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Financial Literacy 101 for Teens. Presented by Michael A. Goldberg, BComm, BEd October/November 2010. Opening a Bank Account & Debts & Credit Cards Tuesday October 26, 2010. Opening a Bank Account. Types Savings Chequing Which one’s for Me?. Opening a Bank Account Types. - PowerPoint PPT Presentation
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Money 101M.A. Goldberg, October/November 2010 $101
Financial Literacy 101 for Teens
Presented by
Michael A. Goldberg, BComm, BEd
October/November 2010
Money 101M.A. Goldberg, October/November 2010 $101
Opening a Bank Account&
Debts & Credit Cards
Tuesday October 26, 2010
Money 101M.A. Goldberg, October/November 2010 $101
Opening a Bank Account
1. Types2. Savings3. Chequing4. Which one’s for Me?
Money 101M.A. Goldberg, October/November 2010 $101
Opening a Bank AccountTypes
Savings vs. Chequing
Money 101M.A. Goldberg, October/November 2010 $101
Opening a Bank AccountSavings Account
What is it?• A safe place to keep your money in a bank,
trust company, credit union or caisse populaire
• Banks pay interest• Percentage based on the balance of your
account.
What does Percent mean?
Money 101M.A. Goldberg, October/November 2010 $101
What does Percent mean?
Per Centout of/
divided by100
%
Money 101M.A. Goldberg, October/November 2010 $101
Opening a Bank AccountSavings Account
Advantages of savings accounts:• Good for emergencies• Good if you’re not comfortable with investing• Convenient – can use a debit card for deposits
(putting-in) or withdrawals (taking-out)• No risk of losing your money
• Deposits in Canada are protected by the CIDC (Canadian Deposit Insurance Corporation)• Insures up to $100,000/institution
Image Source: (http://www.cdic.ca/Protecting_Your_Deposits.html, October 23, 2010)
Money 101M.A. Goldberg, October/November 2010 $101
Opening a Bank AccountChequing Account
What is it?• Chequing accounts are a safe place to
keep money that you plan to use over the next month or so for bill payments and buying things
• A chequing account is for money you plan to use soon
Money 101M.A. Goldberg, October/November 2010 $101
Opening a Bank AccountChequing Account
Similar to Savings accounts?• Chequing accounts are a safe, covered by the
CDIC
Differences?– Used for different reasons (bill payments, etc.)– Pays less interest – Can cost more in fees
• Cheques• Transaction charges• Service charges• Minimum balance charges• NSF (non-sufficient funds) charges
Money 101M.A. Goldberg, October/November 2010 $101
Opening a Bank AccountChequing Account
Risks?1. Low return (you’ll earn little interest)2. High costs (be aware of fees charged)3. Bounced cheques (can be costly)
Money 101M.A. Goldberg, October/November 2010 $101
Which One’s for Me?
Depends on the purpose of having an account
– Save money?– Pay bills?– Internet banking/access? – Debit card needed?
– Whatever you use the bank for, make sure you minimize any charges!!!
Money 101M.A. Goldberg, October/November 2010 $101
Who can get an account/what’s needed?
• Anyone can have an account• If you’re under 18, you need a
parent/guardian to help you sign-up• When you get your account, you will
need to provide identification
Money 101M.A. Goldberg, October/November 2010 $101
High Interest Savings Accounts
• This should be considered• Lately, some high interest savings
accounts are paying 2% interest/year• Examples – President’s Choice
Financial, ING Direct, ICICI
Money 101M.A. Goldberg, October/November 2010 $101
Debts & Credit Cards
1. Why do People Borrow Money?2. Why you should Avoid Borrowing
Money3. Credit Ratings4. Types of Debt5. Credit Cards
Money 101M.A. Goldberg, October/November 2010 $101
Debts & Credit Cards
Why do People Borrow Money?– Large purchases they couldn’t
otherwise afford, like…• House• Car• Education (after high school)• Start a business• Emergency• Pay off another debt, but at a lower
interest rate
Money 101M.A. Goldberg, October/November 2010 $101
Debts & Credit Cards
Why you should avoid borrowing money (using credit wisely)
• It can become a habit• You have to pay interest (takes money
away from other things you need)• If misused, it could damage your credit
rating
Money 101M.A. Goldberg, October/November 2010 $101
Debts & Credit Cards
Credit Rating• Your ability to repay you borrow is
scored• Your credit rating will have an effect on
how much or at what rate you may borrow in the future
• If your credit rating’s bad, you may not be able to borrow at all
• Once you start borrowing, you should check your credit rating every year (sometimes mistakes are made)
Money 101M.A. Goldberg, October/November 2010 $101
Debts & Credit Cards
Types of Debt– Credit Cards– Overdraft Protection (let’s your
chequing account go negative without bouncing checks – a big money maker for banks!)
– Loan– Mortgage (used to finance house)– Lease (like a long term rental)
Money 101M.A. Goldberg, October/November 2010 $101
Debts & Credit Cards
Credit Cards– Let’s you pay for things without money
(for now!)– Most are issued by banks
(Visa/Mastercard)Charge Cards
– Issued by particular stores– Avoid these, as their use is limited to
the one store– Charge higher interest rates than
regular credit cards
Money 101M.A. Goldberg, October/November 2010 $101
Debts & Credit CardsCredit Card Tips
– Pay credit cards off every month – once you carry a balance, you get charged interest (and it’s expensive debt)
– Ask the bank for a better/lower interest rate– Avoid cards with annual fees– Look for rewards associated with the card
(travel point, groceries, cash bonuses, etc.)– Shop around – lots of banks will eventually
offer you a credit card – find the lowest interest rate
– Only own ONE credit card
Money 101M.A. Goldberg, October/November 2010 $101
Debts & Credit Cards
APR– Annual Percentage Rate
• The interest rate you’ll pay, which is quoted on an annual basis
– Must be quoted/stated when you sign-up for credit
– Always try to figure out “What will this cost me per year?”
18%???
Money 101M.A. Goldberg, October/November 2010 $101
Resources
cdic.ca (Canada Deposit Insurance Corporation)getsmarteraboutmoney.ca (Investor Education
Fund)http://www.getsmarteraboutmoney.ca/education-
programs/Documents/2008_fm_10_creditreport.pdf (Additional information on Credit Reports)
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