Depository Institutions

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Depository Institutions

• Take Charge of Your Finances 1.7.3

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Depository Institutions

• Depository Institutions businesses which offer
  multiple services in banking and finance
• These institutions include
• Banks
• Savings and Loans
• Credit Unions
• They are regulated by various state and federal
  agencies

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Depository Institutions
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Federal Reserve Bank

• Services include

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Federal Reserve Bank

• Which federal reserve bank located in your region?

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Life of a Deposited Check
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Depository Institutions

• Commercial Bank
• Credit Union
• Savings and Loan Association

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Commercial Bank

• Commercial Banks
• Usually the largest depository institutions
• Considered full-service depository institutions
• Available to a variety of consumers
• Examples Wells Fargo, US Bank, Chase Bank

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Credit Union

• Credit Unions
• Non-profit cooperative depository institution
• Owned by members who share a common bond
• Examples Rocky Mountain Credit Union, Teachers
  Federal Credit Union

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Savings and Loan Association (SLs)

• Savings and Loan Association
• Focus on providing loans and mortgages
• Customers must have a savings account with them
• Examples American Federal Savings Bank, Pioneer
  Federal Savings Loan.

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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

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Insurance Protection

• Insurance protection
• Each depositor is insured up to 250,000 for
  money deposited in a regular account and 250,000
  for retirement deposits
• Available from both FDIC and NCUA
• Insurance is important because of the risk of
  loss
• Risk of Loss is used to determine which party
  should be responsible for damage or loss of
  products after a service transaction has been
  completed but prior to delivery

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Interest

• Interest - the amount of money that is either
  gained or lost when accessing services offered by
  a depository institution
• Interest rate - the percentage used annually to
  calculate the total interest either gained or lost

Type of account Interest rate Impact on the consumer
Interest earning - money earned from an investment instrument High More money earned by the consumer
Interest earning - money earned from an investment instrument Low Less money earned
Interest bearing - the charge for money that a consumer borrows from a depository institution High More money paid by the consumer
Interest bearing - the charge for money that a consumer borrows from a depository institution Low Less money paid
Credit unions typically offer rates which have the most positive impact on the consumer Credit unions typically offer rates which have the most positive impact on the consumer Credit unions typically offer rates which have the most positive impact on the consumer
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Depository Institution Services
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Common Services Offered
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Interest Earning Accounts
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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.

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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.

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Conclusion Review
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Review