2. What will you learn today
• An introduction to common terms and concepts
you will come across
• Basic accounts with common features
• What to think about when picking an account or
institution
• Additional resources
3. Why should you bank?
• Protect your money
• Earn money by way of interest
• Save and manage your money for a better future
• Get a line of credit, mortgage, or a business loan
4. Bank
• A financial institution that handles money,
including keeping it for saving or commercial
purposes, and exchanging, investing, and
supplying it for loans
5. Credit Union
• A non-profit financial institution that is owned
and operated entirely by its members
• Provides financial services for their members,
including savings and lending
• When a person deposits money in a credit union
the deposit is considered partial ownership in
that credit union
• Many have membership eligibility requirements
6. Savings Institution
• A financial institution that accepts deposits from
individuals, makes homes mortgage loans, and
pays dividends
7. Web Only banks
• No Brick and Mortar/ATMs
â–« No tellers just customer service
• Offers many of the same services and products
as traditional banks
• Generally offer higher interest rates and
different financial products
8.
9. Deposits and Withdrawals
• Deposits
â–« When you put money into an account
ď‚– Includes cash, check, direct deposit from employers
ď‚– Cash is immediate
ď‚– Checks can take several days to clear
• Withdrawal
â–« To take money out of an account
ď‚– Includes withdrawals from ATM or teller, debit card
purchases, checks you write, or online bill payments
ď‚– Does not include credit card purchases
10. Transfers
• Can be automatic
• Online, mobile, ATM, at the bank
• International remittance (global remittance)
â–« Allows you to transfer money to family members
in other countries
â–« Not all institutions do this
• Not all transfers count as deposits or
withdrawals
11. Balances
• Balance
â–« The amount of money in your account
• Available Balance
â–« The amount of money in your account that you have
access to (i.e. after waiting for a check to clear)
• Minimum Balance
▫ The amount of money you’re required to keep in an
account to avoid fees or to keep the account open
12. Overdrawing your account
• Means you took out more money than you have
in the in that account
â–« Checks can bounce
â–« Debit purchases can be denied
• Good banking habits will prevent this
• Overdraft fees can be costly
13. What is interest?
• The amount of money paid by a borrower to a
lender in exchange for the use of the lender’s
money for a certain period of time.
• Examples
â–« You earn interest from a bank if you have a
savings account
â–« You pay interest to a lender if you have a loan
• Interest you earn is taxable income
14. Types of Interest
• Simple interest
â–« Earn interest on the principal (the amount of
money you originally deposited)
• Compound interest
â–« Interest not only on your original deposit plus the
interest your deposit has earned over time
• APY (Annual Percentage Yield)
â–« The rate of return on an investment for a one year
period
15.
16. Checking Account
• An account that allows a customer to deposit
and withdraw money and to write checks
• Checking accounts allow you to
â–« Deposit your paycheck
â–« Pay bills
â–« Withdraw money to spend later
â–« Earn interest (not all institutions offer this)
• Can be linked to a debit or ATM card
17. Savings Account
• A bank account that allows a customer to deposit
and withdraw money and earn interest on the
balance
• May require a minimum balance
• Can be linked to a Debit or ATM card
18. ATM cards Vs. Debit Cards
ATM Cards Debit Cards
• Can be used to operate ATM,
withdraw money, and access
account
• Can be used to make in-store
purchases if used at a
merchant that uses one of the
networks listed on the back of
your card
• Can be used to operate ATM,
withdraw money and access
account
• Has a Visa or MasterCard logo
on the front and is accepted
where Visa/MasterCard are
accepted
• Can be used to purchase
items/services in-store and
online
19. Credit Cards vs. Debit Cards
Credit Card Debit Card
• You are borrowing money and
need to pay it back
• Paying your credit card bills
on time can build good credit
• Can be used online/in store in
place of cash or checks
• Safer to use online
• Deducts directly from bank
account
• Does not build your credit
history
• Can be used in an ATM
• Can be used online/in-store in
place of cash or checks
20. Money Market Accounts (MMA)
• Pays interest like a regular savings account—
generally higher interest
• May require a higher minimum balance
• Has checks you can use to make withdrawals
â–« restrictions on the number of withdrawals made
by check
21. Certificate of Deposit (CDs)
• Requires that money stay in an account for a
fixed period of time called a “term”
â–« i.e. a few months to five or more years
• Interest earned is generally higher than on a
regular savings or money market account
• If money is withdrawn before the end of the
term, penalties could be applied
22. Good Banking Habits
• Write all of your checks, withdrawals, deposits, and
transfers in your register for each account
â–« That includes your debit card purchases too
• Verify the activity with your monthly statements
• Sign all of your cards once you get them
• Keep bank customer service numbers on file
• Report stolen/lost cards immediately
23. Will my money be safe?
• Banks and Savings Institutions are insured by the
FDIC up to $250,000
• Credit Unions are insured by NCUA up to $250,000
• FDIC and NCUA Insure:
â–« Checking accounts
â–« Savings accounts
â–« CDs
â–« Money market accounts
▫ IRA’s and NOW accounts
• FDIC and NCUA do not insure:
â–« Safety deposit boxes
â–« Money Market Mutual funds
â–« Stocks, bonds, mutual funds
â–« Insurance products or investments
â–« Anything that is not a deposit
24.
25. Picking an Institution
• Are the products this institution offers
FDIC/NCUA backed?
• Is it convenient?
â–« Locations?
â–« Hours?
â–« Services?
• Is the staff friendly and helpful?
• Do they offer other products or services you are
interested in?
26. What fees can I expect?
• Check with the financial institution about what
kinds of fees they or their products have
• This list is not exhaustive:
▫ ATM withdrawals from “out of network” ATMs
â–« Mailed statements
â–« Not making minimum monthly deposits
â–« Too many or not enough withdrawals
â–« Too many transfers
â–« Not maintaining the minimum balance
â–« Maintenance fees
27. Other services:
• Investing resources (not FDIC/NCUA insured)
▫ Annuities, bonds, mutual funds…
• Online banking
• Mobile banking
• Home loans
• Business loans
• Lines of credit
28. Solid Advice
• Don’t sign something you don’t understand
• Always ask for clarification
• Always get written copies and take them home
• Have someone you trust go with you to the bank
and review paperwork with you
29. Things you’ll need to open an account
• Two forms of Identification
â–« Ask your bank which forms they accept
â–« Common types:
 State ID or Driver’s License
ď‚– Alien Registration card
ď‚– Passport
ď‚– US military ID
• Money
â–« Ask if there is a minimum deposit
30. Online Banking Safety Tips
• Use secure WiFi and your own computer
• Make sure your browser and virus protection
software are up to date
• Don’t share your password and change it often
• Make sure you have a secure connection
â–« Look for the https:// and the security certificate
31. Things you can do with banking online
• Services vary by institution
• Set up new accounts
• Transfer money to other accounts or other
people
• Set up automatic transfers to your savings or
other accounts
• Pay bills or credit cards
• View statements and more…!
32. What if my bank is having problems?
• Read the news
• Massachusetts Division of Banks
• Your money will be insured up to the
NCUA/FDIC will protect you up to their limits
even if your bank fails
33. What can I use to bank better?
• Bank Rate Monitor or Bankrate.com
â–« Articles, bank rates, tips and more
• Mycreditunion.gov
â–« Find an NCUA insured CU and if your assets are
covered
• fdic.gov and Edie
â–« Find FDIC insured institution and if your assets
are covered
• handsonbanking.org
â–« Tutorials and lessons about banking for all ages