Depository Institution Essentials

1. Depository Institution Essentials

2. What is a Depository Institution? Commercial Banks CreditUnions What is the name of a depository institution in your community? ? These are the two most common types of depository institutions.

3. Types of Depository Institutions

4. Choosing a Depository Institution All depository institutions differ from one another in regards to locations, services offered, interest rates offered, and specific features provided Choose the correct depository institution to meet individual needs Individuals may choose to use one depository institution or multiple depository institutions Individuals may have more than one type of account at the same depository institution

5. Financial Goals Choose a depository institution that will help meet financial goals Financial goals are specific objectives to be accomplished through financial planning • A goal is defined as the end result of something a person intends to acquire, achieve, do, reach, or accomplish

6. Advantages and Disadvantages of Using a Depository Institution • May have to pay fees • May have required minimum balances • Sharing financial information • Assists in managing finances and reaching financial goals • Protection from loss (insurance) • Opportunity to earn interest ? Do you use a depository institution?

7. Individual depository institutions may offer all or some of these services.

8. Services Interest bearing accounts either charge the consumer interest for money borrowed or earn interest for the consumer Interest rate - percentage rate used annually to calculate the total interest either gained or lost from an account Interest - the price of money Look for high interest rates on interest-earning accounts and low interest rates when borrowing money.

9. Savings Tools • Savings tools are secure, easily accessible accounts that assist in money management • May be interest or non-interest earning • As long as the depository institution is insured, savings tools are insured against lost

10. Savings Tools Checking Account Savings Account Hold money not spent on current consumption Interest earning • Used to transfer funds deposited into the account to make a cash purchase • Interest or non-interest earning At a credit union a checking account is known as a share draft account and a savings account is known as a share account.

11. Savings Tools Money Market Deposit Account Certificate of Deposit Interest earning Restricted access to the funds • Offers higher interest rates than a savings account • Have a minimum balance requirement • Limited to a certain number of transactions each month

12. Investment Tools • Earn higher interest rates than savings tools but the funds are not as easily accessible • Not insured against loss Stocks Bonds

13. Credit • Credit is when goods, services, or money is received in exchange for a promise to pay a definite sum of money at a future date • Consumer is charged interest Loans ? What might a person need a loan to purchase? Credit Cards

14. Other Services Safe-Deposit Boxes Financial Counseling Information and advice is given to customers to help them make financial decisions • A secured box to store valuable and important personal items ? What services offered by depository institutions would you use?

15. Depository Institution Features • Made possible by electronic funds transfers (EFTs)- utilize computer networks to transfer funds electronically (rather than by check or cash) among depository institution accounts • Adds to the convenience and money management tools of certain depository institution services Allows 24-hour access to move money electronically in a fast and paperless way

16. Advantages and Disadvantages of E-Banking • 24-hour access • Fast transactions • Paperless transactions • Convenience • Worldwide access • Increased risk of fraud and identity theft if consumers are not careful with their personal information • Regulation E was established to combat the security issues of electronic banking • Covers all EFT’s including transfers occurring through an electronic terminal, computer, telephone, or magnetic tape

17. E-Banking Safety • To take full advantage of • e-banking: • Keep personal security as your first priority • Know how to protect your personal information If a consumer feels his or her funds have been accessed without permission Report the problem immediately to the depository institution involved

18. Types of E-Banking • Will vary among depository institutions • Will vary between services and accounts at the same depository institution • Direct Deposit & Direct Payment • Debit • Cards • Online • Banking • ATM’s

19. Debit Cards • Plastic card which looks like a credit card but is electronically connected to the cardholder’s depository institution account • Functions like a check but electronically • Usually used for savings tools, especially checking, savings, and money market deposit accounts • Require using a personal identification number (PIN) or signature to perform transactions

20. Debit Card Safety Tips

21. Fraudulent Debit Card Charges If reported within 2 days, the consumer is held responsible for no more than $50 in fraudulent charges If reported within 60 days, the consumer is held responsible for no more than $500 in fraudulent charges After 60 days, the consumer is held liable for no more than the amount of unauthorized transfers

22. Automated Teller Machines (ATMs) • Electronic computer terminals which offer automated, computerized banking • Usually used for savings tools, especially checking and savings accounts • Accessed with ATM and/or debit cards • Allow customers to make deposits, withdrawal cash, make account transfers, and check account balances • May be offered in many different locations or few (if any) locations

23. Direct Deposit & Direct Payment

24. Online Banking Online banking is also known as internet banking. • Complete transactions with a depository institution from a personal computer (PC) or through other wireless technology (personal digital assistant (PDA) or cellular phone) • May access account information and statements, transfer funds, manage and pay bills, and apply for loans and mortgages • May be used for savings tools, investment tools, and credit accounts

25. Online Banking Safety Tips ? What features offered by depository institutions would you use?

26. Researching Depository Institutions

27. Summary • Businesses which offer multiple services in banking and finance • Type • Services offered • Interest rates offered • Location • Features offered • Research depository institutions and choose the one(s) that best fits needs and helps reach personal financial goals

28. Summary • Safe-deposit boxes • Savings tools • Credit • Financial counseling • Investment tools Electronic banking- • Debit cards • ATMs • Online banking • Direct deposit • Direct payment Find the depository institution that best fits your needs and helps you reach financial goals!