1.7.3.g1 © family economics & financial education – revised march 2008 – financial...
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1.7.3.G1
© Family Economics & Financial Education – Revised March 2008 – Financial Institutions Unit – Depository Institutions
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Depository Institutions
Take Charge of Your Finances 1.7.3
1.7.3.G1
© Family Economics & Financial Education – Revised March 2008 – Financial Institutions Unit – Depository Institutions
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Depository Institutions
Depository Institutions – businesses which offer multiple services in banking and finance These institutions include:
Banks Savings and Loans Credit Unions
Institutions are regulated by various state and federal agencies
1.7.3.G1
© Family Economics & Financial Education – Revised March 2008 – Financial Institutions Unit – Depository Institutions
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Depository Institutions
Why consumers may not use them:
Fees are too high Minimum balances
required are too high
They wish to keep their financial information private
Why consumers may use them:
To keep money safe To receive the
advantages of interest earning accounts
To have the opportunity to receive lower cost loan
1.7.3.G1
© Family Economics & Financial Education – Revised March 2008 – Financial Institutions Unit – Depository Institutions
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Federal Reserve Bank
Federal Reserve Bank – is part of the central banking system in the United States Services provided to depository
institutions include: Collecting checks Electronically transferring funds Distributing and receiving cash and coin
1.7.3.G1
© Family Economics & Financial Education – Revised March 2008 – Financial Institutions Unit – Depository Institutions
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Federal Reserve Bank
Which federal reserve bank located in your region?
1.7.3.G1
© Family Economics & Financial Education – Revised March 2008 – Financial Institutions Unit – Depository Institutions
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Depository Institutions
Commercial Bank
Credit Union Savings and
Loan Association
1.7.3.G1
© Family Economics & Financial Education – Revised March 2008 – Financial Institutions Unit – Depository Institutions
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Commercial Bank
Commercial Banks Usually the largest depository institutions Considered full-service depository
institutions because offer a wide variety of services and products
Available to a variety of consumers Examples – Wells Fargo, US Bank,
Chase Bank
1.7.3.G1
© Family Economics & Financial Education – Revised March 2008 – Financial Institutions Unit – Depository Institutions
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
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
1.7.3.G1
© Family Economics & Financial Education – Revised March 2008 – Financial Institutions Unit – Depository Institutions
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Savings and Loan Association (S&Ls)
Savings and Loan AssociationFocus on providing loans and mortgages
Customers must have a savings account with them
Examples – American Federal Savings Bank, Pioneer Federal Savings & Loan.
1.7.3.G1
© Family Economics & Financial Education – Revised March 2008 – Financial Institutions Unit – Depository Institutions
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
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
1.7.3.G1
© Family Economics & Financial Education – Revised March 2008 – Financial Institutions Unit – Depository Institutions
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Insurance Protection
Insurance protection Each depositor is insured up to $250,000 for money
deposited in a regular account The same protection is available from both FDIC
and NCUA Insurance is important because the risk of
loss. Risk of Loss is used to determine which party
should be responsible for damage occurring to products after a service transaction has been completed but prior to delivery.
1.7.3.G1
© Family Economics & Financial Education – Revised March 2008 – Financial Institutions Unit – Depository Institutions
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Interest
Interest – the amount of money that is either gained or lost when accessing services offered by a depository institutionTwo types of interest include:
Interest earning - Money earned from an investment instrument
Interest bearing - The charge for money that a consumer borrows from a depository institution
1.7.3.G1
© Family Economics & Financial Education – Revised March 2008 – Financial Institutions Unit – Depository Institutions
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Interest Rates
Interest rate – the percentage used annually to calculate the total interest either gained or lostType of account Interest rate Impact on the
consumer
Interest earning High More money earned by the consumer
Low Less money earned
Interest bearing High More money paid by the consumer
Low Less money paid
Credit unions typically offer rates which have the most positive impact on the consumer
1.7.3.G1
© Family Economics & Financial Education – Revised March 2008 – Financial Institutions Unit – Depository Institutions
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Depository Institution Services
1.7.3.G1
© Family Economics & Financial Education – Revised March 2008 – Financial Institutions Unit – Depository Institutions
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Common Services Offered
Checking account (also known as a Share Draft Account at a credit union) Paper checks or debit cards that are used to
withdraw money May or may not be interest bearing
Savings account (also known as a Share Account at a credit union) An account in which money is typically deposited to
earn interest Interest bearing
1.7.3.G1
© Family Economics & Financial Education – Revised March 2008 – Financial Institutions Unit – Depository Institutions
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Interest Earning Accounts Stock
Ownership, represented by shares in a corporation Certificate of deposit (also known as a
Share Certificate account at a credit union) An insured interest-earning savings instrument with
restricted access to the funds Money market account
An account which offers higher interest rates than a savings account and may offer limited check writing privileges
Bond A debt instrument issued by an organization, such as a
business or the government Designed as an investment for the purchasers to earn
interest
1.7.3.G1
© Family Economics & Financial Education – Revised March 2008 – Financial Institutions Unit – Depository Institutions
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
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.
1.7.3.G1
© Family Economics & Financial Education – Revised March 2008 – Financial Institutions Unit – Depository Institutions
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
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
1.7.3.G1
© Family Economics & Financial Education – Revised March 2008 – Financial Institutions Unit – Depository Institutions
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Conclusion& Review
1.7.3.G1
© Family Economics & Financial Education – Revised March 2008 – Financial Institutions Unit – Depository Institutions
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
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 a depository institution