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Banking and Financial Services

17. Banking and Financial Services. 17-1 Banks and Other Financial Institutions 17-2 Financial Services and Electronic Banking 17-3 Checks and Payment Methods. LESSON 17-1 Banks and Other Financial Institutions. Goals Explain the purpose of the Federal Reserve System.

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Banking and Financial Services

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  1. 17 Banking and Financial Services 17-1 Banks and Other Financial Institutions 17-2 Financial Services and Electronic Banking 17-3 Checks and Payment Methods

  2. LESSON 17-1Banks and Other Financial Institutions Goals • Explain the purpose of the Federal Reserve System. • List the types of financial institutions. • Discuss factors for selecting a financial institution. Chapter 17

  3. Key Terms • Federal Reserve System (Fed) • commercial bank • credit union • Federal Deposit Insurance Corporation (FDIC) Chapter 17

  4. THE BANKING SYSTEM • The Federal Reserve System (Fed) • Main purpose is to supervise and regulate member banks and to help banks serve the public efficiently • All national banks are required to join – becoming member banks. • United States divided into 12 districts with a central Federal Reserve Bank in each district. Chapter 17

  5. Chapter 17

  6. THE BANKING SYSTEM • Federal Reserve activities • Supervise banks • Holding of reserves – banks are required to keep a part of the money they receive from customers on deposit in case the banks need additional funds to meet the daily customer demand • As a clearinghouse • Uses electronic funds transfer (EFT) to pay checks among different banks in different cities Chapter 17

  7. THE BANKING SYSTEM • Banking and the Economy • The savings you and others deposit make banking services possible. Deposits do not remain idle in the bank, they are put to work. Chapter 17

  8. Some of the activities for which banking services are used include: • Building homes • Starting new businesses • Planting crops • Financing educations • Buying goods • Paving streets • Investing for retirement • Building hospitals • These activities create jobs and economic growth. Chapter 17

  9. TYPES OF FINANCIAL INSTITUTIONS Chapter 17

  10. Deposit Institutions • Commercial banks • Most common bank organization • Also known as full-service bank because they offer services such as: • Checking accounts • Savings accounts • Loans to businesses and individuals • May find branches in shopping centers and grocery stores Chapter 17

  11. Deposit Institutions • Savings and loan associations • Traditionally specialized in savings accounts and making loans for home mortgages • Recently have expanded to offer a wider variety of services Chapter 17

  12. Deposit Institutions • Mutual savings banks • A savings bank that is owned by, and operated for the benefit of, its depositors. • Profits are distributed in proportion to the amount of business each participant does with the company. • Organized mainly for savings and home loans. • Located mainly in the northeastern United States. Chapter 17

  13. Deposit Institutions • Credit unions • User-owned, not-for-profit, cooperative financial institution • Comprised of people in the same company, government agency, or profession • Accept savings deposits and make loans • Regulated by NCUA, the National Credit Union Administration Chapter 17

  14. TYPES OF FINANCIAL INSTITUTIONS (continued) • Non-deposit financial institutions • Life insurance companies • Investment companies • Consumer finance companies • Mortgage companies • Check-cashing outlets • Pawnshops Chapter 17

  15. >> C H E C K P O I N T What are some examples of non-deposit financial institutions? Chapter 17

  16. SELECTING A FINANCIAL INSTITUTION • Services offered • Savings accounts • Checking and payment accounts • Loans and other credit plans • Other services, such as safe deposit boxes Chapter 17

  17. SELECTING A FINANCIAL INSTITUTION • Safety • Federal Deposit Insurance Corporation (FDIC) helps to regulate banks and protects depositors’ money in case of the failure of a bank • Insures all accounts in the same name at each bank up to an amount of $100,000 (temporarily increased by the government to $250,000 per depositor through December 31, 2009) Chapter 17

  18. SELECTING A FINANCIAL INSTITUTION • Convenience • 24-hour banking • Branch offices in convenient locations • ATMs in convenient locations • On-line banking Chapter 17

  19. SELECTING A FINANCIAL INSTITUTION • Fees and charges • Compare your needs with the price you pay • Watch for hidden fees such as ATM fees • Restrictions • Minimum deposit requirements • Amount • Time Chapter 17

  20. >> C H E C K P O I N T What factors should be considered when selecting a financial institution? Chapter 17

  21. LESSON 17-2Financial Services and Electronic Banking Goals • Identify the financial services used by consumers. • Explain types of checking accounts. • Describe electronic banking activities. Chapter 17

  22. Key Terms • safe-deposit box • service charge • debit card Chapter 17

  23. TYPES OF FINANCIAL SERVICES • Savings services • Payment services • Lending services • Electronic banking • Storage of valuables • Investment advice • Management of trusts Chapter 17

  24. >> C H E C K P O I N T What are the main financial services used by consumers? Chapter 17

  25. TYPES OF CHECKING ACCOUNTS • Regular checking accounts • Interest-earning • Checking accounts • Special checking accounts Chapter 17

  26. COMPARING CHECKING ACCOUNTS • Minimum balance • Interest rate earned, if any • Monthly service charge • Fees for other services, such as printing checks and stop payment orders • Other restrictions Chapter 17

  27. >> C H E C K P O I N T What are three main types of checking accounts? Chapter 17

  28. ELECTRONIC BANKING • E-banking services • Automatic teller machines • Payments at the point-of-sale • Direct deposit • Automatic bill payments Chapter 17

  29. ELECTRONIC PAYMENTOPTIONS • Debit card transactions • Online payments • Stored-value cards • Smart cards Chapter 17

  30. BANKING IN THE FUTURE • Financial services combined with wireless technology • Personalized systems for obtaining, transferring, and using funds Chapter 17

  31. >> C H E C K P O I N T What are common electronic banking services? Chapter 17

  32. LESSON 17-3Checks and Payment Methods Goals • Describe three main types of endorsements. • Describe proper check-writing procedures. • Explain the bank reconciliation process. • Identify other payment methods. Chapter 17

  33. Key Terms • endorsement • check register • stop payment order • bank statement • bank reconciliation • outstanding checks Chapter 17

  34. OPENING A CHECKING ACCOUNT • Benefits of checking accounts • Convenience and ease of making payments • Safety to make payments with less risk than using cash • Proof of payment • A record of finances for managing your money Chapter 17

  35. THE FIRST DEPOSIT • Signature card • Joint account • Deposit slip Chapter 17

  36. SIGNATURE CARD Chapter 17

  37. TYPES OF ENDORSEMENTS • Blank endorsement • Full endorsement • Restrictive endorsement • Special endorsement • Two signatures required • Restrictive endorsement Chapter 17

  38. SAMPLE ENDORSEMENTS Chapter 17

  39. >> C H E C K P O I N T What are the three types of endorsements? Chapter 17

  40. USING A CHECKING ACCOUNT • Check-writing procedures • Elements of a check • The check register • Writing a check • Proper check writing • Stopping payment Chapter 17

  41. PARTS OF A CHECK Chapter 17

  42. >> C H E C K P O I N T What is the purpose of a check register? Chapter 17

  43. THE RECONCILIATION PROCESS • Bank statement information • Determine checks paid • Find differences • Calculate adjusted balance Chapter 17

  44. MONTHLY ACCOUNT STATEMENT Chapter 17

  45. RECONCILIATION FORM Chapter 17

  46. >> C H E C K P O I N T What are causes of differences between the bank statement balance and a person’s check register? Chapter 17

  47. OTHER TYPES OF PAYMENTS • Certified checks • Cashier’s checks • Traveler’s checks • Money orders Chapter 17

  48. CERTIFIED CHECKS • Personal check for which a bank has guaranteed payment • Certification stamped on face • Signed or initialed by a bank officer Chapter 17

  49. CASHIER’S CHECKS • Check that a bank draws on its own funds • Costs the amount of the check plus a service fee • More acceptable than the personal checks Chapter 17

  50. TRAVELER’S CHECKS • Special forms designed for making payments when away from home • Require your signature in two places • Cash a check or pay for a purchase • Commonly accepted throughout the world Chapter 17

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