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Depository Institutions

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

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  1. Depository Institutions Take Charge of Your Finances 1.7.3

  2. 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

  3. Depository Institutions Why consumers may not use them: 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 • Fees are too high • Minimum balances required are too high • They wish to keep their financial information private

  4. 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

  5. Life of a Deposited Check • Look closely at steps 2-4 to see how the Federal Reserve bank plays an integral role in how a check transaction works

  6. Depository Institutions • Commercial Bank • Credit Union • Savings and Loan Association

  7. 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

  8. Credit Union • Credit Unions • Non-profit cooperative depository institution • Owned by members who share a common bond • Example – Vantage Credit Union

  9. Savings and Loan Association (S&Ls) • Savings and Loan Association • Focus on providing loans and mortgages • Customers must have a savings account with them

  10. 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 • Each depositor is insured up to $250,000 • The same protection is available from both FDIC and NCUA

  11. Depository Institution Services

  12. Common Services Offered • Checking account (also known as a Share Draft Account at a credit union) • Savings account(also known as a Share Account at a credit union) • Stock • Ownership, represented by shares in a corporation • Certificate of deposit (also known as a Share Certificate account at a credit union) • Money market account • Bond

  13. 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.

  14. 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 • Mutual Fund • A group of stocks, bonds, and other investments managed by a brokerage firm.

  15. Conclusion& Review

  16. 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

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