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Depository Institutions. Take Charge of Your Finances 1.7.3. Depository Institutions. Depository Institutions – businesses which offer multiple services in banking and finance These institutions include: Banks Savings and Loans Credit Unions
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Depository Institutions Take Charge of Your Finances 1.7.3
Depository Institutions • Depository Institutions – businesses which offer multiple services in banking and finance • These institutions include: • Banks • Savings and Loans • Credit Unions • They are regulated by various state and federal agencies
Federal Reserve Bank • Services include:
Federal Reserve Bank • Which federal reserve bank located in your region?
Depository Institutions • Commercial Bank • Credit Union • Savings and Loan Association
Commercial Bank • Commercial Banks • Usually the largest depository institutions • Considered full-service depository institutions • Available to a variety of consumers • Examples – Wells Fargo, US Bank, Chase Bank
Credit Union • Credit Unions • Non-profit cooperative depository institution • Owned by members who share a common bond • Examples – Rocky Mountain Credit Union, Teachers Federal Credit Union
Savings and Loan Association (S&Ls) • Savings and Loan Association • Focus on providing loans and mortgages • Customers must have a savings account with them • Examples – American Federal Savings Bank, Pioneer Federal Savings & Loan.
Types of Insurance • Federal Deposit Insurance Corporation (FDIC) • Federal government agency which protects depository institution accounts • Insures commercial banks and savings and loan associations • National Credit Union Administration (NCUA) • Provides insurance for credit unions
Insurance Protection • Insurance protection • Each depositor is insured up to $250,000 for money deposited in a regular account and $250,000 for retirement deposits • Available from both FDIC and NCUA • Insurance is important because of the risk of loss • Risk of Loss is used to determine which party should be responsible for damage or loss of products after a service transaction has been completed but prior to delivery
Interest • Interest - the amount of money that is either gained or lost when accessing services offered by a depository institution • Interest rate - the percentage used annually to calculate the total interest either gained or lost
Interest Bearing Accounts • Credit Card • A card used to make a purchase now and repay later • If the balance is paid before the grace period ends, interest is not added • If the balance is paid after the grace period, the payment of interest is required • Loan • Money borrowed and paid back with interest • Mortgage – loan for a home • Personal – interest rates vary depending upon type of loan • Loan types can include vehicle, school, etc.
Additional Services Which May Be Offered • Safe-Deposit Box • A secured box in a bank to be used for valuable and important personal items. • Financial Counseling • Information and advice is given to customers to help make financial decisions.