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					Chapter 4


                     Managing Your
                    Cash and Savings




 FIN 100, The University of Alabama in Huntsville, Dorla Evans
                                                                 1
Liquid Assets
     Cash
     Checking Account
     Savings Account
     Money Market Deposit Account
     Money Market Mutual Fund
     Certificate of Deposit
     U.S. Treasury Bill
     U.S. Savings Bonds (EE)

                                     2
Fading Cash*
  100%                         In 2003 v 1999:
   90%               Debit
                                   Cash 32% v 39%
   80%
   70%               Credit        Check 15% v 18%
                     Card
   60%
                     Other         C Card 21% v 22%
   50%
   40%                             Debit 31% v 21%
                     Check
   30%
   20%
   10%
                     Cash
                               Cash and checks
    0%                          down
         1999 2003


*WSJ 7/23/04
                                                       3
Statistics on Plastic Usage
Households with        1970           Today
cards                  16%             73%
Amount bought          1994            2003
with cards          $724 Billion   $2.2 Trillion
Avg # cards per        1971            2003
household               0.6             7.8
Merchants              1971           Today
accepting cards       820,000       5.3 Million
Solicitations for      2002           2003
cards               811 Million    1.27 Billion

                                                   4
More Plastic Statistics
  GDP paid with cards                20%

  $ processed by Visa per second     $32,000

  Card solicitations expected 2004   4.9 Billion

  Avg amount spent on cards
      per household in 2003           $15,066




                                                    5
Institutions

    Commercial Banks
    Savings and Loan Associations
    Savings Banks
    Credit Unions
    Internet Bank
    Brokerage Firms
    Mutual Funds

                                     6
Banks are Watching*
  Banks can check your credit rating,
   insurance payments, loan applications, and
   credit usage daily
       Raise/lower rates on credit cards
       Raise/lower credit limits on credit cards
       Cut-off credit card day after bankruptcy
       Counter-offer rival mortgage offer


  Congress investigating

*WSJ 7/22/03
                                                    7
Bank Mergers -- Better Deals?*
   Bigger banks compete for consumer
    business
      7-days-per-week banking
      Free on-line banking
      Higher CD rates
   Only in competitive markets
   Purpose to sell more mortgages, car
    loans, home equity lines, annuities

  *WSJ 10/28/03
                                          8
Set-up Savings Plan – NOW!
                Pay yourself first!
                Automatic savings
                 plans
                Save
                  Tax returns
                  Pay raises
                  Money gifts
                Pay off debts


                                       9
Balance Your Checkbook!




   Balance on ATM statements not good enough!

                                                10
Questions?




 FIN 100, The University of Alabama in Huntsville, Dorla Evans
                                                                 11

				
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