Eisenhower High School September 15, 2013

1. Eisenhower High School September 15, 2013

3. Banking Basics Overview • Choosing a Bank • Understanding Debit Cards • Tracking Your Account Balance • Balancing Your Checkbook • An Overdraft Scenario

4. Choosing a Bank • Research local bank websites. • Select a bank with the most ATMs in your proximity. • Look for banks that can make it even easier for you to bank. • Online Banking • Online Bill Pay • Email Alerts • Mobile Banking • Free Checking • Savings Account • Lowest or Free Transaction Fees • Ask parents and friends.

5. Understanding Debit Cards • Debit cards work like cash or a personal check. • Debit cards offer a quick way to pay for groceries, gas, etc. • With debit cards, you pay now. With credit cards, you pay later.

6. Debit Card Advantages • It’s easier to get than a credit card, since it is attached to your checking account. • It’s more convenient; you don’t have to carry cash or a checkbook. • You don’t pay interest charges, because the money comes directly out of your checking account. • Purchase protection.

7. Debit Card Tips • Keep your debit card safe and secure. • Make sure you have enough money in your account to cover purchases made with your debit card. • Keep track of all your debit card transactions. • Memorize your debit card PIN; don’t write it on your card or keep it in your purse or wallet.

8. Tracking Your Account Balance • It’s important to keep track of your account balance because you could “bounce” a check and/or have an overdraft on your account. • What is overdraft? • What are insufficient funds? • What happens if a check is returned? • Write down all your debit card purchases in your checkbook register.

9. A Tale of Two Balances: What Is Your Actual Balance? Tracking balances can be tricky, especially if you use a debit card. Some merchants (gas stations, restaurants, etc.) only authorize a small portion of your total bill at first. Then, several days later, they authorize the rest. That delay can make your available balance look bigger than it really is. $100.00 Gas - $20.00 Lunch - $7.00 Tip - $1.00 Available Balance $92.00 The Actual Balance: $72.00 (How can that be?)

10. A Tale of Two Balances: What Is Your Actual Balance? • The gas station only pre-authorized the debit card transaction for $1.00, rather than the full $20.00. • The café authorized the amount of the bill ($7.00), but did not include the $1.00 tip. • Therefore, while you only have $72.00 left in your account because you spent $28.00, your statement balance will show $92.00 until the purchases are posted to your account. Gas - $1.00 Lunch - $7.00 Available Balance $92.00

11. So, to Summarize: $100.00 It is up to YOU to keep a register of your account to know what the accurate balance is at any given time. Gas - $20.00 Lunch - $7.00 Tip - $1.00 Actual Account Balance $72.00

12. Balancing Your Checkbook Five Reasons You Should Balance Your Checkbook • You might have made a mistake. • You forget to post a transaction in your checkbook register. • There may be a bank error. • There may be an unauthorized transaction (fraud). • If you only check your transactions online, you might forget about checks you wrote, debit transactions, etc.

13. How to Balance Your Checkbook • Ending balance from your bank statement. • Add total outstanding deposits. • Subtract total outstanding checks/debits. • New balance. $ _______ + _______ - _______ = _______ Deposits - Checks/Debits = Balance

14. An Overdraft Scenario Kara goes into the bank on 3/27 to deposit her paycheck. A Customer Service Representative (CSR) notices Kara’s account is overdrawn, which can cost $25+ for each overdraft. The CSR mentions this to Kara, and she wants to know why. Upon reviewing the statement, here is what we see: 03/25 $100.00 daily balance 03/26 $175.00 ck# 1102 (rent check) 03/26 $ 18.25 department store 03/26 $ 6.20 bookstore 03/26 $ 12.00 restaurant 03/26 $-111.45 daily balance 03/27 $-148.00 overdraft/return items fee 03/27 $-259.45 daily balance

15. What Happened? • Because the rent check was written on 3/21, Kara assumed it had already been deducted from her account when she called the bank for her balance on 3/25. • Kara thought her rent check had already cleared when she got the balance on 3/25, so she continued to spend the $100 in her account. • She didn’t keep track of all her checks written and debit purchases in her checkbook register, therefore she did not have up-to-date information about her account balance. • Since she didn’t track her transactions with her checkbook register and did not go online to look at her account, Kara wound up with $148 in fees.