Banking

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					Banking
Managing Cash Needs
 Choices of Services depends on:
   your personal daily cash needs
  Savings goals
 Daily Cash needs
  Lunch, fuel, entertainment, routine activities
      Cash, check, credit cards…..
 Consider long-term financial goals when making
  daily purchases, so that way you are prepared.
  Long-term Plans may have to be delayed
  because of short term buying decisions
Banks Financial Services

3 Main Categories
  Savings
  Payment services
  Borrowing
                               FINANCIAL SERVICES
                               Financial Services for Short Term Needs

Daily purchases (food, transportation)
Living Expenses (utilities, housing)
Emergency Fund (Savings)

          Cash                       Savings                     Checking                    Credit Cards
Currency                      Regular – basic %      Regular
                                                                                         Are not an option
ATM                           Money Market Account   Online payments
                                                       Auto Pre authorized pmts
                                                                                         for daily needs
Cash a check
Pre-paid card                                         Pmts by phone
                                                       Cashier’s Check
                                                       Money Order
                                                       Debit Card/ Visa check Cards


              Financial Services for Long-Term Needs
Major Purchases (car, house, student loans)
Long – Term Financial Security
        Savings                  Credit Services          Investment Services            Other Services
Certificate of Deposit (CD)   Cash Loans: cars,        Mutual Funds                 Tax Preparation
U.S. Savings Bonds            education                 Financial Advice             Insurance
                               Home Loans                                             Budgeting
1. Savings

Safe storage of funds for future use
  Money left for a length of time, is called a “time
   deposit” you want it to earn a big amount
Having a savings account is essential for
 any personal finance plan
2. Payment Services

Transferring money from a personal account
  to a business, for fees, services, or goods.
Checking account
Visa card
Debit card

**Expect your money to be there, in order to
  use it. (demand deposit)
3. Borrowing

Using “Credit”
Use someone else's money to purchase
 something. For using their money: you will
 pay back the original amount, plus some
 (interest).
Credit card
Loans
Banks Offer Other Services

Insurance Protection
Investment options (stocks, bonds, mutual
 funds)
Income tax assistance
Financial Planning Services
Electronic Banking

Convenient for customers to:
  Manage
  Operate
  Apply
  Check status
Security is an issue. Customers want to
 make sure that their information is safe.
Electronic Services

Direct Deposit
Automatic Payments
ATMs
Debit Cards
Plastic Payments
Types of Financial Institutions
                                       Deposit Institutions
FDIC – Federal Deposit Insurance          Commercial Bank
   Corporation                                   •   For- profit organization
                                                 •   Individuals and businesses
          Protects deposits up to                •   Charter, license, grant to operate
   $100,000
SAIF – Savings Association Insurance
                                          Savings and Loan Assoc.
                                                 •   Savings accounts
   Fund                                          •   Mortgages
          Protects Savings and Loans             •   Svcs. like a commercial
   Institutions                                  •   Charter to operate
NCUA - Credit Unions                      Mutual Savings Bank
          Protects Credit Unions                 •   Savings accounts
                                                 •   Mortgages
                                                 •   Lower interest rates
                                          Credit Union
                                                 •   Full Range of services
                                                 •   Non-profit organization
                                                 •   Owned by its members
                                                 •   Fees are lower
                                                 •   Low interest rates on loans
                                                 •   High interest rates on accounts
Non-Deposit Institutions

Life Insurance Company
Investment Companies
Finance Companies
Mortgage Companies
Comparing Financial Institutions

1. Where can I get the best Interest rate?
2. Where can I get the best checking
   account?
3. Can I borrow money?
4. Financial Advice
5. Is the Institution insured?
6. Convenience
7. Online Banking Services
8. Special needs
 Savings Plans
      and
Payment Methods
Types of Savings Plans

Regular Savings Account
Certificates of Deposit
Money Market Accounts
U.S. Savings Bonds
                      Savings Alternatives

  Types of Accounts               Benefits                         Drawbacks

                       Low minimum balance               Low rate of return
Regular Savings        Ease of Withdrawal
Account                Insured

                       Guaranteed rate of return for     Possible penalty for early
Certificates of        time of CD                         withdrawal
Deposit (CDs)          Insured                           Minimum deposit


                       Good rate of return               Minimum balance
Money Market           Some check writing                No interest and possible service
Accounts               Insured                           charge if below a certain balance


                       Low minimum deposit               Lower rate of return when
U.S. Savings Bonds     Guaranteed by the government      cashed in before bond reaches
                                                          maturity date
                       Free from state and local taxes
Evaluate Savings Plans
Rate of Return
  Total interest earned / Original deposit = rate of
   return
  Compounding
  Truth in Savings
Inflation
Tax Considerations
Liquidity
Restrictions and Fees
Types of Checking Accounts
3 Main Categories
 Regular
   Usually no minimum balance
   Low fee (some banks will waiver)
 Activity
   Few checks
   Fee for each check
   Service charge
 Interest-earning
   Combine checking and savings
   Pay you interest if you maintain a certain balance
Evaluating Checking Accounts

Weigh the following factors:
Restrictions
Fees and charges
Interest
Special services
Using a Checking Account
 Opening a Checking Account
   Decide individual or joint account
   Sign a signature card
   Make opening deposit
   Order checks, card, etc.
 Writing Checks
  1.   Write the current date
  2.   Write the payee
  3.   Record numerals for the amount
  4.   Record amount in words
  5.   Sign the check
  6.   Record amt, #, and payee in check register
  7.   Calculate new balance
How do Banks make Money?

By making loans to customers.



But can only do that based on how much
 money is deposited and left in the bank

				
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