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Managing Your Finances: Understanding Banking Institutions

Explore the world of financial institutions, electronic banking, and checking accounts. Learn about different types of banks, electronic funds transfer, and managing transactions efficiently. Discover various payment methods and how to effectively utilize them in your personal finance management.

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Managing Your Finances: Understanding Banking Institutions

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  1. Chapter 10 Banking

  2. 10.1 Comparing Financial Institutions • Bank = an institution where you can deposit money • Interest = fee paid for using someone else’s money for a certain period of time • Banks offer Checking, savings, safe deposit boxes, financial services

  3. Types of Financial Institutions • Commercial Banks = owned by shareholders and operates on a profit • Savings and Loans = owned by the depositors and profits held in reserve • Credit Union = nonprofit, owned by its members and have a common bond • FDIC – Federal Depository Insurance Company

  4. 10-2 Banking Electronically • Electronic Funds Transfer (EFT) = movement of funds by electronic means • ATM (Automated teller machine) = gives you electronic access to your money • PIN = Personal ID Number= security for your account

  5. Point-of-sale-transaction = paying for an item by electronic means • Debit Card = allows the user to subtract money from bank account in order to obtain cash or make a purchase • Automated Services… Direct deposit, automated transfers between accounts, loan payments • Online banking

  6. 10-3 Managing a Checking Account • Payee- person who the check is made • Cancelled Check = has cleared the system and has been paid • Overdraft= lack of sufficient funds

  7. Advantages of Checks • Choosing a Checking Account Minimum Balance Fees Transaction limits Interest

  8. Using a Checking Account • Making a Deposit • Endorsing a Check Endorsement = signature on the back saying it can be cashed. Blank – signature Special – transfer money to someone else Restrictive – limits the check – deposit only

  9. Recording Transaction = Check Register. • Writing a Check = date, payee, amount in dollars, words, sign it, memo, • Receiving Your Bank Statement = by mail or electronically • Reconciling

  10. 10-4 Using other Payment Methods • Certified Checks = check from personal account, that has been stamped for guarantee payment

  11. Cashiers Check = check issued by the bank

  12. Money order= get them at bank or post office, safe for travel • Travelers Checks • Wire Transfer • Prepaid Cards • Online Payment Services

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