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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

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
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

key terms
Key Terms
  • Federal Reserve System (Fed)
  • commercial bank
  • credit union
  • Federal Deposit Insurance Corporation (FDIC)

Chapter 17

the banking system
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

the banking system1
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

the banking system2
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

slide8

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

deposit institutions
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

deposit institutions1
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

deposit institutions2
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

deposit institutions3
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

types of financial institutions1
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

c h e c k p o i n t
>> C H E C K P O I N T

What are some examples of non-deposit financial institutions?

Chapter 17

selecting a financial institution
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

selecting a financial institution1
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

selecting a financial institution2
SELECTING A FINANCIAL INSTITUTION
  • Convenience
    • 24-hour banking
    • Branch offices in convenient locations
    • ATMs in convenient locations
    • On-line banking

Chapter 17

selecting a financial institution3
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

c h e c k p o i n t1
>> C H E C K P O I N T

What factors should be considered when selecting a financial institution?

Chapter 17

lesson 17 2 financial services and electronic banking
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

key terms1
Key Terms
  • safe-deposit box
  • service charge
  • debit card

Chapter 17

types of financial services
TYPES OF FINANCIAL SERVICES
  • Savings services
  • Payment services
  • Lending services
  • Electronic banking
  • Storage of valuables
  • Investment advice
  • Management of trusts

Chapter 17

c h e c k p o i n t2
>> C H E C K P O I N T

What are the main financial services used by consumers?

Chapter 17

types of checking accounts
TYPES OF CHECKING ACCOUNTS
  • Regular checking accounts
  • Interest-earning
  • Checking accounts
  • Special checking accounts

Chapter 17

comparing checking accounts
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

c h e c k p o i n t3
>> C H E C K P O I N T

What are three main types of checking accounts?

Chapter 17

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

Chapter 17

electronic payment options
ELECTRONIC PAYMENTOPTIONS
  • Debit card transactions
  • Online payments
  • Stored-value cards
  • Smart cards

Chapter 17

banking in the future
BANKING IN THE FUTURE
  • Financial services combined with wireless technology
  • Personalized systems for obtaining, transferring, and using funds

Chapter 17

c h e c k p o i n t4
>> C H E C K P O I N T

What are common electronic banking services?

Chapter 17

lesson 17 3 checks and payment methods
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

key terms2
Key Terms
  • endorsement
  • check register
  • stop payment order
  • bank statement
  • bank reconciliation
  • outstanding checks

Chapter 17

opening a checking account
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

the first deposit
THE FIRST DEPOSIT
  • Signature card
  • Joint account
  • Deposit slip

Chapter 17

signature card
SIGNATURE CARD

Chapter 17

types of endorsements
TYPES OF ENDORSEMENTS
  • Blank endorsement
  • Full endorsement
  • Restrictive endorsement
    • Special endorsement
    • Two signatures required
    • Restrictive endorsement

Chapter 17

c h e c k p o i n t5
>> C H E C K P O I N T

What are the three types of endorsements?

Chapter 17

using a checking account
USING A CHECKING ACCOUNT
  • Check-writing procedures
    • Elements of a check
    • The check register
    • Writing a check
    • Proper check writing
  • Stopping payment

Chapter 17

c h e c k p o i n t6
>> C H E C K P O I N T

What is the purpose of a check register?

Chapter 17

the reconciliation process
THE RECONCILIATION PROCESS
  • Bank statement information
  • Determine checks paid
  • Find differences
  • Calculate adjusted balance

Chapter 17

c h e c k p o i n t7
>> 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

other types of payments
OTHER TYPES OF PAYMENTS
  • Certified checks
  • Cashier’s checks
  • Traveler’s checks
  • Money orders

Chapter 17

certified checks
CERTIFIED CHECKS
  • Personal check for which a bank has guaranteed payment
  • Certification stamped on face
  • Signed or initialed by a bank officer

Chapter 17

cashier s checks
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

traveler s checks
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

money orders
MONEY ORDERS
  • Form of payment that orders the issuing agency to pay the amount printed on the form to another party
  • A bank money order
  • A postal money order
  • An express money order
  • A telegraphic money order

Chapter 17

c h e c k p o i n t8
>> C H E C K P O I N T

How does a certified check differ from a cashier’s check?

Chapter 17

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