17-1 Banks and Other Financial Institutions 17-2 Financial Services and Electronic Banking

1. C H A P T E R 17 Banking and Financial Services 17-1 Banks and Other FinancialInstitutions 17-2 Financial Services andElectronic Banking 17-3 Checks and Payment Methods

2. 17-1 Banks and Other Financial Institutions Goal 1 Explain the purpose of the Federal Reserve System. Goal 2 List the types of financial institutions. Goal 3 Discuss factors for selecting a financial institution.

3. KEY TERMS • Federal Reserve System (Fed) • commercial bank • credit union • Federal Deposit Insurance Corporation (FDIC)

4. THE BANKING SYSTEM • The Federal Reserve System (Fed) • Federal Reserve activities • Banking and the economy

5. Checkpoint  • What is the main purpose of the Federal Reserve System? • The Federal Reserve System was created by the federal government to supervise and regulate member banks and to help banks serve the public efficiently by holding reserves and clearing checks.

6. TYPES OF FINANCIAL INSTITUTIONS • Deposit institutions • Non-deposit financial institutions

7. DEPOSIT INSTITUTIONS • Commercial banks • Savings and loan associations • Mutual savings banks • Credit unions

8. NON-DEPOSIT FINANCIAL INSTITUTIONS • Life insurance companies • Investment companies • Consumer finance companies • Mortgage companies • Check-cashing outlets • Pawnshops

9. Checkpoint  • What are some examples of non-deposit financial institutions? • Examples of non-deposit financial institutions include life insurance companies, investment companies, consumer finance companies, mortgage companies, check-cashing outlets, and pawnshops.

10. SELECTING A FINANCIAL INSTITUTION • Services offered • Savings accounts • Checking and payment accounts • Loans and other credit plans • Other services, such as safe-deposit boxes • Safety • Convenience • Fees and charges • Restrictions

11. Checkpoint  • What factors should be considered when selecting a financial institution? • Factors to consider when shopping for a financial institution include the services offered, safety, convenience, fees and charges, and restrictions.

12. 17-2 Financial Services and Electronic Banking Goal 1 Identify the financial services used by consumers. Goal 2 Explain types of checking accounts. Goal 3 Describe electronic banking activities.

13. KEY TERMS • safe-deposit box • service charge • debit card

14. TYPES OF FINANCIAL SERVICES • Savings services • Payment services • Lending services • Electronic banking • Storage of valuables • Investment advice • Management of trusts

15. Checkpoint  • What are the main financial services used by consumers? • The main financial services used by consumers are savings services, payment services, lending services, electronic banking, storage of valuables, investment advice, and management of trusts.

16. TYPES OF CHECKING ACCOUNTS • Regular checking accounts • Interest-earning • Checking accounts • Special checking accounts

17. COMPARING CHECKING ACCOUNTS • Minimum balance • Interest rate earned, if any • Monthly service charge • Fees for other services, such as printing checks and stop payment orders • Other restrictions

18. Checkpoint  • What are three main types of checking accounts? • Regular checking accounts • Interest-earning checking accounts • Special checking accounts

19. ELECTRONIC BANKING • E-banking services • Automatic teller machines • Payments at the point-of-sale • Direct deposit • Automatic bill payments

20. EXAMPLES OF ELECTRONIC BANKING ACTIVITIES

21. ELECTRONIC PAYMENT OPTIONS • Debit card transactions • Online payments • Stored-value cards • Smart cards

22. BANKING IN THE FUTURE • Financial services combined with wireless technology • Personalized systems for obtaining, transferring, and using funds

23. Checkpoint  • What are common electronic banking services? • Common electronic banking services include automatic teller machines (ATMs), point-of-sale payments, direct deposit, and automatic bill payments. • E-banking also includes electronic payment options such as debit card transactions, online payments, stored-value cards, and smart cards.

24. 17-3 Checks and Payment Methods Goal 1 Describe three main types of endorsements. Goal 2 Describe proper check-writing procedures. Goal 3 Explain the bank reconciliation process. Goal 4 Identify other payment methods.

25. KEY TERMS • endorsement • check register • stop payment order • bank statement • bank reconciliation • outstanding checks

26. OPENING A CHECKING ACCOUNT • Benefits of checking accounts • Convenience and ease of making payments • Safety to make payments with less risk than using cash • Proof of payment • A record of finances for managing your money

27. THE FIRST DEPOSIT • Signature card • Joint account • Deposit slip

28. TYPES OF ENDORSEMENTS • Blank endorsement • Full endorsement • Restrictive endorsement • Special endorsement • Two signatures required • Restrictive endorsement

29. SAMPLE ENDORSEMENTS

30. Checkpoint  • What are the three types of endorsements? • Blank endorsement • Full endorsement • Restrictive endorsement

31. USING A CHECKING ACCOUNT • Check-writing procedures • Elements of a check • The check register • Writing a check • Proper check writing • Stopping payment

32. PARTS OF A CHECK

33. Checkpoint  • What is the purpose of a check register? • The purpose of a check register is to record all account activities so that the account holder will always know the account balance. • The check register is also used for reconciling a checkbook with a bank’s monthly statement.

34. THE RECONCILIATION PROCESS • Bank statement information • Determine checks paid • Find differences • Calculate adjusted balance

35. MONTHLY ACCOUNT STATEMENT

36. RECONCILIATION FORM

37. Checkpoint  • What are causes of differences between the bank statement balance and a check register? • Checks that have not cleared • Deposits mailed to the bank that may not have arrived by the time the statement was issued • Transactions that may not have been recorded in the check register • Transactions that were not recorded correctly • Service charges or interest earned

38. OTHER TYPES OF PAYMENTS • Certified checks • Cashier’s checks • Traveler’s checks • Money orders

39. CERTIFIED CHECKS • Personal check for which a bank has guaranteed payment • Certification stamped on face • Signed or initialed by a bank officer

40. CASHIER’S CHECKS • Check that a bank draws on its own funds • Costs the amount of the check plus a service fee • More acceptable than the personal checks

41. TRAVELER’S CHECKS • Special forms designed for making payments when away from home • Require your signature in two places • Cash a check or pay for a purchase • Commonly accepted throughout the world

42. MONEY ORDERS • Form of payment that orders the issuing agency to pay the amount printed on the form to another party • A bank money order • A postal money order • An express money order • A telegraphic money order

43. Checkpoint  • How does a certified check differ from a cashier’s check? • A certified check is a personal check for which a bank has guaranteed payment. • A cashier’s check is a check that a bank draws on its own funds.