Depository Institution Essentials - Teen Livingwahlen.weebly.com/uploads/9/2/4/7/9247949/depository_institutions… · of money Interest bearing accounts either charge the consumer

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Depository Institution Essentials – Slide 1

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona

7.2.2.G1

Depository Institution

Essentials

Advanced Level



7.2.2.G1

What is the name of a

depository institution in your

community? ?

What is a Depository Institution?

Depository Institutions

Are businesses which offer multiple services in banking and finance

Commercial Banks

Credit Unions

Savings & Loan

Investment Brokerages

Loan Agencies

Banks & Credit Unions are

the most common types of

depository institutions.



7.2.2.G1

Advantages and Disadvantages of

Using a Depository Institution

• May have to pay fees

• May have required

minimum balances

• Sharing financial

information

• Assists in managing

finances and reaching

financial goals

• Protection from loss

(insurance)

• Opportunity to earn

interest

Do you use a depository institution? ?



7.2.2.G1

Choosing a Depository Institution

Each institution offers different services,

interest rates, locations, and special

features

Individuals may choose to use one

depository institution (may have multiple

accounts) or multiple depository institutions

Services Offered by Depository Institutions

Savings Tools

Investment Tools

Credit Safe-

Deposit Boxes

Financial Counseling



7.2.2.G1

Types of Depository Institutions

Commercial Bank Credit Union

Description

Full service institutions- may offer

all of the services provided by

depository institutions

Non-profit cooperative

institution that is owned by the

members and often provides

more customer friendly interest

rates than commercial banks

Used by? Open to anyone who wants to

utilize a depository institution

Members must possess a

common bond

Type of

Insurance

Coverage

Federal Deposit Insurance

Corporation (FDIC)

National Credit Union

Administration (NCUA)

Insurance

Protects

Will restore the lost funds in

savings tool accounts up to

$250,000 per account

Will restore the lost funds in

savings tool accounts up to

$250,000 per account



7.2.2.G1

Services

Many services offered by depository

institutions are interest bearing

Interest - the price

of money

Interest bearing

accounts either

charge the consumer

interest for money

borrowed or earn

interest for the

consumer

Interest rate -

percentage rate used

annually to calculate

the total interest

either gained or lost

from an account

Look for high interest rates on interest-earning accounts

and low interest rates when borrowing money.



7.2.2.G1

Savings Tools

Savings tools are secure, easily accessible

accounts that assist in money management

May be interest or non-interest earning

As long as the depository institution is insured,

savings tools are insured against lost

Checking Accounts

Savings Accounts

Money Market Deposit Accounts

Certificate of

Deposits (CDs)



7.2.2.G1

Savings Tools

Checking Account

Used to transfer funds

deposited into the

account to make a cash

purchase

Interest or non-interest

earning

Savings Account

Hold money not spent

on current

consumption

Interest earning

At a credit union a checking account is known as a share draft

account and a savings account is known as a share account.



7.2.2.G1

Savings Tools

Money Market Deposit Account

Offers higher interest

rates than a savings

account

Have a minimum

balance requirement

Limited to a certain

number of transactions

each month

Certificate of Deposit

Interest earning

Restricted access to the

funds



7.2.2.G1

Credit

Credit is when goods, services, or money is

received in exchange for a promise to pay a

definite sum of money at a future date

Consumer is charged interest

Loans

Credit Cards

What might a person need a

loan to purchase? ?



7.2.2.G1

Other Services

Safe-Deposit Boxes

A secured box to store

valuable and important

personal items

Financial Counseling

Information and advice is

given to customers to help

them make financial

decisions

What services offered by depository

institutions would you use? ?



7.2.2.G1

Electronic Banking (E-Banking) Allows 24 hour access to move money electronically in a fast and paperless way

Depository Institution

Features

• Increased risk of fraud

and identity theft if

consumers are not

careful with their

personal information

• 24-hour access

• Fast transactions

• Paperless transactions

• Convenience

• Worldwide access



7.2.2.G1

E-Banking Safety

If a consumer

feels his or her

funds have been

accessed without

permission

Report the problem

immediately to the

depository

institution involved

To take full

advantage of

e-banking:

Keep personal

security as your

first priority

Know how to

protect your

personal

information



7.2.2.G1

Types of E-Banking

Will vary among depository institutions

Will vary between services and accounts at the same

depository institution

Debit

Cards ATM’s

Direct

Deposit &

Direct

Payment

Online

Banking



7.2.2.G1

Debit Card Safety Tips

Keep receipts and check statements carefully and

frequently for any unauthorized or incorrect charges

Sign the back of the card in the signature box with “Please see ID” in addition to a signature

Do not make a PIN number one that reveals a birth date,

social security number, address, or telephone number

Keep PIN numbers safe

If a debit card is lost, report it to the depository institution as

soon as possible



7.2.2.G1

Fraudulent Debit Card

Charges

If reported within 2 days, the consumer is

held responsible for no more than $50 in

fraudulent charges

If reported within 60 days, the consumer is

held responsible for no more than $500 in

fraudulent charges

After 60 days, the consumer is held liable for no more

than the amount of unauthorized transfers



7.2.2.G1

Direct Deposit &

Direct Payment

Direct Deposit Direct Payments

Allows paychecks and benefit checks

to be directly deposited into a

specified depository institution account

(savings or investment tools)

Authorize bills to be paid electronically

by a specified depository

institution account (savings or

investment tools)



7.2.2.G1

Online

Banking

Complete transactions with a depository institution from a personal computer (PC) or through other wireless technology (personal digital assistant (PDA) or cellular phone)

May access account information and statements, transfer funds, manage and pay bills, and apply for loans and mortgages

May be used for savings tools, investment tools, and credit accounts

Online banking is also

known as internet banking.



7.2.2.G1

Online Banking Safety Tips

The Uniform Resource Locator (URL) should end

with an “s,” https://www.yourbank.com. Or, have a closed pad lock in

the bottom right hand corner of the website

Do not authorize online bill paying through an

email account, go directly to the company’s website

Passwords should be combinations of letters, numbers, and characters

Change passwords at least once per month

Make sure to log out from online bill paying

sites immediately

Never enter an online banking site on a wireless

network away from home; use a wireless

network at home only if it is thoroughly protected

What features offered by depository

institutions would you use? ?

Documents

Depository Institution Essentials - Teen Livingwahlen.weebly.com/uploads/9/2/4/7/9247949/depository_institutions… · of money Interest bearing accounts either charge the consumer