Banking

1
Banking

• Chapter 7

2
Money

• Barter
• Trade item for item
• May not account for true value
• Currency
• Paper money and coins used for financial
  transactions
• Smaller payments usually
• Checks
• Larger payments
• Money transfers from bank to PAYEE

3
Banks

• How do banks earn their money?
• Interest!
• Service fees
• Banks provide security
• Protect your purchasing power
• More you can buy for your money
• Banks are regulated
• Own money put into it
• Reserves

4
Banking

• Deposits are insured
• FDIC Federal Deposit Insurance Corporation
• 100,000 max
• Money lent to borrowers
• People houses, cars, etc.
• Business start-up, buildings, equipment.
• Credit is verified to ensure payback

5
Checks

• Safety
• Only the payee can cash
• Payer not responsible if cashed illegally
• Banks responsible if cashed illegally
• Banks request ID to cash a check
• If lost, can stop payment
• Convenience
• Recorded transaction

6
Checking accounts

• Interest and non-interest bearing checking
  accounts
• Joint and individual accounts
• Various plans
• Based on checks
• Based on use (electronic)
• Fees
• Maintenance fees (per month)
• Service charges (per check)

7
Opening Checking Accounts

• Must be 18
• Minimum deposit
• Identification
• Complete signature card
• Sometimes credit check
• SS
• Proof of address

8
Writing a check

• Write in non-erasable ink
• Fill in every line date, payee, amount of
  check words and numbers, signature
• Write checks sequentially
• Keep documents in safe place
• Notify bank immediately if checks stolen

9
Important Check Terms

• Check register
• Record all transactions
• Maintain an account balance
• Overdrawing
• Endorsements
• Third party checks
• Deposits/deposit forms
• Check clearing process

10
How can I be overdrawn when I still have checks
left???
11
New Age Banking

• Electronic Funds Transfer (EFT)
• Direct deposit
• Debit cards
• ATM cards
• Bill payments
• Pay by phone
• Automatic withdrawals
• Online banking

12
ATMs

• ATM cards
• Pin number
• Deposits
• Withdrawals
• Costs
• Use responsibly

13
Caution!

• Keep your card in a safe place
• Memorize your ID
• Never give it out
• Never say it out loud
• Keep all receipts!
• Record transactions
• Notify bank immediately if card lost

14
EFTA

• Requires banks to inform customers of fees
• Requires banks to provide receipts
• Requires consumers to use EFTs responsibly
• Report lost cards
• Immediately lose 50 max
• After two days lose 500 max
• After 60 days lose everything

15
Other Bank Services (7.5)

• Certified checks
• Cashiers checks
• Money orders
• Travelers checks
• Wire transfers
• Safe Deposit Boxes