque cashed by a different individual (countersigned cheques); endorsed cheques
Stop Payment
Fraudulent cheques
Bank Reconciliation
Source: http://www.cba.ca/en/consumer-information/40-banking-basics/584-cheques-what-you-need-to-know
•Online or monthly statement
that is mailed to you.
•TD
•Infinity Account $14.95
•Overdraft Fee $4
•Statement Fee $2
•Cheques
•$39.95 for 100 Cheques
(TD)
•$20 for 100 at ASAP
Cheques
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The difference between the two records on a given date
may arise because of the following;
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Cheques drawn but not yet presented to the bank
Cheques received but not yet deposited in the bank
Interest credited and not recorded in the organization's books
Bank charges debited but not recorded in the organization's
books.
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Financial institutions help you manage your
money with basic services, and they can also
help you meet your financial goals with more
advanced services. Most can offer you
financial advice to help you save, and they
can also help you invest your money.
1.
2.
3.
For many people, the hardest part about saving is
simply not spending money when they have it.
When there is money in your account, it's tempting
to spend it on things you want today—whether on
small things like an afternoon coffee, or more
expensive things like a new music player.
When you transfer money out of your chequing
account into your savings account, it's easier to
keep it for long-term spending needs, like buying a
home or paying for an education.
Your financial institution can set up an automatic
transfer so that you put money into your savings
account or an investment account every month.
Your savings will grow, and you won't have to
choose between saving and spending.
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Watch how many transactions you make.
Use the cheapest method of do your banking.
Get only the records you really need.
Watch your account balance.
Ask for special fees based on your age.
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Pawn shops charge very high interest for loans based on the
value of tangible assets (such as jewellery or other valuable
items)
Rent-to-own programs offer an opportunity to obtain home
entertainment systems or appliances for a small weekly fee.
However, the amount paid for the item usually far exceeds the
cost if the item were bought on credit/cash.
Cheque-cashing outlets charge high fees (2-3%) just to cash a
paycheque or government cheque. ($1000 cheque, they could
charge 3% fee ($30) plus a $3 service fee, for a total charge of
$33 – EXPENSIVE)
Rapid-refund tax services provide “instant refunds” when you
pay to have your federal tax return prepared. However, this
“instant refund” is a loan with interest rates as high as 120%.
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Banking Services
◦ Complete the bank services sheet
◦ Complete the chequing account sheet
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Chequing Account
◦ Keeping a running balance
◦ Reading a bank statement
◦ Reconciling an account
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Banking and Fraud
Saving
Credit and Debit
Investing
Income Tax
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Career
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Independent Living
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UNITS
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Tracking/Banking
Action Plan
Expense
Christmas Project
Budget Assignment
Banking Assignment
ASSIGNMENTS
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You can ask for lower fees. Contact your financial
institution and discuss lowering or waiving some of your
fees.
◦ Make sure your account is in good order. Be ready to say how
many years you've been a good customer, what accounts you have
at the institution and what charges you pay.
◦ Ask for something specific. Explain that you want a specific fee
waived and why.
◦ The first person you talk to may not be able to help you. Ask to
speak to a supervisor if necessary.
◦ Explain your position, but make sure your request is reasonable.
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Review your accounts with a representative once a year or
if there is a major change in your finances. Ask the
representative to suggest ways to reduce your fees. You
may be able to get the institution to reduce some or all of
your banking fees if you take out a mortgage or line of
credit at the institution.
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Banking Selector Tool
◦ http://www.fcacacfc.gc.ca/eng/resources/toolCalculator/banking/banki
ngPackage/BanStep1-eng.asp
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Cheque Activities
◦ http://www.enchantedlearning.com/economics/checks/
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MODULE 27
Describe how to open a checking account,
balance a checkbook, and apply for a loan.
◦ http://voc.ed.psu.edu/projects/caps/27CAPS.html