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                                          HANDOUT


                                          BAN*ING

                                          10 TH GRADE
                                                                       Name: ________________________

                                                                       Advisor: """"""""""""""""""""""



WHY USE A BANK?

People use banks for two reasons: to !"#$ &'($) and to *'++', &'($).


SAVING MONEY

Banks, credit unions, and other financial institutions give people a convenient place to save their money.
Even better, banks -") )'. /(0$+$!0 for the privilege of using your money. Here are ways to save money:

    !   12$34/(567$*/0 "33'.(0!8 People store money they need every day in their checking accounts.
        They get the money back by writing checks or using a debit card. Banks usually don’t pay much
        interest on these accounts because the money comes and goes so frequently. With a checking
        account or debit card, you usually can’t spend more than you have in your account.

    !   9"#/(5! "33'.(0!8 Savings accounts are for money you don’t need immediately. Most people
        keep a savings account to store money for emergencies and earn a little interest until they need
        the money.

    !   :'(5$+;0$+& !"#/(5!8 Banks usually offer many other tools (such as certificates of deposit or
        money market accounts) for money their customers won’t need for six months, a year, or longer.
        In return for getting to use this money for a longer time, banks offer higher interest rates on these
        accounts.

    !   <$0/+$&$(0 !"#/(5!8 Many banks also offer people a way to save for retirement through
        Individual Retirement Accounts or other tools. These accounts may offer a guaranteed interest
        rate or may be risky, depending on how you choose to invest your money.

    !   =(#$!0&$(0!8 Some banks also offer other investment services, usually ways of investing your
        money in the stock market to attempt to make more money. These accounts are not guaranteed; if
        the business or stock you invest in fails, you lose money; if it succeeds, you earn money.



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BORROWING MONEY

Banks, credit unions, and other financial institutions also allow people to borrow money. Banks require
that )'. -") /(0$+$!0 for the privilege of using their money. Here are ways to borrow:

    !   1+$7/0 3"+7!8 People use credit cards for purchases they make every day. You can repay your
        credit card bill in full each month, and not owe the bank any interest; or you can repay it a little at
        a time (essentially borrowing the money you owe from the bank, usually at a very high interest
        rate).

    !   >$+!'("? ?'"(@ 3"+ ?'"(@ '+ 2'&$ $A./0) ?'"(8 Sometimes you need money for a larger
        purchase, such as a new car or a home improvement project. In that case, you can get a loan from
        the bank. Banks typically require their customers to offer them “collateral,” or something the
        bank can claim if you don’t repay the loan. The collateral could be your car, in the case of a car
        loan; or your home, in the case of a home equity loan. With a loan of this type, the bank sets a
        repayment schedule that includes interest.

    !   B'+05"5$8 Banks also offer larger loans, called mortgages, for people who are buying a home.
        With a mortgage, your home is the collateral for the loan, and the repayment term is usually quite
        long: 15 to 40 years. As with a smaller loan, the bank sets up a repayment schedule that includes
        interest. Although the interest rate may not be very high, the amount of interest you actually pay
        is quite high because of the very long length of the loan.


BALANCING A CHECKBOOK

If you write checks or use a debit card, you cannot spend more money than you have in your account. If
you do, your debit card will not work, or you will be charged large “overdraft” fees.

How do you keep track of the money in your checking account so that you don’t get into trouble? It’s a
simple matter of addition and subtraction. You just have to stay organized.

Why don’t you try it? Imagine you have a checking account and use both checks and a debit card. Here
are your transactions for the last half of January. Enter them into the “checkbook” on the next page:

    !   Your beginning balance is W150.
    !   On January 15th, you write check Y1150 to your school for W10 for two tickets to movie night.
    !   On January 16th, your neighbors pay you W[5 for dogsitting.
    !   On January 1[th, you use your debit card to pay W\0 for a new pair of shoes.
    !   On January 1[th, you use your debit card to pay W10 for your monthly music subscription.
    !   On January 20th, your parents pay you W20 in allowance.
    !   On January 25th, you write check Y1151 to your school for W10 for a ticket to the school play.
    !   On January 2\th, you use your debit card to pay W15 for a movie ticket and popcorn.
    !   On January 29th, your parents pay you W20 in allowance.
    !   On January 30th, you use your debit card for W25 for dinner with your friends.




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SAMPLE CHECKBOOK

Complete the checkbook below using the transactions listed on the previous page. The first several entries
have been made for you:

                                                            E-G            EHG
 CIeJK or     DaLe       DesJriMLioN oO TraNsaJLioN     AmoPNL oO       AmoPNL oO    BALANCE
 ReJeiML Q                                              WiLIdraRaS       DeMosiL
                                                                                        #1%0.00
     11%0     1%-)an   School movie night (2 tickets)        #10.00                     #140.00
              1=-)an   Payment for dogsitting                               #C%.00      #21%.00




What is your checkbook balance on January 30th after your dinner with your friends? Do you still have
money in your account?




BANKING HANDOUT: GRADE 10 -FEBRUAR:                                                                     3

								
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