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How to use a financial institution Latino Community Credit Union 2
HOW TO USE A FINANCIAL
INSTITUTION
LATINO COMMUNITY CREDIT UNION & LATINO COMMUNITY DEVELOPMENT CENTER
Copyright©2011 Latino Community Credit Union
How to use a financial institution Latino Community Credit Union 3
TABLE OF CONTENTS
INTRODUCTION 4 WHY SHOULD I USE A FINANCIAL INSTITUTION? 5 CREDIT UNIONS VS. BANKS 6 WHAT DO I NEED TO OPEN AN ACCOUNT? 7
GENERAL DOCUMENTS 7 INDIVIDUAL TAX IDENTIFICATION NUMBER (ITIN) 7 HOW CAN I APPLY FOR THE ITIN? 7
WHAT QUESTIONS SHOULD I ASK? 8 HOW DO I USE MY CHECKING ACCOUNT? 9
WRITE A CHECK 9 DEPOSIT A CHECK 9 ENDORSE A CHECK 10 BALANCING MY CHECKBOOK 10 DEBIT CARD 11 OVERDRAFT PROTECTION 13 DIRECT DEPOSIT 14
HOW CAN I ACCESS MY ACCOUNTS? 16
PHONE 16 INTERNET 16 ATM 17
MYTH BUSTERS 18
How to use a financial institution Latino Community Credit Union 4
In this chapter, we will learn how to begin working with a financial institution. You may wonder if
you should keep your money at home instead of a financial institution. We will discuss why financial
institutions are the safest option.
Using a financial institution offers you a safe place to save and grow your money. In the United
States, financial institutions offer many important services including savings accounts, checking
accounts and loans. It is important to know how they work to find the best services for you.
INTRODUCTION
DISCUSSION TOPIC
If I am an immigrant, is my money safer here or in my home country?
Your money is safest in a reliable financial institution, whether here or in
your home country, where it is federally insured and you can access it
easily. A financial institution allows you to manage and grow your
money.
How to use a financial institution Latino Community Credit Union 5
The interest rate is written as a percentage (%) of your money or your loan. Interest works in two ways. First, if you deposit your money in an account, you can earn interest. To earn interest means that your financial institution pays you to keep money in your account. Second, if you borrow money (a car loan, for example), you will have to pay interest.
I AM SAFE
If you keep your money under the mattress or carry a lot of cash in your pocket, you could lose
your money or be robbed. It is much safer for you and your family to keep your money in a
financial institution.
MY MONEY IS SAFE
The money you save in your credit union or bank is insured by the federal government up to
$250,000. This means that you cannot lose your money, even if the financial institution closes.
An account in a financial institution is the safest way to save your money for the future.
MY MONEY CAN GROW
Saving money with my financial institution will allow my money to grow over time to help reach
my goals. Financial institutions offer different types of accounts with a variety of terms, fees,
and interest rates.
You can save money since financial institutions are typically much less expensive than using
check cashers or payday lenders. You will also be able to access credit when you create a
relationship with a financial institution. This means that you can buy things now and pay for
them later. When you manage your credit well, you can build a strong credit history. This will
allow you to make important purchases, such as a home, to build wealth for yourself and your
family.
WHY SHOULD I USE A FINANCIAL INSTITUTION?
How to use a financial institution Latino Community Credit Union 6
Banks and credit unions are both regulated by the federal government. This means that your deposits are insured up to $250,000.
In the United States, there are various types of financial institutions. Two of the main types of
financial institutions are credit unions and banks. Both of them offer similar types of services and a
safe place to save your money. But, different financial institutions offer varying interest rates and
fees.
CREDIT UNIONS: are non-profit financial institutions.
exist to serve their members and work for the benefit of the community.
use the money the organization makes to provide more benefits to their members, such as
lower fees and better interest rates.
CREDIT UNION MEMBERS: have something in common, such as an employer, association, or community. They must
join the credit union to use its services.
obtain a share of the credit union by opening a savings account and become owners of the
organization.
participate in a democratic process to elect leaders of the organization who are part of the
board of directors.
CREDIT UNIONS VS. BANKS
How to use a financial institution Latino Community Credit Union 7
GENERAL DOCUMENTS
Each financial institution may request different types of documentation. Here are some examples:
THE INDIVIDUAL TAX IDENTIFICATION NUMBER (ITIN)
The Individual Tax Identification Number (ITIN) is a number that the Internal Revenue Service (IRS) issues to people who cannot get a valid social security number so that they can file their taxes. With this number, you can file your taxes, receive interest on your bank accounts, start a credit history, or apply for a loan with some financial institutions.
HOW CAN I APPLY FOR THE ITIN?
Go to your local Internal Revenue Service (IRS) office and get the form W-7 with the corresponding instructions. You can complete the application yourself or ask for help from your local non-profit organizations. Usually your financial institution or local community center can help you apply for this number.
WHAT DO I NEED TO OPEN AN ACCOUNT?
An ITIN or a Social
Security number
A driver’s license or
another form of
official
identification with
your photo and
your signature
A bill to verify
your address
A minimum deposit
of $10 for a savings
account
Be aware!
Do not pay a lot of money for someone to help you fill out your ITIN paperwork.
The ITIN is NOT a work permit.
How to use a financial institution Latino Community Credit Union 8
While each financial institution offers similar products and
services, their rates, fees, minimum balances and deposits
can vary. It is important to ask the right questions before
opening your account.
WHAT SHOULD I ASK WHEN I OPEN AN ACCOUNT?
ARE THERE ANY
FEES/CHARGES?
DOES THE
ACCOUNT EARN
INTEREST?
DO I NEED TO MANTAIN A MINIMUM BALANCE?
IS THERE A MINIMUM DEPOSIT?
You should ask how much interest the account earns. To earn interest means the financial institution pays you for keeping money in your account. All savings accounts should earn interest. There are different types of savings accounts with different interest rates. Some checking accounts earn interest too.
Sometimes you have
to pay a monthly
maintenance fee for
having an account.
Most checking
accounts have
monthly fees, but they
should be very low.
Some financial
institutions have no
monthly fee, but have
different types of fees
instead. For example,
you might have to pay
when you use the ATM
machines or visit the
teller.
Minimum balance is
the amount of money
that you need to have
in your account at all
times. Many financial
institutions charge
you a fee if your
balance goes below
the minimum
balance.
Minimum deposit is
the amount of
money you must
deposit to open an
account.
Be aware!
Fees and charges for account management, overdraft and ATM use might
change and can be very high. Be aware of new fees and penalties charged to
your account and compare.
How to use a financial institution Latino Community Credit Union 9
You can use a checking account to write checks, to pay bills, or to use a debit card to buy things in
stores.
WRITE A CHECK
Learn how to write a check:
DEPOSIT A CHECK
Learn how to deposit a check:
123 Miguel Rodríguez 111 Street Durham, NC 00011
111111111
HOW DO I USE MY CHECKING ACCOUNT?
Today’s
Date
*Name
person to
receive
cpayment
. *
Write today’s
date here.
Use numbers to
write the check
amount.
Name of person or
company who will
receive the money
Write the amount
in words
Note the purpose
of the check
Sign here
Check number
Write today’s date
here
Write your
name here
Indicate cash to be
deposited
Indicate here checks
to be deposited
Write here the amount
of each check to be
deposited
Total cash and
checks to deposit
Total cash you want
to receive
Subtotal minus
cash received
Write here your
account number
How to use a financial institution Latino Community Credit Union 10
If there is more than one owner of the account it is recommended that one person tracks the balance in the account using the check register in order to avoid NSF, overdraft and other unnecessary fees.
ENDORSE A CHECK
Sign your name on the back of the check where it says “ENDORSE HERE”. Remember, after your
check is endorsed it is the same as cash. So, wait until you cash your check to sign it, in case it is lost
or stolen.
BALANCING MY CHECKBOOK
1. Record and subtract all DEBITS - withdrawals using the ATM, debit card or other automatic payments deducted from your account, checks, and service fees.
2. Record and add up all CREDITS - deposits, including direct deposit or electronic funds transfers.
3. Calculate your BALANCE in your register - add your deposits and subtract your withdrawals.
Date Number Description of
transaction
Debit/Payment
(-)
Credit/Deposit
(+)
Balance
1/20/09 Previous balance 435.00 435.00
1/21/09 90 Groceries 42.35 392.65
1/2/09 91 Newspaper 17.61 375.04
1/22/09 92 Felipe Fuentes 25.80 349.24
1/23/09 Paycheck 300.00 649.24
Your check register helps you monitor the amount of money in your checking account. This will
help you to avoid fees for using more money than you have in your account. It is important to
record in your check register every checking account transaction.
END
OR
SE H
ERE
Do
no
t si
gn b
elo
w t
his
lin
e
Sign here
How to use a financial institution Latino Community Credit Union 11
PIN stands for “personal identification number.” This number is normally sent to your home by mail in a separate envelope when you apply for a debit card. You use this number to access your accounts at the ATM or make purchases with your debit card at stores. The PIN is a safety feature; it is like an electronic signature.
DEBIT CARD
When you open a checking account, you can request a debit
card. Debit cards can be used to make purchases almost
anywhere. You can also use a debit card to withdraw money
from the ATM. In most cases you will need to enter a
Personal Identification Number (PIN) that your financial
institution will provide you. When you use your debit card, it
takes money directly from your checking account to make
the payment. It acts like a check, but faster.
ADVANTAGES
DISADVANTAGES
You do not need to carry cash.
If your purse or wallet is lost or stolen
your money is safe since a PIN number is
required to access your funds.
You do not need to visit your financial
institution every time you need cash.
You can use your card just about
anywhere you go and if you need cash,
you can access your money at an ATM
machine any time.
If you do not use your check register to
track the money in your account, you
could spend more than you have.
Your debit card provides direct access to
your checking account. So, be sure to
protect your Personal Identification Number
(PIN) and debit card number. Do not carry
your PIN with your card and do not allow
anyone to watch you enter your PIN at the
ATM.
YOUR PIN IS PERSONAL, DO NOT SHARE IT
WITH ANYONE!
BE AWARE!
If your card is lost or stolen or you detect any fraudulent use, contact your financial institution
immediately. In some cases, such as online purchases, credit cards have more protection than debit
cards in case of fraud.
How to use a financial institution Latino Community Credit Union 12
ATM CARD, DEBIT CARD AND CREDIT CARD ATM card Debit card Credit card
To obtain it you need to have: A savings account A checking account Any account, but your
application needs to be
approved first.
Can I withdraw money from
the ATM?
Yes Yes Yes
Do I need a PIN to use the
ATM?
Yes Yes Yes. It is possible you will be
charged more interest for a
cash advance.
Can I use it for purchases? No Yes Yes
Do I need a PIN to make
purchases?
You cannot make
purchases
Yes No. You only need to sign the
receipt.
When you use your card to
withdraw money or make
purchases, the money …
… is withdrawn
immediately from
your account.
… is withdrawn
immediately from
your account.
…is borrowed from your
financial institution and you pay
it back the following month.
Limit you can spend The amount in your
account.
The amount in your
account.
Credit limit previously
approved.
It is very important to understand that the amount you have in your account determines the
maximum amount you can spend. If you spend more than you have in your account, you will be
charged a Non-Sufficient Funds (NSF) fee.
To avoid spending more than you actually have, it is important to keep a record of your expenses,
writing each transaction in your check register and carefully checking the transactions in your
printed or online monthly statement.
The amount in your checking account =
The limit you can spend on your debit card
How to use a financial institution Latino Community Credit Union 13
It is good to have overdraft protection, but you should try not to use it. You should always know how much money you have in your checking account. Do not withdraw or write checks or make purchases for more than that amount.
If you do not manage your accounts carefully, they could be closed and it could be difficult to open an account in another financial institution.
OVERDRAFT PROTECTION
Overdraft protection helps you if you spend more money than you have available in your checking
account. There are two types of overdraft protection:
One type takes money from your savings account and puts it into your checking account.
The other type gives you a small loan to pay the check.
While overdraft is less expensive than incurring non-sufficient funds fees, there is still typically a fee
for overdraft protection and a maximum number of transfers that can be made each month from
your savings to your checking account to fund overdrafts. These restrictions and fees vary by
financial institution.
SAVINGS ACCOUNT
CHECKING ACCOUNT
FINANCIAL INSTITUTION
How to use a financial institution Latino Community Credit Union 14
DIRECT DEPOSIT
Direct deposit allows your employer to deposit your salary directly in your account. You receive a payment stub with all the information about your hours worked and salary. Your money is safe, you save time waiting in line to deposit your check, and your money begins to earn interest right away.
Direct deposit also allows you to receive your Social Security and other federal benefit payments.
You can sign up at http://www.godirect.org or calling 1-800-333-1795.
Ask your employer if
they offer direct
deposit.
Ask for a direct
deposit form from a
representative at your
financial institution and
give it to your employer.
If the answer is yes
Name and address of your
bank or credit union
Choose the account type where you
want your money to be deposited
Account in
which you
want your
money to
be
deposited
Number that
identifies your
bank or credit
union
Account #1 Account Type: □ Checking □ Savings □ Money Market
Bank Name: LATINO COMMUNITY CREDIT UNION_________________________________
Bank Address: 201 West Main Street _____ City, State, Zip: Durham, NC 27701________
Routing # (9 digits): _________________________ Account#: _________________________
Requested amount for this account:
□ % of Net Pay: _________ □ Specific Amount $____________ □ Entire Balance
Amount you want
to deposit in this
account
How to use a financial institution Latino Community Credit Union 15
ADVANTAGES OF DIRECT DEPOSIT
1. Your salary is available automatically and starts to generate interest immediately. Even if you are sick, on vacation, or traveling, you continue to receive your money automatically
2. It is convenient. You won’t miss going to the branch and waiting in a long line to deposit or cash a check.
3. Your money is safe. There is no risk of being robbed or losing your money.
4. It is a trustworthy service. Millions of people use this service in the United States. Payments always arrive on time and you can enjoy your money immediately.
5. It is confidential because there is not a printed check and thus no one can see what you earn. You will receive a check stub from the employer with the same information you receive in your regular check (how much you are paid and how many hours you worked).
6. Direct deposit can help you manage your finances and develop a habit of saving. You can decide to deposit your money directly into one account, or divide your salary into various accounts. This way, you can deposit a portion of your paycheck into your checking account and the remainder in one or more savings accounts.
7. Fewer problems. Problems with direct deposit are very infrequent. If a problem arises, you can call the financial institution and it can be fixed with a phone call. Normally, a problem with a lost or stolen check takes much longer to resolve.
8. It is better for the environment because electronic services save paper and this helps save our forests.
How to use a financial institution Latino Community Credit Union 16
Of course, at the branch your representative can help you with anything you need, but there are
other quicker and easier ways to do basic transactions such as check your balance and transfer
money between accounts. You can handle many types of transactions over the phone or mobile
phone, using the Internet or the ATM.
PHONE
Almost all financial institutions have a phone system that allows you to:
1. View your account balances.
2. Review your account transactions.
3. Transfer money between accounts.
4. Compare interest rates for deposits and loans.
5. Find the closest ATM.
6. Make a report of a lost or stolen card.
Ask your financial institution how to access your accounts by phone.
INTERNET
Through the internet you can access your accounts and make almost exactly
the same transactions as you would in your branch, except for withdrawing or
depositing checks or cash. You just need a computer with internet access and
your personal passwords.
MOBILE PHONE
Using your cell phone, you can check your balance, recent transactions and
more.
You can also receive alerts via text message when there is a deposit or
withdrawal in your account or when your balance is getting low.
HOW CAN I ACCESS MY ACCOUNTS?
How to use a financial institution Latino Community Credit Union 17
ATM
Automatic Teller Machines (ATM) give you access to your accounts 24 hours a day, 7 days a week. You can check your balance, deposit and withdraw money and transfer money between your accounts. To use the ATM, you need an ATM card or debit card and your PIN.
To withdraw money To deposit money Transfer money between accounts
1. Insert your card
2. Select a language
3. Type in your code or “PIN”
4. Press “withdraw cash”
5. Selecta an account
6. Type the amount to withdraw
7. Take the money, your card, and the
receipt
8. Document the amount you took out in
your check register
1. Take an envelope and complete the
part on the back with your name and
amount of your deposit
2. Insert your card
3. Select a language
4. Type in your code or “PIN”
5. Press “Deposit”
6. Selecta an account
7. Type the amount you are depositing
8. Put the money or the endorsed check
in the envelope
9. Insert your envelope
10. Take out your card and receipt
11. Document the amount in your check
register
1. Insert your card
2. Select a language
3. Type in your code or “PIN”
4. Press “Transfer”
5. Select an account from where the
money is transferred
6. Select an account to where the
money is transferred
7. Enter the amount to transfer
8. Take your card and the receipt
9. Document the transaction in your
check register
B
A
D
G
C
F
A = Card Slot
B = Menu Keys
C = Key Pad
D = Envelopes
E = Cash Withdrawal
F = Deposit Envelope
G = Receipt Slot
How to use a financial institution Latino Community Credit Union 18
It is more expensive to use a financial
institution than a check-cashing outlet or a
payday lender.
In fact, it is much less expensive to use a
financial institution. Ask the right
questions and look for a credit union or
bank that does not charge many fees.
Credit unions tend to offer the low fees
and better interest rates.
When you deposit money in a financial
institution you can be sure that your
money is safe. The federal government
insures individual deposits up to $250,000
at both banks and credit unions.
MYTH BUSTERS
My money might not be safe in a financial
institution.
I will not be able to access my money in a
credit union or bank.
You can access your money at any time in a
number of ways – at the branch, at an
ATM, by telephone, cell phone, or on the
internet.
What happens with my money if I have to
return to my country or if I die?
You can access your money using your
credit card or you can send your money
wherever you are. In the event that you
die, the beneficiaries designated in your
account would have access to the money in
the account.