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Banking

Banking. Consumer Ed. Role of a Bank. Earn a profit for the owners of the bank Handle Financial needs of customers Provide security for the customers money Provide service to customers. Types of Financial Institutions.

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Banking

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  1. Banking Consumer Ed

  2. Role of a Bank • Earn a profit for the owners of the bank • Handle Financial needs of customers • Provide security for the customers money • Provide service to customers

  3. Types of Financial Institutions • Commercial Banks-owned and operated for profit of the shareholders (owners) • Mutual Savings Banks-state chartered operated by trustees for the benefit of depositors • Credit Unions-are non-profit, set up to serve members-does not do commercial work

  4. Banking Laws • Financial Services Modernization Act -1999 • eliminated the restrictions among companies in the securities, banking and insurance industries. • (ex. banks can offer insurance & securities • Electronic Fund Transfer Act-1978 • protects consumers using electronic banking. • Liability of $50 if reported within 2 days—later up to $500 (debit card)

  5. Federal Reserve Bank • Established in December 23, 1913-with 12 District Banks • To keep banks safe • Roles-Monetary Policy, Payment Services, and Supervision and Regulation of Banks • ACH-Automated Clearing House • Payments-cash, check, and electronic payment

  6. Banking Options • Checking • Savings • Loans • CD’s

  7. Factors to Consider in Bank Choice • Deposit insurance- • FDIC (Federal Deposit Insurance Corporation) • insures up to $250, 000. • NCUA (National Credit Union Administration)- insures up to $250, 000 • Services • Convenient Access-location, ATM’s, Hours • Rates • Fees

  8. Checking Account Options • Direct Deposit • Automated Payments • Debit Card-EFT • ATM-Automated Teller Machines • Safety Deposit Box

  9. Advantages to Checking • Safety • Security • Provide Legal Proof of Payment • Convenience

  10. Criteria for Checking Accounts • Required minimum balance • Fees-debit card use, transfer of funds, billing paying • Transaction limits • Interest Rates • Overdraft Protection

  11. Types of Checking Accounts • Joint/Individual-basic checking • NOW-interest bearing accounts • Money Market Accounts

  12. Check Parts • Payee, Drawer, check number, Account #, Routing Number, date, signature line, memo line, institution name

  13. Endorsements • Blank-just your name • Restrictive-for deposit only • Special-payable to a third party • Multiple-more than one person

  14. Special Checks • Certified-is a check from a personal checking account that has been stamped by the bank to guarantee that there are sufficient funds in the account • Money order-is a purchased certificate used to pay a specified amount to a particular payee. • Cashier’s-is a check used and guaranteed by the bank • Wire Transfer-direct funds transfer from bank to bank • Traveler’s Checks-are documents that function as cash but can be replaced if lost or stolen

  15. Check Writing Tips • Use ink • Fill out completely-check the date, and amounts to match • Compare numeric amount to written amount • Sign check • Draw a line to end of the amount line if blank • Record all events-deposits, checks, atms, debt card transactions in check register

  16. Checking Reconciliation • Balance your checkbook with bank statement • Compare your checkbook with the bank’s records • Look at both balances • Determine outstanding checks and deposits • Subject these items from bank balance then compare the amounts to your checkbook balance • If discrepancies exist, double check adding and verify amounts.

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