EPF.12a compare types of financial institutionsEPF.12b examine how financial institutions affect personal financial planningEPF.12h explain how certain historical events have influenced the bankingsystem and other financial institutionsEPF.10i access reliable financial info from a variety of sources
Financial institutions include credit unions, commercial banks, finance corporations,savings and loan companies, insuring agencies, and non-bank institutions.
Credit unions, banks, and savings and loan companies generally offer checking accounts, savings accounts, consumer loans, certificates of deposit, and check cashing for depositors. Banks and savings and loan companies are generally insured by the Federal Deposit Insurance Corporation (FDIC) and credit unions by the National Credit Union Share Insurance Fund (NUSIF). Consumers should be aware that not all deposits are insured.
Payday loan and check-cashing companies typically charge higher rates than banks for their services.
Some consumers do not have bank accounts and use check-cashing services when they must cash a check. Companies charge a very high fee for this service.
Over time, financial institutions have expanded services that affectpersonal financial planning.
Many banks offer brokerage and insurance services, as well as financial management advisors.
A series of historical events led to todays banking system in the UnitedStates.
The Industrial Revolution brought an economic shift in the United States from bartering and trading to exchange of currency for goods and services; individuals moved from being self-supporting to working for others; increased use of money allowed for purchases and the initiation of consumer credit, as well as seasonal bank loans for farmers; the period also saw high bank interest rates. 1791 — First Bank of the United States established 1816 — Second Bank of the United States established
Transition from an agricultural economy to an industrial economy and an expansion of purchasing power and credit World War I — War debt incurred by United States Panic of 1907 1913 — Federal Reserve System established 1920s — Stronger credit 1920–1980 — Credit made available to most Americans 1929 — Stock Market Crash 1930s — Great Depression; decade of consumer distrust of credit and investment 1940s–1960s — Stable inflation rates; low interest rates 1970s — Rapid economic growth; overuse of credit; high inflation rate; consumer credit protection legislation; birth of credit counseling 1990s — Credit as a major marketing tool across industries; major stock market gains; longest peace time expansion
September 11, 2001 — Terrorist attacks on the World Trade Center, the Pentagon, and Pennsylvania led to major stock market losses. Threats of further terrorism continue to influence the financial markets. The latter part of the first decade was marked by a significant economic recession that resulted in failed banks, foreclosures, and high unemployment.
It is important for consumers to seek reliable financial info to assist them in making financial choices anddecisions.Financial info is available from a variety of sources, not all of which are reliable.
Data may be gathered from print, electronic, and verbal sources such as newspaper financial pages Internet sources investor services and newsletters financial magazines brokers banks credit unions financial advisors annual reports.
Financial data must be evaluated for reliability: Some information sources have an incentive to sell a product. Statistical data can be misrepresented, for example, to imply cause and effect. Some information sources are opinion programs, and others are news programs. Some advisors are more skilled than others. Past performance is no guarantee of future performance. It is the consumer’s responsibility to determine the reliability of the information.