Basics of Banking in the U.S.
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Basics of Banking in the U.S.

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A general overview of the basics of banking in the U.S. aimed at international students in higher education.

A general overview of the basics of banking in the U.S. aimed at international students in higher education.

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  • Welcome participants and provide introduction to presenter(s). Goal: The goal of the workshop is to give you a basic understanding of banking in the U.S. The U.S. banking system is probably a little different than the banking system in your home country. The workshop’s goal is to improve your knowledge in order to help you better manage your finances. During the presentation, f any terms are unfamiliar, please let us know.
  • Agenda: This workshop will cover a variety of topics from the advantages of having a bank account to bank scams. We will have an hour to go over these topics. So, let’s get started.
  • You may already have a bank account in your home country, or you may not have had to worry about your finances by yourself before coming to the U.S. Either way, having a U.S. bank account will make managing your finances and budgeting a lot easier.   Individuals with a bank account use a combination of cash, check writing, debit card, credit cards, and online bill payment to make purchases and pay for bills.  A bank account will allow you to securely deposit your financial aid awards, loans, stipends, paychecks, and wired funds from another country. Also, most banks now issue debit cards with a MasterCard or Visa emblem, which means you can use the card to make purchases anywhere that accepts credit cards, including online and in stores. Paying cash or purchasing money orders for payments is sometimes inefficient and can be dangerous if you carry large amounts of cash with you all the time. Also, for important purchases or paying bills, paying in cash doesn't leave much evidence to prove your payment in case of a dispute. For example if you pay rent with cash, there is little way to prove that you paid for rent unless you have a receipt. Unfortunately, there are some dishonest people out there. If you pay by check, credit, or debit card the bank will have a record of your payment.
  • People use banks for different purposes. Some need to manage their personal finances and some have extra money to save. Banks help their customers meet those needs by offering a variety of accounts. The two most common accounts for students are:   Checking Accounts: Offer safety and convenience. A checking account is the main account that is used to access money that you need for day-to-day expenses. While it’s called a checking account, there are many ways to access money in this account – a check is just one of them. You can use your debit card, or pay bills online.   You can also withdraw money at the bank or from an ATM (automatic teller machine) with your PIN (personal identification number). Most banks have a daily transaction and/or withdrawal limit on your account at an ATM.   Another nice feature of a checking account is that your bank sends you a monthly record of the transactions or you can access your checking account online or even by phone.   Savings Accounts: For students who have a little extra money and want to keep their money in a safe place while earning interest at the same time. The interest rate varies depending on the bank. You can move money from savings into your checking account if needed, although there might be a limit on how many times you can move money between the two accounts. Check with your bank.
  • You should look around to find out which banks offer the best services to fit your personal needs at the lowest cost. Most major U.S. banks offer "student accounts" designed specifically for students that usually include a checking account with a debit card, a savings account, free online bill payment, and other features. Check with each bank for details.   Associated Cost   Many banks won’t charge a fee to open an account as long as you deposit a minimum amount and keep a minimum balance. Some banks charge a monthly fee if your account falls below a certain amount. Other banks may charge fees for additional services such overdraft protection. Check with banks for details.
  • As an international student, plan to open your account in person at a local bank. You can call the bank beforehand to make an appointment or banks usually will assist you if you just visit a local office. You can also talk to representatives from some local banks during International welcome week. When you go, make sure you bring your social security card, passport, and the funds you want to deposit. In addition, you should bring as many of the following documents as you have - although every bank has slightly different requirements. You will likely need at least one of the following in addition to your passport: Your school id, Your state driver’s license or id, or your visa. Some banks might not require a social security number to open an account, but can use another form of I.D. such as ITIN – Individual Taxpayer Identification Number, check with each bank. Under federal regulations, the ITIN may be accepted by banks as a legitimate identifier for prospective customers without a social security number. Typically, banks prefer social security numbers. The reason banks need to officially verify the identity of a prospective customer is because they have a legal duty to prevent money laundering and fraud. They also must file 1099 tax forms with the IRS, disclosing any interest they have paid to their customers. A U.S. Treasury Department regulation states that banks may accept ITINs instead of social security numbers. 
  • Check Protection   Banking laws help protect you in the event someone steals your checks and forges your name. If a check is lost or stolen, you also may be able to stop payment on the check if you act quickly before the check “clears” and if you meet any other rules set by the bank. Contact the bank immediately if a check is lost or stolen.
  • Your checkbook comes with a check register, which is used to record all of the transactions that affect your checking account. This will help you determine how much money you have in your account, even if the transaction has not processed through your bank account yet. Be sure to record the check or transaction in your checkbook register as it occurs.
  • Let participants complete activity. See appendix for activity handout. Go over completed activity. See appendix for completed activity handout.
  • Let participants complete activity. See appendix for activity handout. Go over completed activity. See appendix for completed activity handout.
  • Let participants complete activity. See appendix for activity handout. Go over completed activity. See appendix for completed activity handout.
  • Overdraft: An overdraft of your checking account can happen when you write a personal check, withdraw money from an ATM, or make a purchase or payment with a debit card when there isn't enough money in your account to cover the charge. In this situation, the account is said to be " overdrawn ".   Most banks will cover the amount that was overdrawn for a fee between $20 and $30, but each time you complete a transaction with insufficient funds you'll be charged another fee. Be very careful because overdraft fees can add up quickly and you must pay the fees in addition to putting enough cash in your account to pay for the ATM withdrawal, check or card purchase.
  • Some banks offer overdraft protection plans. This is essentially a line of credit or a link to your saving account to cover overdrafts. Banks may also charge for this service, but overdraft protection plans are typically less costly than standard overdraft fees for some individuals.   In the past, some banks automatically enrolled you in their standard overdraft practices for all types of transactions when you opened an account. Under the new rules, your bank must first get your permission to apply its standard overdraft practices to everyday debit card and ATM transactions  before   you can be charged overdraft fees. The new rules  do not cover checks or automatic bill payments  that you may have set up for paying bills such as your mortgage, rent, or utilities. To grant this permission, you will need to contact your bank.   Remember, if you don't opt in, your debit card could be declined if you're out of money. You can decide to opt in or opt out of your banks overdraft practices whenever you want.
  • *Although it can be inconvenient, refusing to accept an old checks is done for the depositor's protection. Banks may worry about funds still being available for an old dated check and in turn wish to protect their customers from any fees or liability for insufficient funds.
  • If you are using a check card at a store, you will often see the choice of debit or credit when using your check card to pay for a purchase. What’s the difference?   A "debit” purchase will allow the total amount of the purchase as well as any cash back to be posted to your checking account immediately and requires your PIN to be entered.   A "credit" purchase will allow only the total amount of the purchase to be posted to your checking account and requires a signature. The amount will still be deducted from your checking account, and you will not be charged interest or accrue debt. Additionally, you may earn rewards by choosing the “credit” button depending on the card processor (Visa or MasterCard).     In either case, both "debit" and "credit" transactions will be deducted exclusively from your checking account. Most of the time, it is a personal preference on which on is used.  
  • Internet banking is a great way to manage finances online through your bank’s website. The biggest advantage of using internet banking is accessing your bank accounts online 24 hours a day, 7 days a week. Here are just some of the ways online banking can make banking easier for you:
  • If you lose your check card, checks, or notice any unauthorized transactions, contact your bank as soon as possible. Many banks have toll-free numbers and 24-hour service to deal with such emergencies. On the back of your debit card, there is usually a telephone number to call. So it might be helpful to make a photocopy of the back of your card. The longer you wait, the more money you might be responsible for if an unauthorized person uses your card to buy things.
  • The Federal Deposit Insurance Corporation (FDIC) preserves and promotes public confidence in the U.S. financial system by insuring deposits in banks and thrift institutions for at least $250,000; by identifying, monitoring and addressing risks to the deposit insurance funds; and by limiting the effect on the economy and the financial system when a bank or thrift institution fails. An independent agency of the federal government, the FDIC was created in 1933 in response to the thousands of bank failures that occurred in the 1920s and early 1930s. Since the start of FDIC insurance on January 1, 1934, no depositor has lost a single cent of insured funds as a result of a failure.  
  • Identity theft occurs when someone assumes your identity to perform a fraud or other criminal act. Criminals can get the information they need to assume your identity from a variety of sources, including by stealing your wallet, going through your trash, or by accessing your credit or bank information. They may approach you in person, by telephone, or on the internet and ask you for the information. Identity theft is one of the fastest growing crimes in America. A dishonest person who has your social security number can use it to get other personal information about you. Identity thieves can use your number and your good credit to apply for more credit in your name. Then, they use the credit cards and do not pay the bills. You may not find out that someone is using your number until you are turned down for credit or you begin to get calls from unknown creditors demanding payment for items you never bought. 

Basics of Banking in the U.S. Basics of Banking in the U.S. Presentation Transcript

  • Basics of Banking in the U.S.
  • Welcome!
    • The Advantages of Having a Bank Account
    • The Different Types of Bank Accounts
    • How to Choose a Bank
    • How to Open a Bank Account
    • Checking Basics
    • ACTIVITY: Check Writing
    • Overdraft
    • Returned Checks
    • The Difference Between Debit vs. Credit
    • Wire Transfers
    • Electronic Banking
    • What to do: Lost Check Card, Checks, or Unauthorized transactions
    • Federal Protection on Bank Accounts
    • Establishing Credit
    • Identity Theft
    • Bank Scams
    • Banking Tips
    Agenda
    • Management of finances and budgeting
    • Cash, check writing, debit card, credit card, online bill payment used to make purchases and pay for bills
    • Secure deposits of financial aid awards, loans, paychecks, & wired funds
    • Convenience of Visa and MasterCard
    • Some of the negative side of cash
    Advantages of a Bank Account
  • Types of Bank Accounts
    • Checking Account
      • Convenient for day-to-day expenses
      • Checks, debit card
      • ATM (Automatic Teller Machine)
        • PIN (Personal identification number)
        • Withdrawal limit
      • Monthly statements, online / phone access
    • Savings Account
      • Interest
      • Transfer to checking
  • How to Choose a Bank
    • Look Around
      • Personal needs
      • “ Student” account
    • Compare Costs
      • Minimum original deposit
      • Minimum balance
      • Fees
  • Questions to Ask
    • Do you offer a student account?
    • If yes, what features are included in the student account?
    • Do I need a Social Security number to open an account? What else can I use?
    • What is the minimum amount I need to deposit to open up an account?
    • What is the minimum balance I need to keep in my account to avoid fees?
    • What ATM can I use besides your banks?
    • Are there ATM fees?
    • What other fees does the bank charge?
    • Are there ways to avoid or lower these fees?
    • Is there a maximum amount of checks you can write a month?
    • How long does the bank take to clear a check?
    • Where are your banks located?
    • Do you provide wire transfers?
    • What is the interest rate on the bank account?
  • How to Open an Account
    • Visit a local bank / local bank reps during international welcome week
    • Each bank has different requirements
    • Items to bring:
      • Social security card*
      • Passport
      • Funds to deposit
      • One other form of I.D.
        • Student I.D.
        • Driver’s License / State I.D.
        • Visa
    • *Some banks might not require a social security number to open an account, but can use another form of I.D. such as ITIN – Individual Taxpayer Identification Number, check with each bank.
  • Checking Basics
    • A Check Tells the Bank
      • How much of your money you want to transfer
      • When you want to transfer it
      • To whom you want it to pay to
    • Check Writing Tips
      • Use dark ink when writing checks; never use pencil or erasable ink
      • Write clearly
      • Always start at the far left, so extra numbers cannot be written in
      • Keep your checks in a safe place
    • Check Protection
      • Lost or stolen, contact bank
      • “ Stop” payment
  • How to Write a Check
    • Address: Your U.S. address should be pre-printed on your checks.
    • Date Line: Write the date that you write the check.
    • Payee Line: Write the name of the person or business to whom the check is for.
    • Amount Field: Starting at the far left box, write the amount of the check in numbers.
    • Dollars Line: Starting at the far left, write the dollar amount of the check in words and the cents as a fraction of 100. Draw a line in the remaining space.
    • Drawee Bank: The bank or financial institution should be pre-printed on the checks.
    • Memo Line: Write down the purpose of the payment.
    • Signature Line: Sign your name as it is printed on your checks.
  • How to Fill Out a Check Register
    • Check number or text for check/debit card transaction.
    • Date of the check or transaction.
    • The individual or business who the payment was for.
    • The amount of the payment/debit.
    • The amount of the deposit /credit.
    • The balance of your account. Subtract payment/debit amounts from the previous balance or add deposit/credit amounts to the previous balance.
    6
  • Activity Time!
  • Activity Time!
  • Activity Time!
  • Overdraft
    • When a purchase or payment is made from a checking account when there isn't enough money in the account to cover the charge.
    • Banks usually will cover the amount, but will charge an overdraft or NSF (non-sufficient fund) fee around $20 - $30.
    • Each additional transaction made with insufficient funds, will be charged an additional fee.
    • For example, if you wrote two personal checks for $100, but you only had $75 in your account, you would then be charged two overdraft / NSF fees when the checks were processed. If the fee was $25, you would have an account balance of negative $175.
  • Overdraft
    • Bank overdraft protection plan
    • Opt in / opt out bank’s overdraft practices
      • Permission to apply the bank’s overdraft practices
      • Applies to everyday debit & ATM transactions
      • Doesn’t cover checks or automatic bill payments
      • Contact your bank to opt in /opt out
    • Opt out – debit card could be declined if out of money
  • Returned Checks
    • Checks that bank denies
    • Reasons vary
      • Not enough money in the account
      • A stop payment on the check
      • The check is too old to honor – 6 mo.
      • The check was improperly written
    • As a check writer this means that your bank will not pay the person or business you wrote the check to. Also, many times if the check was to a business, the business will charge you a return check fee in addition to the original amount owed.
    • If you received the check, a returned check is a check that you won’t get paid on. You can contact the person or business who you received the check from to see about arranging another form of payment.
  • Debit vs. Credit DEBIT CREDIT Requires PIN to be entered Requires signature Can get cash back N/A N/A Possible rewards from Visa/MasterCard Both transactions will be deducted exclusively from your checking account
  • Wire Transfers
    • Wire transfers are electronic funds transferred from one person or institution to another.
    • A wire transfer can be made from one bank account to another account, either within a single bank or across different banks.
    • Wire transfers can be completed at most banks and is done for a fee usually from both the sending and the receiving bank. However, if it is within the same bank, the fee may be waived depending on the bank.
    • The fee can vary from a set amount to a percentage.
    • You may send and receive transfers in U.S. dollars; although certain banks are able provide foreign money exchange services.
    •   If you send money to other people on a regular basis, you can also set up repetitive wire transfers.
  • Electronic Banking
    • Convenient
    • Check your balance
    • View online statements
    • Pay bills
    • Transfer funds
    • Dispute an unauthorized charge
    • And more! 
  • What to Do: Lost Debit Card, Checks, Unauthorized Transactions
    • Contact your bank as soon as possible by phone
    • Stop authorization of transactions and issue a new card and checks
    • The longer you wait to report lost debit card, the more money you might be responsible for.
    • If you report an ATM /debit card missing before it's used without your permission, the EFTA (Electronic Fund Transfer Act or Regulation E) says the card issuer cannot hold you responsible for any unauthorized transfers.
    • If unauthorized use occurs before you report it, your liability under federal law depends on how quickly you report the loss.
  • What to Do: Lost Debit Card, Checks, Unauthorized Transactions
    • For example, if you report the loss within two business days after you realize your card is missing, you will not be responsible for more than $50 for unauthorized use.
    • However, if you don't report the loss within two business days after you discover the loss, you could lose up to $500 because of an unauthorized transfer.
    • You also risk unlimited loss if you fail to report an unauthorized transfer within 60 days after your bank statement containing unauthorized use is mailed to you. 
    • Additional information: www.ftc.gov/bcp/edu/pubs/consumer/credit/cre04.shtm
    • www.fdic.gov/regulations/laws/rules/6500-3100.html
  • Federal Protection on Accounts
    • Federal Deposit Insurance Corporation (FDIC)
    • Created in 1933 in response to the thousands of bank failures that occurred in the 1920s and early 1930s
    • Since the start, no depositor has lost a single cent of insured funds as a result of a bank failure.
    • Insures deposits in banks and thrift institutions for at least $250,000
    • Most banks are FDIC insured to stay competitive
    • Additional information: www.fdic.gov
  • Establishing Credit
    • Credit is linked to Social Security number
    • Credit score a number representing the “creditworthiness” of a person, the likelihood that he/she will pay her debt
    • No credit history = no credit score.
    • International students may have a difficulty obtaining credit card to start building credit
    • Ask bank about possible options – secure line of credit
    More information: www.federalreserve.gov/creditreports/
  • Establishing Credit
    • Good credit can help students qualify for items such as:
      • Cell phone, renting an apartment, and more
      • Loans: personal, car, home
    • Credit score - Higher is better. Increases likelihood of approval and getting better interest rate and conditions. Information used:
      • the number and type of accounts you have (credit cards, auto loans, mortgages, etc.);
      • whether you pay your bills on time;
      • how much of your available credit you are currently using;
      • whether you have any collection actions against you;
      • the amount of your outstanding debt; and
      • the age of your accounts.
  • Identity Theft
    • Someone assumes your identity to perform fraud or other criminal acts
    • Variety of sources to get information:
      • Stealing your wallet
      • Going through trash
      • Accessing credit or bank accounts
    • Looking for social security number and other identifying information such as birthday, PIN, account numbers, etc…
    • Used to apply for credit cards, access accounts, etc..
    • Be cautious
    • Additional information:
    • www.ftc.gov/bcp/edu/microsites/idtheft/
  • Identity Theft Prevention Tips
    • Never throw away ATM receipts, credit statements, credit cards, or bank statements in a usable form. Tear or shred these items.
    • Never give your check card number over the telephone unless you make the call.
    • Carefully review your bank account / credit card statements frequently and notify your bank of discrepancies immediately.
    • Keep a list of telephone numbers to call to report the loss or theft of your wallet, credit cards, etc.
    • If you have a Social Security number, review a copy of your credit report at least once each year. Notify the credit bureau in writing of any questionable entries and follow through until they are explained or removed.
  • Bank Scams: “Phishing” Emails
    • Fictitious emails that seem to be from trusted companies, financial institutions —even government agencies — and they attempt to obtain confidential information from you.
    • Social Security number, PIN, passwords, account numbers and other info can be obtained by replying to the email or by linking you to a legitimate looking website to enter your personal information.
  • Bank Scams: “Phishing” Emails
    • Lessons:
    • Don’t give out personal information over the phone, through the mail, or online unless you initiate the contact or know the caller.
    • With e-mail, do not respond to any email asking you to “verify your account information.” Banks will never ask you to verify your PIN, Social Security number, or other private information via e-mail.
    • If you are ever in doubt about a message, contact the company, financial institution, or government agency.
  • Automated Voicemails or Real Phone Calls
    • Phone messages or calls saying something similar to your bank’s debit card has been locked. Then, press a number to reactivate account. Finally, enter bank account number and PIN.
    • Lesson:
    • Again, never give any number, punched in or otherwise, to someone over the phone. If you get one of these automated calls, hang up, call you bank and ask them if the calls are legitimate.
  • Bank Scams: Fake Checks
    • It may start with someone offering to buy something you advertised for sale, pay you to work at home, or give you an advance on a sweepstakes you supposedly won.
    • Stranger sends the victim a check and has the victim cash the check, then wire some of the money from the check in return.
    • The checks sent to victims are forgeries, but they’re so realistic that even bank tellers may be fooled.
    • By the time the checks bounce, the victims have already wired the money to the crooks. Because bank customers are responsible for the checks they deposit, the victims of these scams are left to repay the bank the money they withdrew against the bad check.
  • Bank Scams: Fake Checks
    • Lesson:
    • If someone you don’t know wants to pay you by check but wants you to wire money back, it’s a scam. Don’t ever agree to cash a check for someone and wire or send some of the cash back to the person.
  • Banking Tips: General
    • Whenever possible, keep an eye on your debit card when doing a transaction. Ensure that you get your card back after every purchase. If any activity during the transaction concerns you, call your bank.
    • Always check sales receipt for the correct purchase amount before you sign them, and keep copies of your receipt and ATM receipts. Always check your billing statement and verify the amounts of your purchases.
  • Banking Tips: General
    • Change your passwords and PINs regularly. Don’t write your PIN number on your card, or anywhere else that someone might see it or find it.
    • Remember to log-out every time you access your bank account online.
    • Don’t “save” your password on a shared computer, (example in the school computer lab).
  • Banking Tips: ATM
    • Do not give an ATM PIN number or online banking password to anyone, including close friends or roommates.
    • When using an ATM or making a payment, be aware of the behavior of those around you and report any suspicious acts to the bank.
    • Position yourself so that others cannot see you entering your PIN.
    • Remember there are several types of ATMs. Some require that your card be inserted for the entire transaction while other scan your card and return it immediately. Follow the instructions on the screen carefully, and do not walk away until you have completed your transaction and the screen indicates it is ready for a new customer.
  • Banking Tips: Checks
    • Secure and lock up all extra checks you are not using.
    • When a check book has been received in the mail, check for any tampering of the envelope, and that all the checks are in numerical order.
    • Do not give a check without an amount written in to anyone, signed or unsigned.
    • Know your banks policy when checks “clear”, meaning once you deposit the check, how long until you can actually use the money
    • Additional banking tips:
    • www.cnb.com/Business/checkingSavings/notice.asp
  • ASUU Personal Money Management Center
    • Want more information about banking, or other personal financial topics?
    • The PMMC is University resource to help you with your personal finances. You can schedule a meeting to discuss your financial concerns.
    • Schedule an appointment soon! It’s free for students!
    • Union, room 317
    • 801.585.7379
    • Email: [email_address]
    • Website: asuupmmc.utah.edu
    ASUU Personal Money Management Center
  • Workshop Conclusion
    • ANY QUESTIONS?
    • Please fill out the workshop evaluation form!
    • THANKS & GOOD LUCK EVERYONE!
    • Follow-up questions or feedback email: k.t.nguyen@utah.edu