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• Introduction to Financial Services • Basic Banking Services • Money Management • Credit. Activity 1…….Where Do I Keep My Money? Activity 2…….Evaluating Financial Services Activity 3…….Banks, Yesterday and Today. Introduction to Financial Services - Activity 1. ACTIVITY 1

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• Introduction to Financial Services • Basic Banking Services • Money Management • Credit


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    1. • Introduction to Financial Services • Basic Banking Services • Money Management • Credit

    2. Activity 1…….Where Do I Keep My Money? • Activity 2…….Evaluating Financial Services • Activity 3…….Banks, Yesterday and Today

    3. Introduction to Financial Services - Activity 1 ACTIVITY 1 Where Do I Keep My Money? Overview • The functions of banks • The cost of alternative financial services • The stability of banks 3

    4. Slide 1 - Places to Save MoneyLesson Reference: Introduction to Financial Services, Activity 2 – Overhead 1 • PLACES TO SAVE MONEY • Would you save your money in any of these places? Why? Why not? Can you think of other places to save money? • Bed & Mattress • Cookie Jar • Pillow • Wallet • Money Belt • Small House Safe 4

    5. Slide 2 - Alternative Financial Services Lesson Reference: Introduction to Financial Services, Activity 1 – Handout 1 • ALTERNATIVE FINANCIAL SERVICES • Check-Cashing Services • Check-Deferrals, Cash Advances, Payday Loans • Pawn Shops • Rapid Tax Refunds • Rent-to-Own • Other Financial Services 5

    6. Slide 3 – FDIC Lesson Reference: Introduction to Financial Services, Activity 1 – Overhead 2 • FEDERAL DEPOSIT INSURANCE • CORPORATION (FDIC) • Established in 1933. • Insures most Savings, Checking, • and other Deposit Accounts, up to $100,000 per depositor, • per institution. • Applies to most Commercial Banks, Savings Banks, and • Savings Associations. 6

    7. ACTIVITY 2Evaluating Financial Services • Overview • Formal and informal financial services • Costs of alternative financial services and average bank accounts • Advantages of establishing a banking relationship 7 Introduction to Financial Services – Activity 2

    8. FORMALFINANCIAL SERVICES • Accounts • Credit cards • Loans • Investment vehicles • Direct deposit • Wire transfers/ remittances • INFORMAL • FINANCIAL • SERVICES • Payday lenders • Check cashing services • Rent-to-own stores • Pawn shops • Title lenders • Loans from family/friends • Cultural savings clubs • Remittances offered through nonfinancial institutions 8 Slide 1 – Formal and Informal Financial Services Lesson Reference: Introduction to Financial Services, Activity 2 – Overhead 1

    9. HOW A BANK CAN SAVE YOU MONEY Monthly Fees without a Bank Monthly Fees with a Bank* • $0 to directly deposit paycheck • $0 to get cash from bank's ATMs or make debit card purchase • $0 to pay monthly bills using electronic bill payment • $5 to send money to family • Monthly cost: $5.00 • Annual cost: $60.00 • $80 to cash paychecks • $3.81 on money orders and stamps to pay bills • $15 to send money to family with a wire transfer company • Monthly cost: $98.81 • Annual cost: $1,185.72 Annual Savings by Using a Bank: $1,125.72 9 Slide 2 – How a Bank Can Save You Money Lesson Reference: Introduction to Financial Services, Activity 2 – Handout 2

    10. ADVANTAGES OF ESTABLISHING A BANKING RELATIONSHIP Nearly everyone needs a bank account to help manage his or her day-to-day money. Bank accounts can help you to: • Pay bills • Manage your money • Receive money • Send money to a friend or family member • Keep your money secure • Start building wealth • Earn interest 10 Slide 3 – Advantages of a Banking Relationship Lesson Reference: Introduction to Financial Services, Activity 2 – Overhead 2

    11. Introduction to Financial Services - Activity 3 ACTIVITY 3Banks, Yesterdayand Today Overview • The many traditional financial services provided by a bank • Other expanded financial services provided by a bank • The impact of banks throughout the community 11

    12. Slide 1 - Traditional Services of Banks Lesson Reference: Introduction to Financial Services, Activity 3 – Overhead 1 • TRADITIONAL • SERVICES • OF BANKS • Checking Accounts • Savings Accounts • CDs (Certificates of Deposit) • Savings Bonds • Loans • Car • Home • Personal • Safe Deposit Boxes 12

    13. Slide 2 - Expanded Services of Banks Lesson Reference: Introduction to Financial Services, Activity 3 – Overhead 2 • TRADITIONAL • SERVICES • OF BANKS • Checking Accounts • Savings Accounts • CDs (Certificates of Deposit) • Savings Bonds • Loans • Car • Home • Personal • Safe Deposit Boxes • EXPANDED • SERVICES • OF BANKS • Insurance Sales • Small Business Advising and Loans • Investments • Credit Cards • Remittances 13

    14. Slide 3 - Financial Services Modernization Act Lesson Reference: Introduction to Financial Services, Activity 3 – Overhead 3 • FINANCIAL SERVICES • MODERNIZATION ACT (1999) • Transformed the banking industry. Eliminated many • restrictions among companies in the securities, • banking, and insurance industries. • Results? • Banks may offer some insurance and investment services. • Investment and insurance companies may offer some traditional banking services. Investments are not insured by FDIC. 14

    15. Slide 4 - Some Community-Related Services Lesson Reference: Introduction to Financial Services, Activity 3 – Overhead 4 • SOME COMMUNITY-RELATED • SERVICES OF BANKS • Bank employees mentor students in areas of basic financial skills. • Bank employees serve on community organizations’ boards of directors. • Banks provide scholarships to students going into the banking profession. • Banks fund affordable housing construction. 15

    16. Activity 1………….Why Do You Need A Bank? • Activity 2………The Many Services of a Bank • Activity 3….The ABCs of a Checking Account • Activity 4……….Opening a Checking Account • Activity 5………………….How to Write a Check • Activity 6…..Maintaining a Checking Account • Activity 7……The ABCs of a Savings Account

    17. Basic Banking Services - Activity 1 • ACTIVITY 1 • Why Do You • Need a Bank? • Overview • Purposes of banks • The differences between banks and • credit unions • Safety of financial institutions • Banks as money management tools • The Earned Income Tax Credit 17

    18. Slide 1 – Safety of Financial Institutions Lesson Reference: Basic Banking Services, Activity 1 – Overhead 3 SAFETY OF FINANCIAL INSTITUTIONS COMMERCIAL BANKS CREDIT UNIONS 18

    19. Slide 2 – EITC Lesson Reference: Basic Banking Services, Activity 1 – Handout 2 THE EARNED INCOME TAX CREDIT The Earned Income Tax Credit (EITC) is a federal tax credit used to reduce the tax burden on low-income working people and to supplement low-income working people’s wages. Low-income workers often use this refund for the initial deposit required to open a bank account and then pay off debt, save for emergencies, or save for long-term goals such as homeownership. Workers are eligible for the EITC when they earn an annual income that is less than a specified amount. This is possible even if they have no tax liability and no money was withheld from their paychecks for taxes. In order to qualify for the EITC, a taxpayer must have a Social Security Number and an annual income and/or investment income that falls below a certain level. Contact the IRS, a tax preparer, or a VITA representative to obtain the current income level requirements. 19

    20. Basic Banking Services - Activity 2 • ACTIVITY 2 • The Many Servicesof a Bank • Overview • Financial services provided by a bank • Bank employees • Services that might be of personal benefit • The impact of state and federal regulations upon the security of a bank 20

    21. REMITTANCE OPTIONS • TO SEND AND RECEIVE MONEY • 1. Money Transfer Organizations • 2. Bank Transfers • 3. Hand Delivery • 4. Mail • 5. Hawala • 6. Post Offices • 7. Stored Value Cards 21 Slide 1 – Remittance Options Lesson Reference: Basic Banking Services, Activity 2 - Overhead 1

    22. BANK OCCUPATIONS • • Tellers • • Platform Bankers • • Mortgage Lenders • • Operations Manager • • Branch Manager 22 Slide 2 – Bank Occupations Lesson Reference: Basic Banking Services, Activity 2 – Overhead 2

    23. Slide 3 - Electronic Bank Services Lesson Reference: Basic Banking Services, Activity 2 – Overhead 3 • ELECTRONIC BANK SERVICES • Online banking is the fastest growing Internet • activity in the U.S. • Types of Services • Bank Cards • Automated Services • Protect Your Passwords! 23

    24. Slide 4 - Bank Card Types Lesson Reference: Basic Banking Services, Activity 2 – Overhead 4 BANK CARD TYPES • TYPE • Check Cards or • ATM/Debit Cards • Stored Value Cards • DESCRIPTION • Bank cards that allow for the payment of goods and services to be subtracted directly from a bank deposit account. • Can be used with merchants that take major credit cards—known as point of sale (POS) transactions. • Bank cards with preset, limited value. • Used to pay for goods and services. • Alternative to cash. 24

    25. ELECTRONIC BANK SERVICES • • Direct Deposit • • Transfers between Accounts • • Transfers to a Third Party • • Online Banking • • Bank by Phone • • ATM 25 Slide 5 – Electronic Bank Services Lesson Reference: Basic Banking Services, Activity 2 – Handout 3

    26. Slide 6 - Regulation of Electronic Banking Lesson Reference: Basic Banking Services, Activity 2 – Overhead 5 • REGULATION OF ELECTRONIC • BANKING SERVICES • Electronic Fund Transfer Act • Protects consumers using any type of electronic • banking from loss and protects their privacy. • Banks must: • Offer consumers a record or receipt for all computer • transactions. • Investigate errors and report to consumer within ten days of error notification. • Customers are responsible to report any errors. 26

    27. Basic Banking Services - Activity 3 • ACTIVITY 3 • The ABCs of a Checking Account • Overview • Purposes of a checking account • Shopping for and comparing checking accounts 27

    28. CHECKING ACCOUNT TERMS • Bank Statement • Cancelled Check • Check • Check Register/Ledger • Endorsement • Fee • Interest • Minimum Balance • Outstanding Transactions • Overdraft • Overdraft Protection • Payee • Reconciling a Bank Statement • Transaction Limits 28 Slide 1 - Checking Account Terms Lesson Reference: Basic Banking Services, Activity 3 – Handout 1

    29. Slide 2 - Shopping Around Lesson Reference: Basic Banking Services, Activity 3 - Handout 2 SERVICES Location of bank Location of ATMs Banking hours Minimum balance required Minimum transactions or limits Interest-bearing accounts? Other COSTS Non-primary bank ATM transactions In-branch transaction fees Per-check fees Other checking fees Overdraft protection Printing of checks SHOPPING AROUND (THINGS TO ASK ABOUT WHEN OPENING A CHECKING ACCOUNT) 29

    30. Basic Banking Services - Activity 4 ACTIVITY 4 Opening a Checking Account Overview • Checking Account Application Process • The Application • Acceptable Forms of ID • The Signature Authorization Card • The PATRIOT Act 30

    31. OPENING A CHECKING ACCOUNT 31 Slide 1 – Opening a Checking Account Lesson Reference: Basic Banking Services, Activity 4 – Handout 1

    32. Slide 2 - Commonly Accepted Forms of IDLesson Reference: Basic Banking Services, Activity 4 – Handout 2 COMMONLY ACCEPTED FORMS OF ID Primary ID* • Photo Driver’s License issued within the U.S. or Canada • State Non-Driver Photo ID • Photo Learner’s Permit • Government Photo ID • U.S. Passport • Non-U.S. Passport • Resident Registration Card • Mexican Consular ID (Matricula Consular) • Naturalization Certificate • Employee Photo ID (from a recognizable employer) • Photo Trade License (barber, plumber, electrician, etc.) • Student Photo ID (college/trade school) • Medicare Card (must be 65 or older) * Financial institutions' ID requirements may differ; check with the institution first before applying for an account. 32

    33. Slide 3 - Commonly Accepted Forms of IDLesson Reference: Basic Banking Services, Activity 4 – Handout 2 COMMONLY ACCEPTED FORMS OF ID Secondary ID* • Pay Stub • Car Registration • Mortgage Statement • Letter of Introduction from Bank, Embassy, or well-known Employer • Welfare Card • Supplemental Health Insurance Card • Foreign Driver’s License • State/Local Gun Permit • Utility Bill (Name and address of individual account should be listed) • Current Bank Statement • National Credit Card • Bank-issued Debit or Check Card * Financial institutions' ID requirements may differ; check with the institution first before applying for an account. 33

    34. THE PATRIOT ACT Congress passed the PATRIOT Act in response to the terrorist attacks of September 11, 2001. Financial institutions are now required to collect certain information when a new account is opened. 1. The customer must provide identification that includes name, date of birth, address, and identification number. 2. The institution must maintain a copy of the information used to verify the person’s identity. 3. The institution must determine whether the applicant appears on the lists of known or suspected terrorists or terrorist organizations. 34 Slide 4 – The PATRIOT Act Lesson Reference: Basic Banking Services, Activity 4 – Overhead 1

    35. SIGNATURE AUTHORIZATION CARD 35 Slide 5 – Signature Authorization Card Lesson Reference: Basic Banking Services, Activity 4 – Handout 3

    36. Basic Banking Services - Activity 5 ACTIVITY 5 How to Write a Check 36

    37. Slide 1 - Writing a Check Lesson Reference: Basic Banking Services, Activity 5 – Handout 1 WRITING A CHECK 37

    38. Basic Banking Services - Activity 6 • ACTIVITY 6 • Maintaining a • Checking Account • Overview • Check 21 • Keeping a check register • Making a deposit into a checking account • Reconciling a bank statement • Maintaining a checking account • Avoiding Overdrafts 38

    39. CHECK 21 Check 21 is a federal law that helps banks handle more checks electronically and that makes check processing faster and more efficient. Under this law, a check deposited in a bank is typically “delivered” overnight to the paying bank and deducted from the checkwriter’s account on the next business day. Money may be deducted from your checking account almost immediately. 39 Slide 1 – Check 21 Lesson Reference: Basic Banking Services, Activity 6 – Handout 1

    40. Slide 2 - Keeping a Check Register Lesson Reference: Basic Banking Services, Activity 6 – Handout 2 KEEPING A CHECK REGISTER 40

    41. Slide 3 - Making a Deposit - Endorsing a Check Lesson Reference: Basic Banking Services, Activity 6 – Handout 2 MAKING A DEPOSIT - ENDORSING A CHECK The Back Side of a Check Restrictive Endorsement (most secure) Blank Endorsement(least secure) Endorsement to a third party 41

    42. Slide 4 - Making a Deposit - Completing a Deposit Slip Lesson Reference: Basic Banking Services, Activity 6 – Handout 2 MAKING A DEPOSIT - COMPLETING A DEPOSIT SLIP 42

    43. Slide 5 - Reconciling a Bank Statement Lesson Reference: Basic Banking Services, Activity 6 – Handout 2 RECONCILING A BANK STATEMENT 43

    44. OVERDRAFTS AND BOUNCED CHECKS Overdrafts and bounced checks occur when you complete a financial transaction (e.g., write a check) for more than what is available in the account. Your financial institution may pay the amount and charge you a fee, known as an “overdraft fee” or a “nonsufficient funds fee.” Tip: Avoid overdraft or non-sufficient funds fees by making a habit of monitoring the balance in your checking account. 44 Slide 6 – Overdrafts and Bounced Checks Lesson Reference: Basic Banking Services, Activity 6 – Overhead 1

    45. Basic Banking Services - Activity 7 • ACTIVITY 7 • The ABCs of aSavings Account • Overview • Purpose of a savings account • Shopping for a savings account • Applying for a savings account • Monthly bank statement checkup 45

    46. Slide 1 - Reasons to Save Lesson Reference: Basic Banking Services, Activity 7 – Overhead 1 • REASONS TO SAVE • Emergencies • Future Purchases • Future Investments 46

    47. Slide 2 - Shopping for a Savings Account Lesson Reference: Basic Banking Services, Activity 7 – Overhead 2 • SHOPPING FOR A • SAVINGS ACCOUNT • Factors to consider: • Safety • Risk • Liquidity • Minimum Account Balance Requirements • Fees and Service Charges • Interest Rate • Returns (Earnings) • Automatic Transfer • Direct Deposit 47

    48. OPENING A SAVINGS ACCOUNT 48 Slide 3 – Opening a Savings Account Lesson Reference: Basic Banking Services, Activity 7 – Overhead 3

    49. BANK STATEMENT 49 Slide 4 – Bank Statement Lesson Reference: Basic Banking Services, Activity 7 – Overhead 4

    50. Activity 1………………Saving vs. Investing • Activity 2……….….Saving for a Rainy Day • Activity 3……………………..1 + 1 = Saving • Activity 4…..Investing for the Long Term