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 account 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 • Less expensive than check-cashing stores and money orders 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 (or via an “app”) • 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 • e-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: • Enter 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 or credit union 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” (bounced check) being charged to your account. • So that you know how much money you have in your account • 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/credit union gives you a loan, you pay interest to them • When you keep your savings in a bank/credit union, they pay interest to you • APR, or annual percentage rate, is the annual amount of interest, expressed as a percentage of the amount loaned or borrowed 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. In the second half of Banking Basics, we’ll discuss: • How to earn more interest • Safe deposit boxes • Choosing and opening an account • Managing your checking account • How to resolve any issues with your account • See you then! MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

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

33. 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

34. 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

35. 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

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

37. 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 would need a court’s permission to open it MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

38. 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

39. 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

40. 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

41. 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

42. 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

43. Savings account application • Ownership • W-9 certification • Optional services • ATM cards • Linking accounts • ATM fees • Sign and date your application 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 (including “cash back” at stores) • ATM cash withdrawals • Any bank fees you pay • Any online transactions • Any automatic payments/deductions • All deposits and credits MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

45. Account costs • 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 • Use direct deposit for your paycheck or government benefits check MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

47. Ideas to keep account costs down • 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 • 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

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 overdraw your account • You’ll pay interest on funds from the credit line when you use them MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

50. Resolving problems • Mistakes happen! • Bring issues or errors on your account or account statements to the attention of your bank or credit union • Don’t delay—waiting too long could make a situation worse MoneyWI$E A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP