Financial Literacy Skills

1. Financial Literacy Skills Unit 1: Understanding Banking

2. Objective 1: Identify services of a full-service bank • Receiving deposits • Providing checking and savings accounts • Transferring money from one account to another • Electronic funds transfer (EFT) • Preauthorized bill payments • Making loans • Advising customers • Having information and transactions available online • Providing federal insurance through the FDIC • Providing special services, often for a fee

3. Objective 2: Match the different types of financial institutions with their descriptions • Brokerage Firm • Commercial Bank • Savings and Loan Association • Credit Union • Mortgage Company • Mutual Savings Bank • Life Insurance Company • Investment Company • Finance or Loan Company • Financial Supermarket

4. Objective 3: Explain why financial institutions pay and charge interest. • Each financial institution pays interest to encourage depositors to keep their money in that institution. • Depositors’ funds are not stored at the financial institution – they are loaned to other customers. • Each financial institution charges interest on the various types of loans it makes in order to earn money.

5. Objective 4: Define types of interest. • Simple interest is calculated on a yearly percentage rate based on the original amount of the loan. • Compound interest is calculated on the amount of the account on a regularly scheduled time period.

6. Objective 5: State the functions of bank accounts. • Provide a convenient way to buy goods and services and pay bills • Provide legal proof of payment • Protect money from theft or loss • Eliminate need to carry large amount of cash • Provide a record of money spent • Allow access to other banking services • Provide a record of transactions • Serve as a credit reference

7. Objective 6: Select steps in opening a bank account. • Receive bank documents. • Provide personal identification. • Fill out the signature card. • Sign the signature card with the same name that will be written on checks. • Deposit money using a deposit slip. • Order personalized checks. • Apply for ATM and debit cards if desired.

8. Objective 7: Identify types of checking accounts • Regular Checking Account • Economy Checking Account • Check Credit Account • Interest-Bearing Checking Account

9. Objective 8: Identify types of savings accounts. • Regular Savings Account • Certificate of Deposit (CD) • Money Market Account • Money Market Mutual Fund

10. Objective 9: Identify types of electronic banking services. • Automated Teller Machine (ATM) • Automatic savings • Automatic loan payments • Direct deposit/ automatic deposit • Bank credit card • Bank debit card • Electronic bill paying • Online banking • Pay-by-Phone systems • Electronic check conversion

11. Objective 10: Identify correct check endorsements. Blank endorsement

12. Objective 10: Identify correct check endorsements. Restrictive endorsement

13. Objective 10: Identify correct check endorsements. Special endorsement

14. Objective 10: Identify correct check endorsements. Two-party check

15. Objective 11: Discuss the reasons for reconciling financial records. • To catch mistakes. • To prevent overdrafts. • To know exactly how much money is in your account. • To be in control of your finances.

16. Objective 12: Prepare account documents.

17. Objective 13: Balance a bank statement.

18. Objective 14: State steps in stopping payment on a check. • In writing • Use bank’s form or formal letter • Include your name and signature, account number, check number, date the check was written, and payee’s name • Explain why you are requesting to stop payment. • By phone • Temporary measure • Follow with written request

19. Objective 15: Distinguish between ATM and debit cards • ATM card – a small plastic card issued by bank and activated by entering your personal identification number • A fee may be charged for each transaction • Provides great flexibility in banking hours and locations • Functions include: • Withdrawing money • Making deposits • Transferring money between accounts • Finding out your balance • Getting a cash advance • Making loan payments • If you lose your ATM or debit card, notify your bank immediately

20. Objective 15: Distinguish between ATM and debit cards • Debit card – combines combine the functions of ATM cards and checks • Some banks issue a combined ATM/debit card   • Debit cards are issued only by banks but accepted at stores and service providers • Use of a debit card automatically deducts the money from your bank account • Money is deducted instantly

21. Objective 16: Apply for an ATM card.

22. Objective 17: Identify hidden costs of banking. • Overdrafts have a negative effect on your credit rating. • “Free” period of use can expire. • Surcharges can be made each time you use your ATM card. • Some banks charge a teller fee for using bank personnel to make your transactions. • Debit cards often have a once-a-month “offline” fee and a per transaction fee. • Many banks will charge a fee on accounts that are not active for a certain period of time. • Failing to check ATM statements, debit receipts, and bank statements may cost you money.

23. Objective 18: Identify ways to protect your accounts. • Lost card • If you lose your ATM or debit card or it is stolen, report it immediately.

24. Objective 18: Identify ways to protect your accounts. • Card management • Save all pertinent records in a secure place in your home. Shred all documents that have your account numbers. Memorize your PINs. • Be mindful of who is watching when you transact business. • Carry all receipts out of the facility and keep them to compare to your bank statements. • Use your bank’s ATM exclusively to save transaction fees. • Shop for low- or no-charge ATMs.

25. Objective 18: Identify ways to protect your accounts. • Card management (continued) • Avoid third-party ATMs found at rest stops, gas stations, and nightclubs; these charge the highest rates. • Consider making larger withdrawals, therefore, fewer transactions to be charged for. • Use checks, traveler‘s checks, or credit cards when traveling. Overseas ATM charges can be very high. • Consider making deposits by ATM. Some banks credit customers for making deposits at ATMs. • Do not take cash advances on credit cards at an ATM; you will pay fees to the bank and to the card issuer.

26. Objective 18: Identify ways to protect your accounts. • Card management (continued) • Check the amount on your debit card withdrawal very carefully. Using a debit card removes your right to withhold payment because money is immediately removed from the account. • Consider the cost of using a debit card. Is it worth not carrying a checkbook? • Keep very accurate account records. • If you have both credit cards and debit cards, think about which is the least expensive to use before making each transaction.

27. Objective 18: Identify ways to protect your accounts. • Bank accounts • The Federal Uniform Commercial Code 4-406 places a duty on bank customers to discover and report unauthorized signatures or alterations • Uniform Commercial Code 3-306 places absolute liability on bank customers who cause forgery and alteration losses by their negligence. • Keep checks and deposit slips in a secure place. This includes keeping your checkbook out of view in your car and not using your deposit slip to give out your address. • Do not give out your account number or password.

28. Objective 18: Identify ways to protect your accounts. • Bank accounts (continued) • Follow the guidelines for writing and endorsing checks so they cannot be altered. • Keep accurate records of your deposits and withdrawals so you can reconcile your bank statement monthly. • Report errors to your bank as soon as possible after receiving the statement.

29. End of Unit 2