Depository Institution Discovery

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© Take Charge Today – Revised April 2006– Depository Institution Discovery – Slide 2Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the

University of Arizona

Depository Institution

Business that offers and sells financial services to peopleChecking AccountsSavings Tools

Assist people with daily financial tasks

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© Take Charge Today – Revised April 2006– Depository Institution Discovery – Slide 3Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the

University of Arizona

Types of Depository Institutions

Credit UnionSavings and Loan InstitutionCommercial Bank

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© Take Charge Today – Revised April 2006– Depository Institution Discovery – Slide 4Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the

University of Arizona

Commercial Bank

The most popular type of depository institutionLend, issue, borrow and protect

customer’s money

Offer a better way to track and manage moneyProvide records of money deposited, or put

into an account, and money withdrawn, or taken out of an account

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© Take Charge Today – Revised April 2006– Depository Institution Discovery – Slide 5Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the

University of Arizona

Checking Account

Very common type of accountOffers safety and convenienceMost do not pay interest, or

additional money earnedFrequent withdrawals and deposits

are expected

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© Take Charge Today – Revised April 2006– Depository Institution Discovery – Slide 6Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the

University of Arizona

Withdrawing Money

Checks Legal documents that function like cash If sufficient funds are not in the account, checks can

“bounce” Fee Harm future opportunities for credit

Debit Card Electronically connected to an account When purchases are made, money is automatically

withdrawn from the designated account A PIN (Personal Identification Number) is required to

confirm the user is authorized to access the account

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© Take Charge Today – Revised April 2006– Depository Institution Discovery – Slide 7Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the

University of Arizona

Check 21

Check Clearing for the 21st Century ActMoney is automatically withdrawn

from an account as soon as a check is written

Makes it difficult to “bounce checks”An individual must have money in

his/her account to make a purchase

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© Take Charge Today – Revised April 2006– Depository Institution Discovery – Slide 8Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the

University of Arizona

Opening a Checking Account

Read through the contract from the bankComplete a Signature Authorization Card

Printed nameSignatureSocial Security numberTelephone numberAddressDate of birth

Make an initial deposit

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© Take Charge Today – Revised April 2006– Depository Institution Discovery – Slide 9Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the

University of Arizona

Interest Earning Checking Account

Checking account that pays a small amount of interest

Usually require a minimum balance, which is the smallest amount of money that must be kept in the account in order to keep paying interest

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© Take Charge Today – Revised April 2006– Depository Institution Discovery – Slide 10Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the

University of Arizona

Savings Tools

Savings AccountMoney Market Deposit AccountCertificate of Deposit (CD)

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© Take Charge Today – Revised April 2006– Depository Institution Discovery – Slide 11Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the

University of Arizona

Savings Account Keeps money safe until the owner needs it

Emergencies Purchase expensive items

Money can be deposited and withdrawn an unlimited number of times each month

No check writing privileges A debit card may be used with certain

accounts Money has the opportunity to earn more

interest than if it was in an interest earning checking account

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© Take Charge Today – Revised April 2006– Depository Institution Discovery – Slide 12Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the

University of Arizona

Money Market Deposit Account

Pays a higher interest rate than a regular savings account

Requires more money to open than a regular savings account

Money can be withdrawn only a limited number of times each month with checks or a debit card

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© Take Charge Today – Revised April 2006– Depository Institution Discovery – Slide 13Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the

University of Arizona

Certificate of Deposit

Pays interest on a lump sum of money Once money is placed in a CD, it must

remain there for a specific time period If withdrawn early, a penalty fee is charged Interest rate is higher than a savings

account and Money Market Deposit account

The rate of interest money earns in a CD increases as the length of time the money is required to stay in the CD increases

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© Take Charge Today – Revised April 2006– Depository Institution Discovery – Slide 14Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the

University of Arizona

Commercial Banks Safety

Storing large amounts of money in a commercial bank is safer than at homeFire, burglary, or other type of disaster

Federal Deposit Insurance Corporation (FDIC)Protects money in bank accounts from

loss

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© Take Charge Today – Revised April 2006– Depository Institution Discovery – Slide 15Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the

University of Arizona

Quick Review

Depository InstitutionChecking AccountSavings Tools

Savings AccountMoney Market Deposit AccountCertificate of Deposit (CD)

FDIC