Depository Institutions. Take Charge of Your Finances. Depository Institutions. Depository Institutions – businesses which offer multiple services in banking and finance These institutions include: Banks Savings and Loans Credit Unions
Depository Institutions Take Charge of Your Finances
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
Depository Institutions • Why consumers may not use them: • Why consumers may use them: • To have the opportunity to receive lower cost loan • They wish to keep their financial information private • To receive the advantages of interest earning accounts • Minimum balances required are too high • To keep money safe • Fees are too high
Federal Reserve Bank • Services include:
Federal Reserve Bank Which federal reserve bank is 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 any/all consumers • Examples – Centier Bank, US Bank, Chase Bank, Peoples Bank
Credit Union • Credit Unions • Non-profit cooperative depository institution • Owned by members who share a common bond • Examples – Tech Federal Credit Union, Teachers Federal Credit Union, L C School Employees Federal Credit Union, IUN Credit Union • Typically offer interest rates that have the most positive impact on the consumer
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 – Citizen’s Financial, 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 Is The amount earned or paid for using money Interest Rate Is • The % used to calculate the amount of money to be earned or paid for using money.
Interest Earning Accounts • Ownership, represented by shares in a corporation • Stock • Share certificate account at a credit union • An insured interest – earning savings instrument with restricted access to the funds • Certificate of Deposit • An account which offers higher interest rates than a savings account and may offer limited check writing privileges • Money Market Account • A debt instrument issued by an organization such as a business or the government • Designed as an investment for the purchasers to earn interest • Bond
Accounts On Which You Must Pay Interest • 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.
Review • Money management is part of everyday life! • Depository institutions offer multiple services – shop around for the one which best fits your needs! • Ensure the depository institution is insured by the FDIC or NCUA • Comparison shop the financial services and interest rates offered before choosing