Banking BASICS

1. a Welcome to Banking BASICS YOU can bank on it © 2011 MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

2. MoneyWI$E ‘Banking Basics’ • MoneyWI$E • A jointfinancialeducationprojectof Consumer Action and Capital One MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

3. What will the ‘Banking Basics’ training teach us? • We want you to have a thorough understanding of personal banking services and how they can benefit you MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

4. You will learn about: • Banks and credit unions • How to select a financial institution • How to open an account • How to keep costs down • How to get more interest on your savings MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

5. Participants’ folders contain: • You Can Bank On It (brochure) • Check Writing (class activity) • Sample ChexSystems Report • Sample Account Application • Choosing a Bank or Credit Union (take-home worksheet) • Evaluation of the MoneyWI$E Banking Basics Seminar MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

6. Checking and savings accounts • What are some of the advantages to having a checking and savings account? MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

7. Advantages of checking and savings accounts include: • Your money is safe • Each account is insured • Checking account records provide proof that you paid bills and help you keep track of spending • Money in a savings account earns interest to help it grow MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

8. Banks and credit unions • What is the difference between a bank and a credit union? MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

9. Banks • Banks are financial institutions that take deposits, engage in lending and operate for a profit • Banks offer checking and savings accounts to the general public MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

10. Credit unions • Credit unions are financial cooperatives that are owned by and serve individuals with a common affiliation • For example, a workplace, church, employees union, neighborhood, etc. • Credit unions offer checking and savings accounts to members MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

11. Account verification services How do banks and credit unions learn how you have handled your accounts in the past? MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

12. ChexSystems... • Is the major national‘account verification’company • When you apply for a new checking account, banks and credit unions search for your name in the ChexSystems database • If you ever abandoned an account, leaving a negative balance, you are probably listed in this database MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

13. ChexSystems records • Reports about overdrafts or closed accounts remain in your file for five years • You can get a free copy of your report by contacting ChexSystems at www.consumerdebit.com • You have the right to dispute inaccurate information in your account verification report MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

14. Your rights • You can get a free copy of your ChexSystems report if: • You have been denied an account in the past 60 days because of information listed in ChexSystems • Your checks were stolen and used by an impostor or you are the victim of any banking or account fraud • Get a copy anytime for about $10 MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

15. Don’t get discouraged • If you try to open a new checking account and are turned down by a bank or credit union because of your past account history, don’t give up • Different banks and credit unions have different requirements, so shop around MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

16. ChexSystems sample report • Let’s review the categories of the ChexSystems sample report: • Reported information • Drivers license validation • Drivers license verification • Consumer-initiated inquiries • Customer-initiated inquiries • Retail information • Check printing order history MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

17. Checking accounts What kinds of things can you do with a checking account? MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

18. Checking accounts • Checking accounts allow you to: • Pay bills with checks/online bill pay • Get cash, transfer money and make purchases using your debit card • Access your checking account • At an ATM or bank branch • On your computer (online banking) • By phone or using a data-ready mobile device (mobile banking) MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

19. Banking/checking online • Also known as Internet banking • Via a secure website operated by your financial institution • Pay bills, view transactions, transfer funds between accounts • Benefits: convenient, low or no acct fees, quick access to info, savings on postage and checks • But, may still need to visit the ATM MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

20. Safe Internet banking • Make sure the institution is legitimate • Create a strong password • Keep your ID and password private • Don’t fall for phishing scams • Be careful when using public wireless networks (Wi-Fi) or shared computers • Monitor account activity regularly MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

21. Keeping checking account fees in check • Shop around for free or low-cost checking accounts • Electronic transfer accounts (ETAs) • Basic (Lifeline) accounts • Low cost accounts for seniors or students MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

22. Debit cards • You can use your debit card in these ways: • Entering your personal identification number (PIN) at an ATM or at a retailer’s point-of-sale (POS) terminal • Sign a receipt • Swipe without a signature or PIN on purchases under $25 at some stores MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

23. Debit cards • If your debit card is lost or stolen: • Alert your bank as soon as possible. The longer you wait, the more money you might be responsible for if an unauthorized person uses your card to buy things. MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

24. Check writing activity • In this activity you will practice writing a check and entering it into a sample checking account register. MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

25. Check writing • Why is it important to enter your checks and debit transactions in your account register? MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

26. Keep a record of your transactions: • So that you don’t forget checks, cash withdrawals, and purchases with your debit card • If you forget to record a transaction, it could overdraw your account. This could lead to a fee for “non-sufficient funds” being charged to your account. • So that you know how much money you have in the bank • So that you can track your spending and stick to a budget MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

27. Savings accounts • How is a savings account different from a checking account? MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

28. What is interest? • Interest is the cost of borrowing money • When a bank gives you a loan, you pay interest to them • When you keep your savings in a bank, they pay interest to you • APR, or annual percentage rate, is a full year’s interest MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

29. Types of interest • There are two types of interest: • Simple interest means that you only earn interest on your initial deposit • Compound interest allows you to earn interest not only on your initial deposit, but also on the interest you earn as you go along MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

30. Interest • Simple interest • $100 on deposit for 10 years at a 1% APR would earn $10 in interest • Compound interest • The same deposit, compounded monthly, would earn $10.51 (51¢ more because of compounding) • Compounding earns more, especially if you save regularly MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

31. Session One Wrap-up • Next time we will discuss: • ways to earn more interest • safe deposit boxes • what to consider when you are looking for a bank or credit union • how to resolve any issues with your account • See you then! MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

32. Banking Basics Session Two (2 hours) MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

33. Banking Basics • Session Two • Today we’ll learn • How to earn more interest on your money • What to keep in a safe deposit box • Things to consider when you are looking for a bank or credit union • How to resolve any issues with your account MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

34. Certificates of deposit (CDs) • What is a certificate of deposit? MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

35. Certificates of deposit (CDs) • A certificate of deposit, or CD, is a kind of savings account in which you leave your money on deposit for a set period of time in order to earn interest • The longer the term of your CD, the higher your interest rate will be • If you withdraw your money before the term ends, you will lose interest and might have to pay a penalty MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

36. Safe deposit boxes • What is a safe deposit box? • What are some things that you might keep in a safe deposit box? MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

37. What to keep in a safe deposit box • Copies of insurance policies • Birth, marriage and death certificates • Mortgages, leases and other important contracts • Stock and bond certificates and certificates of deposit (CDs) • Valuable jewelry MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

38. Safe deposit boxes • What should you not keep in a safe deposit box? MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

39. Safe deposit boxes • The originals of your will and life insurance policies should not be kept in a safe deposit box • The box might be sealed at the time of your death and your survivors will need a court’s permission to open it MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

40. Opening an account • Questions to ask: • What is the minimum to open an account? • What is the interest rate on the account? • Is there a monthly fee? • Is there any way to avoid monthly fees? • (more questions on next slide) MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

41. More questions to ask when opening an account • Is there a maximum number of checks I can write each month? • Is there a fee for using your ATMs? • What happens if my balance falls below the minimum requirement? • TIP: Use the MoneyWI$E worksheet in your folders as a guide when you apply for an account MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

42. Opening an account • What should you bring with you when you are opening a new account? MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

43. Identification • When you go to a financial institution to open a new account, bring: • Photo identification, such as a driver’s license, state ID card or passport • Proof of your address, such as a utility bill or lease • Your Social Security number for tax purposes MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

44. Keeping your account straight • Once you have an account, write down and deduct in your check register: • Every check you write • Every debit card transaction you make • ATM cash withdrawals • “Cash back” at stores • Any bank fees you pay MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

45. Account cost • How can you save money on account costs? MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

46. Ideas to keep account costs down • Combine checking and saving balances to avoid monthly fees • Save on ATM fees by using your own bank’s machines • If you can’t avoid an ATM fee, take out larger sums less frequently • Write down all transactions and reconcile your account so you don’t overdraw your account and incur overdraft fees MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

47. Ideas to keep account costs down • Use direct deposit for your paycheck or government benefits check • Ask your local bank or credit union about accounts with free checks • Order from a reputable mail-order company • Check with the Better Business Bureau before buying checks from a company you are not familiar with MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

48. Standard overdraft protection • Your overdraft transaction is covered if you pay a fee • There is a separate fee for each overdraft transaction • You must give your permission (opt in) to allow overdrafts on debit card and ATM transactions • If you don’t opt in, you can’t be charged but your overdraft debit transactions will be declined MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

49. Overdraft protection plans • An optional bank service called overdraft protection waives overdraft fees • It can work with a loan or line of credit or with your savings account • For the line of credit, you must have a good credit history • You will be charged a small transaction fee when you overdraft • You’ll pay interest on funds from the credit line when you use them MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

50. Activity • Sample savings account application • This is a sample application for an interest-bearing account at MoneyWI$E Bank • Lets walk through the activity together MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP