Financial Institution Frenzy

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© Family Economics & Financial Education – April 2006 – Get Ready To Take Charge of Your Finances – Financial Institution FrenzyFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Financial Institution

Business that offers and sells financial services to peopleChecking AccountsSavings Tools

Assist people with daily financial tasks

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© Family Economics & Financial Education – April 2006 – Get Ready To Take Charge of Your Finances – Financial Institution FrenzyFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Types of Financial Institutions

Credit UnionSavings and Loan InstitutionCommercial Bank

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© Family Economics & Financial Education – April 2006 – Get Ready To Take Charge of Your Finances – Financial Institution FrenzyFunded 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 financial 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into an account, and money withdrawn, or taken out of an account

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Commercial bank

Fees associated with banking:Overdraft feesATM feesMonthly service feesDebit card feesCheck fees

© Family Economics & Financial Education – April 2006 – Get Ready To Take Charge of Your Finances – Financial Institution FrenzyFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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© Family Economics & Financial Education – April 2006 – Get Ready To Take Charge of Your Finances – Financial Institution FrenzyFunded 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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© Family Economics & Financial Education – April 2006 – Get Ready To Take Charge of Your Finances – Financial Institution FrenzyFunded 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 A Check 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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© Family Economics & Financial Education – April 2006 – Get Ready To Take Charge of Your Finances – Financial Institution FrenzyFunded 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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© Family Economics & Financial Education – April 2006 – Get Ready To Take Charge of Your Finances – Financial Institution FrenzyFunded 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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© Family Economics & Financial Education – April 2006 – Get Ready To Take Charge of Your Finances – Financial Institution FrenzyFunded 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

An account at a financial institution that allows you to deposit money & withdraw money to pay bills many times a day

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© Family Economics & Financial Education – April 2006 – Get Ready To Take Charge of Your Finances – Financial Institution FrenzyFunded 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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© Family Economics & Financial Education – April 2006 – Get Ready To Take Charge of Your Finances – Financial Institution FrenzyFunded 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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Savings Account

A place to deposit money you don’t plan to spend right away!

© Family Economics & Financial Education – April 2006 – Get Ready To Take Charge of Your Finances – Financial Institution FrenzyFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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© Family Economics & Financial Education – April 2006 – Get Ready To Take Charge of Your Finances – Financial Institution FrenzyFunded 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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© Family Economics & Financial Education – April 2006 – Get Ready To Take Charge of Your Finances – Financial Institution FrenzyFunded 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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© Family Economics & Financial Education – April 2006 – Get Ready To Take Charge of Your Finances – Financial Institution FrenzyFunded 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 Insures individuals up to $250,000

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© Family Economics & Financial Education – April 2006 – Get Ready To Take Charge of Your Finances – Financial Institution FrenzyFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Quick Review

Financial InstitutionChecking AccountSavings Tools

Savings AccountMoney Market Deposit AccountCertificate of Deposit (CD)

FDIC