Powerpoint TemplatesPage 1Powerpoint Templates Personal Finance 4.02 Understand services available from financial institutions and forms of payment for

Powerpoint Templates Page 1Powerpoint Templates

Personal Finance 4.02Understand services available from financial institutions and forms of

payment for purchases.

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Powerpoint Templates Page 2

Journal Entry

•Suppose you received or earned $1,000.

•Where would you put the money, and why?

•Have you had any interactions with financial institutions? If so, for what purpose?

•What methods do you use to pay for purchases?

• Which methods(s) do you prefer, and why?





Types of Financial Institutions Terms





• Commerical bank– A full-service financial institution that offers a variety

of services

• Saving and loan association– A financial institution that provides loans and

mortgages to customers who hold a saving account

• Credit union– A nonprofit financial cooperative owned by its

members





• Brokerage firm– A licensed institution that specializes in

investing.

• Insured financial institution– One that is insured---as by Federal Deposit

Insurance Corporation (FDIC), Savings Association Insurance Fund (SAIF), or National Credit Union Administration (NCUA) to protect deposits of clients





Traditional Services of Financial Institutions Terms





• Checking account– Paper checks or debit cards are used to withdraw

money deposited into the account to pay for items

• Savings account– Money is deposited into an account to earn interest

• Retirement plan account– A plan for saving money for retirement; money tax-

deferred until withdrawn





• Share account– A savings account at a credit union

• Share certificate account– A certificate of deposit at a credit union

• Share draft account– A checking account at a credit union





• Bond – An investment of money in a government or

organization

• Certificate of deposit– An insured interest-earning savings tool with

restricted access to funds

• Mutual fund– Groups of stocks, bonds, and other

investments managed by an investment firm





• Real estate investment– Purchasing properties as an investment to

gain profit

• Stock– Ownership, represented by shares, in a

corporation

• Credit card– A card used to make a purchases; must be

repaid later with interest





• Loan– Borrowed money

• Mortgage– A loan to purchase a home or other real

estate

• Financial counseling– Assistance to consumers with specific areas

of financial planning





• Safe-deposit box– A secured box in a bank used by clients for

valuable personal items





E-Banking Services of Financial Institutions Terms





• E-banking– Using computer networks to make electronic

funds transfers among accounts

• Access– The ability to obtain money from one’s

accounts quickly and easily

• Point-of-sale (POS) transfer– The place where a purchase is made and

money is electronically moved





• Personal Identification Number (PIN)– A unique number kept secured and used to

access an account and perform transactions

• Automated Teller Machine (ATM)– A computer terminal used to transact

business with a financial institution





• Direct deposit– Arrangement for electronically depositing

pay/benefits directly into an account

• Direct withdrawal– Arrangement for electronically withdrawing

funds from an account to pay bills

• Smart card– Card storing pre-paid amounts of money to

use when making purchases





Forms of Payment for Purchases Terms





• Currency– Paper money; bills

• Personal check– A hand-written document used to pay for

purchases using funds in a personal checking account





• Cashier’s check– A check bought from a bank with payment

guaranteed by the bank

• Certified check– A personal check with a bank’s guarantee of

payment

• Money order– A way for people with no checking account to

send money by mail





• Traveler’s check– A check used in place of cash when traveling

for greater security

• Debit card– A card used for point-of-sale transactions on a

checking account

• Credit card– A card used for payment through credit with

interest accruing





• Open-end credit– A credit arrangement where the amount of

money borrowed continues to change as payments are made and purchases are put on the credit card

• Closed-end credit– A credit arrangement where the amount of

money borrowed and the amount to be repaid per month are fixed at the time the installment loan is made





“Depository Institutions”





Introduction – Depository Institutions





• Consumers have the option to use a depository institution to manage their finances.

• However, approximately 10 million households in America choose to not use depository institutions.

• Consumers have indicated that primary reasons for making this choice include banking fees being too high, minimum balances required are too high, and they want to keep their financial information private.

• If consumers decide to use a depository institution, they will benefit the most by conducting research first.





• An important element in money management is choosing the correct depository institution to meet an individual’s needs.

• Depository institutions are businesses which offer multiple services in banking and finance.

• These institutions include commercial banks, savings and loans, and credit unions.

• The services customers receive may include savings and checking accounts, loans, investments, and financial counseling.

•Depository institutions are regulated by state and federal agencies.





• The Federal Reserve Bank is a part of the central banking system in the United States.

• A goal of each Federal Reserve Bank is to control the amount of money and credit available to the public.

• The Federal Reserve Banks occupy twelve regional locations in major cities throughout the United States.

• They provide essential services to depository institutions including collecting checks, electronically transferring funds, and distributing and receiving cash and coin.

•Additionally, the Federal Reserve Banks act as banks to the federal government by providing depository services to the United States Department of Treasury.





• There are many different depository institutions available to consumers.

• Each offers a variety of services to best meet an individual’s needs.





Commercial Banks

• are often called full service institutions because they offer a wide variety of services, including checking and savings accounts, loans, credit cards, investments, and financial counseling.

• They operate under state and federal laws and usually are the largest depository institutions.

Depository institutions are open to all individuals

within a community.





Credit unions

• are non-profit cooperative institutions that often charge lower fees and loan rates than other depository institutions.

• They are owned by their members. Government regulatory agencies require credit union members to possess a common bond such as people who live, work, or attend school in a well defined geographical area.

• Many credit unions offer financial counseling, credit cards, and mortgages.

» They often provide a higher interest rate on savings and checking accounts than

commercial banks. Credit union accounts offer unique services such as share drafts (checking accounts), and share certificate accounts (saving accounts).





Savings and loan associations (S&Ls)

• focus on providing loans and mortgages to customers as well as offering both savings accounts and checking accounts.

• Compared to commercial banks, the interest rates are often higher.





• A feature of depository institutions that consumers should be aware of is insurance.

• If the institution is insured, it will be posted in view for the customer to see.

• Depository institutions should be insured to protect consumers against loss.

• The risk of loss is a term that is used to determine which party should be responsible for damage, or loss of products after a service transaction has been completed but prior to delivery.

» Depository institutions are insured by one of the following:





• Federal Deposit Insurance Corporation (FDIC) is a federal government agency which insures federally chartered commercial banks and savings and loan associations against loss.

• Each depositor is insured up to at least $250,000 for money deposited in a regular account and up to $250,000 for qualified retirement deposits.

• Under the Federal Deposit Insurance Act of 2005, the former commercial bank insurance and savings and loan association insurance programs were merged under one program called the Deposit Insurance Fund.





• National Credit Union Administration (NCUA) provides insurance protection for credit unions.

• Each depositor is insured up to at least $250,000 on regular deposit accounts and up to $250,00 for retirement savings plans that qualify.





• Choosing one depository institution for all financial needs may have certain advantages, including lower interest rates for consumers who prove their loyalty by having multiple accounts with one depository institution.

• A variety of services are offered from an institution to consumers, making this a

relatively easy task to accomplish.





Common services offered by depository institutions:





• Checking Account (also known as a share draft account at a credit union)—Paper checks or debit cards that are used to withdraw money deposited into the account to pay for purchases of goods and services.

» They may be interest or non-interest bearing.





• Savings Account (also known as a share account at a credit union)—An account in which money normally is deposited to earn interest.

• They are interest earning.





Interest bearing accounts in which the consumer earns

interest offered by depository institutions:





• Stock—Ownership, represented by shares in a corporation.

• Certificate of Deposit (also known as a share certificate account at a credit union)—An insured interest earning savings instrument with restricted access to the funds.





• Money Market Account—An account which offers higher interest rates than a savings account and may offer limited check writing privileges.

• Bond—A debt instrument issued by an organization, such as a business or the government, designed as an investment for the purchaser to earn interest.





Interest bearing accounts in which the consumer is charged interest offered by depository

institutions:





• Credit Card—A card used to make a purchase now, with repayment made later without interest (if the balance is paid before the grace period ends) or requiring the payment of interest (if the balance is paid after the grace period ends).





• Loan—Money borrowed and paid back with interest. Loans can be a mortgage for a person to buy property, such as a home, or personal for items such as a vehicle or school.





Additional services which may be offered by depository institutions:





• Safe-Deposit Box—A secured box in a depository institution to be used for valuable and important personal items.

• Financial Counseling—Information and advice is given to customers to help them make financial

• decisions.





• When choosing a depository institution, consumers should keep in mind their personal needs and what an institution can do to meet them.

• They should visit several depository institutions to compare services and fees, and to select the best institution for their money management styles and goals.





Depository Institutions

View PowerPoint

Complete Worksheets





Worksheets

• Pages 7 - 8 - 9– Depository Institution– Types of Depository– Services which may be offered at a

Depository Institution– Interest Bearing Accounts





Worksheets

• Page 10– Depository Institutions Services





Worksheets

• Pages 11- 12– Depository Institutions Scenarios





Worksheets

• Pages 13 - 14– Depository Institutions





Saving Tools




Savings ToolsTake Charge of Your Finances

Family Economics & Financial Education

1.14.2.G1

© Family Economics & Financial Education – May 2010 – Saving Unit – Savings Tools – Slide 54Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences

at the University of Arizona

To Develop a Savings Fund:

Determine how much money is appropriate for a savings fund

Determine which savings tools in which to place money

1.14.2.G1



Savings Tools

$ Savings tools are secure and liquid accounts offered by depository institutions assisting in the management of a savings fund

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Savings Tools

$ Determine which savings tools are appropriate to assist in the attainment of personal financial goals

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Low Risk

$ Savings tools are very secure$ Most depository institutions offering

savings tools are backed by government insurance

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FDIC

The most common type of government insurance is offered by the Federal Deposit Insurance Corporation (FDIC)

FDIC is a federal government agency insuring certain depository institutions against lossIf a depository institution covered

by FDIC fails, FDIC will restore the lost funds up to $250,000 per account

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$DEFINITION Tool used to

transfer funds deposited into an account to make a cash purchase

$ INTEREST May be non-

interest or interest earning

Interest rate is usually the lowest available for the savings tools

Checking Account

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$ACCESSIBILITY Most liquid of all the savings tools

$Funds are easily accessed by: Checks Automated teller machines (ATMs) Debit cards Telephone Internet

Checking Account

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$FEATURES Can have minimum balance requirements Can charge transaction fees Can have a limit on the number of checks

written monthly Reduces the need to carry large amounts

of cash

Checking Account

Before opening a checking account, learn all of the requirements

and restrictions.

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$DEFINITION Account to hold

money not spent on consumption

$INTEREST Interest earning Lower interest

rates compared to the other savings tools except checking accounts

Savings Account

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Savings Account

$ACCESSIBILITY More liquid than all savings tools

except a checking account$Funds may be accessed or transferred

between accounts through: Automated teller machines Telephones Internet

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Savings Account

$FEATURES Allows for frequent deposits or

withdrawals Easily accessible Money storage for emergencies or daily

living Available at depository institutions May require a minimum balance or have a

limited number of withdrawals per month

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$DEFINITION A government insured account

offered at most depository institutions

Money Market Deposit Account

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$INTEREST Minimum balance requirement with

tiered interest rates$The amount of interest earned depends on

the account balance $For example: a balance of $10,000

will earn a higher interest rate than a balance of $2,500

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$ACCESSIBILITY Less liquid than checking and

savings accounts$Accessibility is limited to a certain

number of transactions per month (usually 3-6)

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$FEATURES Minimum amount required to open

the account, often $1,000 If the average monthly balance

falls below a specified amount, the entire account will earn a lower interest rate

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$DEFINITION An insured interest

earning savings tool that allows restricted access to the funds

Deposits have to be held for a certain length of time$Usually 7 days to 8

years

$INTEREST Varies depending

upon the time length and amount of money deposited$The longer the

period of time, the higher the interest rate

Certificate of Deposit

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$ACCESSIBILITY Less liquid than checking, savings,

and money market deposit accounts$Large fees are assessed if funds are

withdrawn before the end of the designated time period

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$FEATURES Minimum deposits range from

$100-$250,000 Low risk and no fees if funds are

held for the designated time period

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Savings Bond

$DEFINITION Discount bond purchased for 50%

of the face value from the U.S. Government$Similar to a loan but is given to a

company or the government

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Savings Bond

$INTEREST Can be redeemed once the

investment doubles Amount of time it takes to double in

value depends on the current interest rate offered$Invest $50 for a $100 savings bond$The bond can be redeemed once the

investment doubles to reach $100

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Savings Bond

$ACCESSIBILITY Least liquid of all the savings tools

$Access to funds is restricted

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Savings Bond

$FEATURES Safe, secure, and affordable Purchased for $25.00 - $10,000.00 Taxes

$ Interest earned on a bond is tax exempt until redeemed

$ If the bond is used to pay for college, the interest it earned will be tax exempt when redeemed

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Liquidity

Checking Account

Savings Account



Savings Bond

Most Liquid

Least Liquid

Lowest Interest

Highest Interest

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Choosing a Savings Tool

$ Different savings tools can be utilized to assist in reaching personal financial goals

$ Higher interest rates are a trade-off for lower liquidity

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$ When and how often access is needed to funds helps determine which savings tool to use

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$ By understanding the features of different savings tools, an individual can choose which tools will help them reach their financial goals.

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$ Features of savings tools vary between different depository institutions Interest rates Accessibility options Fees Penalties Minimum balance requirements

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$ Research and compare savings tools at different depository institutions in order to find the best option

$ Not limited to one depository institution Can have different savings tools at

different depository institutions

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Savings Tools Scenarios

$ Read each Savings Tool Scenario$ Discuss which savings tool would be

recommended for each scenario

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Savings Tools Scenario #1

Mariah has twin daughters that will be graduating from high school in two years.

They both have a goal to attend college after graduation, and Mariah wants to help them reach this goal by paying for some of their

schooling. She has $2,000 for each daughter that she would like to save and then be able to access in two years. Which savings tool would you recommend Mariah utilize and

why?

1.14.2.G1




Conner and Lisa were recently married and purchased a new house. They received

$1,000 as a wedding present from Lisa’s parents. They want to use this money to buy new furniture for their house in six months. Which savings tool would you recommend

Conner and Lisa utilize and why?

1.14.2.G1




Sean is a high school student that just received his first paycheck from his new

part-time job at the local grocery store. He currently has no expenses to pay, and his

goal is to save every paycheck from his job to buy a new car in two years. He needs to find a savings tool that will help him reach his financial goal. Which savings tool would

you recommend Sean utilize and why?

1.14.2.G1




Brittany recently moved into her first apartment. Before, she was living with her

parents and had very few expenses to keep track of. Now that she has to pay rent and

utilities for her apartment, she needs to find a savings tool that will help her manage her

money and ensure she can pay her bills every month. Which savings tool would you recommend Brittany utilize and why?

$

1.14.2.G1




Bryan has a goal to become financially secure by developing an emergency fund. He has been saving twenty percent of his net income for the past year and now has $2,000. He plans to maintain this balance and only use this money for emergency expenses. Which savings tool would you

recommend Bryan utilize and why?

1.14.2.G1




Paul and Grace want to purchase a house in two years. They want to begin saving money

to use for the down payment on a home. They are able to save $300 per month and need to know which savings tool would be

the best option for them to put their money in. Which savings tool would you recommend

Paul and Grace utilize and why?

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Summary

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Summary

$ Savings tools are very secure$ Most depository institutions offering

savings tools are backed by FDIC insurance

$ Different savings tools can be utilized to assist in reaching personal financial goals

$ Features of savings tools vary between depository institutions


Checking Accounts




• Having a checking account provides a person with several benefits.

• These advantages include – convenience, – safety, – proof of payment, and a – record of finances.

• Checking account differ from one bank to another and from one part of the country to another.

• They differ in the features they offer customers.

• Checking accounts also differ in costs.• A service charge is a fee a bank charges for

handling a checking account.• Comparison shopping for your checking

account will enable you to choose one that best suits your needs.

There are many types of checking accounts in use, they

can be viewed in two basic categories:

• Regular Checking Accounts

• Interest Checking Accounts

Types of Checking Accounts

A. Regular Checking1. Best option for those who write a large

number of checks.

2. No service charge for checks as long as account minimum balance is maintained.

3. Balance minimum is usually $300 or greater.


B. Interest Checking (NOW accounts)1. Usually require minimum monthly balance.2. Interest rate varies from 2-4% depending on

economy.3. A higher rate is paid when minimum balance is

maintained.4. If account balance goes below minimum

allowed, no interest is paid and a service charge is added.

5. Usually allows for unlimited check writing6. A debit card is usually available


C. Deluxe Interest Checking (Super NOW Accounts-Negotiable Order of Withdrawal)

1. Requires large minimum balance; usually over $1500.

2. A debit card is available at no additional charge.

3. A bank credit card is also available at no extra cost.

4. Interest is earned if the average minimum balance is maintained.


D. Other Types of Checking Accounts1. Special checking accounts

a. Used when writing a few checks a month.

b. Requires no or low minimum monthly balance.

c. Small charge assessed for writing checks, usually 10-20 cents each.

d. There may also be a small monthly charge for the account


2. Credit Union Accounts a. Credit unions may provide checking accounts

for members.

b. Members of credit unions are called shareholders when they have money on deposit, and their checks are called sharedrafts.

c. Interest rates vary on these accounts.

--Opening a personal checking/savings account

--Making a bank deposit

--Withdrawing funds

--Writing and endorsing checks

--Maintaining a check register

--Reconciling a bank statement

Signature Card

• Each authorized user of the account must complete a signature card.

• The name on the card should be the signature used on all account transactions.

• This helps detect unauthorized use of the account.

Signature CardACCOUNT 1334

AUTHORIZED SIGNATURE FOR:

NAME Glinda Revels

ADDRESS PO Box 100, St. Pauls, North Carolina 28384

TELEPHONE (910) 724-5968

SIGNATURE Glinda Revels

DATE October 21, 2004

Deposit Slip

• A deposit slip must accompany each deposit.• The depositor’s name, account number, and

the date must be on the deposit slip.• Currency, coins and checks must be listed

separately.• Checks should be identified by the ABA

number.• The total must be written.

Deposit Slip

For Deposit to the Account of 1-15/1265

Better Burger Dollars Cents 123 Money Drive Troy, NC 27371-0123

Date _March 12, ____2008

Signature Sign Here if Cash Received

People's Bank400 Jefferson StreetHayes, NC 27371-0400

‘:1914110197‘: 2321233

CURRENCYCOINSCHECKS

SUBTOTAL

Less Cash Received

TOTAL DEPOSIT

Opening an Account• Marquis Best opened his business, Best’s

Burgers, on March 12. He deposited the following at the bank in his new account, number 23-2133:

• Bills: $206.00• Coins: $31.15• Checks:

– Jack James $12.50– Lucinda Moore $23.24

– Prepare a signature card and a deposit slip for Marquis. His address is 321 Main Street, Hayes, NC 23422-9321. His phone number is (919) 455-3467.

– HANDOUT AVAILABLE –complete in INK!

Withdrawal from Savings Account

• A withdrawal slip must be completed when withdrawing funds from a savings account.

• The completed form contains the:– Date– Account Number– Amount Withdrawn– Signature of the account holder

Withdrawal Slip

Withdrawing from Savings

• Alexia Johnston has been saving for a new VCR. She wants to withdraw $250.00 cash from her savings account to pay for the VCR.

• Her account number is 240-115-6877.• Complete a withdrawal slip –

HANDOUT AVAILABLE – complete in INK~

Check Registers• The check register should be completed before

writing the check so you don’t forget to record the check.

• Record the check number and the date.• Record the payee’s name and the purpose of the

check.• Enter the amount of the payment or withdrawal (ATM)

or enter the amount of the deposit.• Record the new balance.• Subtract checks and withdrawals from the previous

balance.• Add deposits to the previous balance.

Check RegisterNUMBER DATE DESCRIPTION OF

TRANACTIONPAYMENT/DEBIT

(-)

T FEE(IF ANY)

(-)

DEPOSIT/CREDIT

(+)

BALANCE

TO

FOR

TO

FOR

TO

FOR

TO

FOR

TO

FOR

TO

FOR

123 10/5Velicity

School trip 125.00

225.00

100.00

124 106Daddy

25.00 75.00

Preparing a Check Register

• HANDOUT AVAILABLE

Writing Checks

• Checks should be written legibly in blue or black ink.

• Always sign checks exactly as you signed the signature card.

• Always complete the check register before writing the check.

1=Date – enter the month, day and year that you write the check.

2= Pay to The Order Of – enter the person or company you want to pay with the check. Write the information as close to the left edge as possible and always draw a line after the name so no one can add another name in the space.

3=Amount in Numbers – print the first number as close to the dollar sign at the left edge as possible, this will prevent someone from adding another number later.

4= Legal Amount – write out the dollar amount in words starting as far to the left as possible. Write in amounts of dollars and fractions of dollars.

5=Signature – this is where you sign your name. You should sign the same way each time you write a check and the signature should match your name used on the checks.

6= Memo – this space can be used for a few words describing the purpose of the check as a note to your self.

Writing Checks

Writing A Check

• HANDOUT AVAILABLE --- complete in ink!

Endorsements

• Endorsements allow the payee to cash the check, deposit the check, or transfer payment of the check to someone else.

• Endorsements are proof that the payee cashed the check or transferred payment to someone else.

• The endorser guarantees payment of the check if the new owner of the check cannot collect payment.

Blank Endorsement

• Consists of endorser’s name only

• Anyone who has a check with a blank endorsement may cash it

X Marcus Powell

DO NOT WRITE BELOW THIS LINE

Special or Full Endorsement

• Transfers payment of a check to someone else.

• Can be used to make payment on a debt.

• Juan Delgado is the payee on this check.

• Maria Fernandez receives payment.

X Pay to the order of

Maria Fernandez

Juan Delgado


Restrictive Endorsement• Limits use of the check

so it can be deposited only to endorser’s account.

• Safest type of endorsement as it cannot be cashed by a thief or someone who finds the check.

• Safest endorsement to use when mailing a check for deposit or when using the ATM for deposit.

X For Deposit Only

Chang E. Chen


Reconciling a Bank Statement

• When the bank statement arrives, compare the canceled checks listed on the statement with your checkbook register to determine which checks are outstanding.

• Also check the bank statement for any deposits which may be outstanding.

• Check for ATM withdrawals which you might not have recorded.

• Determine if you were charged a service charge or if you earned interest on your account.

BANK STATEMENT RECONCILIATION

BALANCE ON BANK BALANCE INSTATEMENT $ __________ CHECK REGISTER $ _________ ADD DEPOSITS NOT ADD DEPOSITSON STATEMENT $ __________ NOT ALREADY IN __________ CHECK REGISTER $ _________ __________ _________ TOTAL $ __________ TOTAL $ _________SUBTRACT CHECKS SUBTRACT SERVICEISSUED BUT NOT CHARGES AND ANYON STATEMENT PAYMENTS NOT IN CHECK REGISTER_______ $ ________ _______ $ _______________ ________ _______ _______________ ________ _______ _______________ ________ TOTAL $ ________________ ________ TOTAL $ _________ BALANCE $ _________ BALANCE $ _________

• Bob Jones received his bank statement in the mail today. After comparing the bank statement to his check register, Bob discovered that he had four outstanding checks:

• #250 $138.50• #156 $99.50• #157 $145.00• #160 $36.00• Bob also noticed that he had a $60 ATM withdrawal

which he had forgotten to record and a deposit of $350 which was not on the bank statement. Also Bob was charged a service charge of $2.50. The balance in Bob’s check register is $5,280.20 and the balance on the bank statement is $5286.70 Reconcile the bank statement.

• (handout available)


• http://community.ca.uky.edu/moneyville/?q=node/10


“Electronic Banking”

1.7.2.G1

Electronic Banking

Take Charge of Your Finances

1.7.2.G1

© Family Economics & Financial Education – Revised May 2010 – Depository Institutions Unit – Electronic Banking – Slide 129 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Electronic Banking

1.7.2.G1


Electronic Banking

• Benefits of e-banking include: – 24 hour access– Fast transactions– Paperless transactions– Convenience – Worldwide access

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Debit Cards• Debit Cards –

– Plastic cards, which look like credit cards,

– Electronically connected to a card holder’s depository institution account

– Money is automatically withdrawn from the designated account

• For added protection:– Sign the back of a debit card with

• Your signature and • “see id”

1.7.2.G1


Personal Identification Numbers

• Debit cards require the use of PIN (Personal Identification Numbers)

• This number is entered at – Automated Teller Machine (ATM) or – Point of Sale Terminal (POS)

• This confirms the individual is authorized to access that particular account

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Card Act

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Consumer Liability

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Automated Teller Machines

• Automated Teller Machines (ATMs) - electronic computer terminals which offer automated, computerized banking

• Transactions allowed may include:– Deposits– Cash withdrawals– Transfers between accounts– Account balance information

• Some ATMs may only allow cash withdrawals

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ATMs continued• ATMs can be found at various places

including: – depository institutions– supermarkets– convenience stores

• ATMs are accessed with an ATM or debit card and a PIN

• Fees may be charged for ATM use, but will vary depending on the particular depository institution

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Point of Sale Terminal

• Point of Sale (POS) Terminals, are located at stores and allow the customer to use a debit card to make a purchase

• At participating POS terminals customers may request additional cash back

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Point of Sale Terminal Transactions

1.7.2.G1


Direct Deposit & Payment

• Direct Deposit– Paychecks and benefit checks are directly

deposited into a specified depository institution account

• Direct Payment - authorizes bills to be paid by a specific depository institution account– This can be done for fixed and flexible

expenses. Examples include:• Mortgages, vehicle payments, phone bill

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Direct Payment & Deposit

• An authorization form is signed to allow the transaction to occur

• Consumers are responsible for frequently checking their account to ensure that the correct amount was withdrawn or deposited

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Payroll Cards

• Offer an alternative to printing and mailing a paycheck to employees

• Function in a similar way as debit cards • They are reloadable • Often linked to a credit card company, allowing

employees to withdraw money from the ATM or to purchase goods and services through a POS

• An alternative to printing and sending paychecks • Not linked to a depository institution account

1.7.2.G1


Check 21

• Check Clearing for the 21st Century Act (Check 21) - Transfers checks electronically and eliminates most or all float time – This allows a check to be processed as

quickly as using a debit card• Float time - time between writing the

check to when the money is withdrawn from the depository institution account

1.7.2.G1


Pay by Phone

• Pay by Phone system allows the consumer to call a vendor with instructions to pay certain bills or to electronically transfer funds between accounts – A written agreement between the

consumer and the institution may be required for a transaction to occur

1.7.2.G1


Review

• Benefits include 24-hour access and convenience

• Debit cards offer the benefits of a credit card without building debt

• Direct deposits offer convenience to customers who have checks directly deposited into their account automatically

• Direct payment allows bills to be paid electronically


“Electronic Banking TRIVA”


Journal Entry

Documents

Powerpoint TemplatesPage 1Powerpoint Templates Personal Finance 4.02 Understand services available from financial institutions and forms of payment for