Download Banking Basics

Banking Basics
O You can take charge of your financial future!
Reasons to Keep Money in a Bank
O Why keep your money in a bank?
O Safety
O Select an FDIC-insured financial institution
O Calculate your insurance coverage with the Electronic Deposit
Insurance Estimator (EDIE): www.myfdicinsurance.gov
O Convenience
O Cost
O Security
O Financial future
Insured Financial Institutions
O Banks and Thrifts:
O Are subject to federal and state laws
O Make loans, pay checks, accept deposits, and provide other
financial services
O Credit Unions:
O In addition to the above:
O Are non-profit financial institutions
O Require a membership to open an account
Bank vs. Check-Cashing Services
Check-Cashing
Services
Check-cashing fees:
4 x $5 = $20 a month
$20 x 12 = $240 a year
Money order fees:
5 x $1 = $5 a month
$5 x 12 = $60 a year
Total: $300
Bank
Monthly fee:
$5 a month
$5 x 12 = $60
Box of checks: $12
Total: $72
Savings: $228
Additional Benefits of a Bank
O Internet banking access 24 hours, 7 days a week
O Good credentials for loan applications with responsible use
O No worries about cash being lost or stolen
Open & Maintain a Bank Account
Open the account
2. Make deposits and withdrawals
3. Record interest and fees
4. Keep track of your balance
1.
Open a Bank Account
O Complete account verification process
O Photo Identification
O Your Social Security Number or Individual Taxpayer
Identification Number
O Ask about “second chance” checking programs if you are
unable to open an account
Types of Deposit Accounts
O Examples include:
O Checking account–to pay bills and buy goods
O Savings account–to save money and earn interest
O You may have transaction and monthly fees.
O The bank will send you periodic statements.
Deposit
O Deposit: money you add to your account
O Deposit slip: tells the bank how much money you are adding
to your account
Note: You may not have immediate use of
deposited funds until the bank ensures there
are funds at the originating bank.
Balance
O The amount of money you have in your bank account
What is your balance?
Description
Opening
Balance
+/+$100
Balance
$100
Withdrawal
O Taking money out of your account using checks, withdrawal
slip, or ATM
Always know how much is in your account!
Description
Opening
Balance
Withdrawal
+/-
Balance
+$100
$100
-$20
$80
Fees
O Examples include:
O Monthly maintenance fees
O Penalty fees
O Overdraft fees
Basics of Overdraft
O What is an overdraft?
O When you do not have enough money in your account to
cover a transaction and you have pre-authorized the
financial institution to pay it anyway
O Overdraft Protection offered at your financial institution
O Can save you money on returned item and merchant fees should
you make an honest mistake in your checkbook or have an
unexpected emergency
Basics of Overdraft
O Fees
O Per item AND per day at some financial institutions when
your account is overdrawn
O Usually does not cost you unless you use it
O Ways to avoid overdraft fees
O Always familiarize yourself with the financial institution’s
ODP program before requesting ODP
O Keep track of your account balance and only use funds
available
O If you need to use your ODP for an emergency, do one
cash withdrawal and pay for items with cash. This will help
you avoid a fee for each item you pay.
Balance After Fees Charged
Description
Opening
Balance
Withdrawal
Fees
+/-
Balance
+$100
$100
-$20
$80
-$4
$76
Interest
O A percentage of your balance that the bank pays you for
keeping your money at that bank
Description
Opening Balance
Withdrawal
Fees
Interest
+/-
Balance
+$100
$100
-$20
-$4
+$1
$80
$76
$77
Non-Deposit Accounts
O Includes stocks, bonds, and mutual funds
O Not FDIC-insured; therefore, you may risk losing your
investment.
O Speak with a Certified Financial Planner to help you decide
how to invest your money.
Filling Out A Deposit Slip
Deposit Amounts
Account Number
Name,
Date, and
Signature
for cash
received
Print Name
Filling Out A Withdrawal Slip
Account Number
Date
Amount of
Withdrawal
SSN, Name,
and Signature
Writing A Check
Maker
Information
Fraction Code
Routing Number
Check Numbers
Must Match
Drawee
Bank
Signature
Routing Number
Check Numbers
Must Match
Account Number
Micro
Printing
Balancing Your Check Book
Checking Account Statement
1.
2.
3.
4.
5.
6.
Bank Name: The name of your
institution and its location.
Personal Information: Your name and
address.
Account Information: The type of
account and the account number.
Statement Period: The dates that the
statement covers.
Activity Summary: An overview of your
credits and debits as well as the
balance remaining at the end of the
period.
Transaction Summary: A detailed
listing of your credits and debits.
Note that the dates for the checks
you have written are those on which
the bank processed them, not
when you wrote them.
Reconciling our Account
O Balancing: Keeping you checkbook register up to date and
maintaining totals.
O Reconciling: Finding and correcting any differences between
the statement balance and your check register balance.
Thank You for Banking with FSNB