Download Financial Institutions PPT Dep Inst 2011

1.7.3.G1
Financial
Institutions
Information on Financial
Institutions & Services
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.3.G1
Financial
Institutions
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
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Commercial Bank
Savings and Loan
Association
Credit Union
Brokerage Firm
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.3.G1
Commercial Bank
Wide variety of services and products
 Usually the largest financial institutions
 FDIC insured
 Examples – Wells Fargo, US Bank, First Interstate
Bank

© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.3.G1
Commercial Bank Services

Checking Accounts
are the only financial
institution allowed to offer
non-interest paying
checking accounts

 They



Savings Accounts
Safe-Deposit Boxes
Credit cards




Certificate of Deposit
(CDs)
Financial Services
Investments
Loans
Mortgages
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.3.G1
Credit Union
Non-profit, member owned
 Charge lower fees & loan rates
 Offer higher interest rates
 NCUA insured
 Examples – BECU, School Employees Credit
Union

© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.3.G1
Credit Union Services





Same as commercial bank
Share Draft Accounts
(checking)
Share Accounts (savings)
Share Certificate Accounts
(CDs)
Safe-Deposit Box






Credit Card
Financial Counseling
Investment
Loan
Mortgage
Retirement Plan Account
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.3.G1
Savings and Loan
Association (S&Ls)
Provide loans & mortgages to customers with a
savings account
 Pay higher interest rate than commercial banks
 Offer interest-earning checking accounts

© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.3.G1
S&L Services




Checking Accounts
Savings Accounts
Certificate of Deposit
(CDs)
Retirement Plan Accounts




Financial Counseling
Investments
Loans
Mortgages
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.3.G1
Brokerage Firm

Offer money management plans for investing

Provide financial assistance and advice

Examples – DA Davidson & Co., Merrill Lynch
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.3.G1
Brokerage Firm Services




Investments
Bonds
Stocks
Mutual Funds



Financial Counseling
Real Estate Investment
Retirement Plan Accounts
**Customers can move money between accounts easily
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.3.G1
Insurance for
Financial Institutions

Insurance for deposits up to $250,000
 Credit
Unions (NCUA)
 Commercial Banks (FDIC)
 Savings and Loans (SAIF)
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.3.G1
Federal Reserve Bank

Federal Reserve Bank –Services provided to
depository institutions include:
Collecting checks
 Electronically transferring funds
 Distributing and receiving cash and coin

© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.3.G1
Life of a Deposited Check

Look closely at steps 2-4
to see how the Federal
Reserve bank plays an
integral role in how a check
transaction works
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.3.G1
Federal Reserve Bank

Which federal reserve bank located in your region?
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.3.G1
Benefits & Advantages
to using Financial
Institutions
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.3.G1
Benefits of Financial
Institutions

Convenience

Cost savings
 Less
expensive to purchase money orders and to cash
checks

Other businesses may charge to cash checks
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.3.G1
Benefits continued

Safety
 Protection

from fire, theft, & loss
Security
 Money
is protected by the federal government in
federally insured institutions
 Up to $250,000 for each depositor
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.3.G1
Advantages

Using one financial institution may include these
advantages:
 Simplicity
– having all accounts at one place can
simplify banking
 Relationship – establishing relationships can be
beneficial when applying for loans

Lower interest rates on loans may be offered to loyal
customers!
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.3.G1
Remember
Shop around for the
best service, rates,
products, and locations
before choosing a
financial institution!!!
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.3.G1
Financial Institution
Services
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.3.G1
Definition of Services

Bonds
 Lending
money to an organization as an investment, an
“IOU”
 Purchased at a fixed interest rate and period of time

Certificate of Deposit (CD)
 An
insured interest earning savings instrument with
restricted access to the funds.
 An investment with no risks and no fees
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.3.G1
Services continued

Checking Account
 Paper
checks or debit cards are used to withdraw money
deposited into the account to pay for items
 May be interest or non-interest bearing

Credit Card
A
plastic card used to make a purchase now to be repaid
later usually with interest to the credit card company
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.3.G1
Services continued

Financial Counseling
 Information and
advice given to customers to help them make
decisions about financial issues

Investment
A
commitment of money to achieve long-term financial goals
 Many different types are available

Loan
 Borrowed money
consumers apply for at financial institutions
 Paid back at various interest rates in payments
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.3.G1
Services continued

Mortgage
A

long-term loan to purchase real estate such as a house
Mutual Fund
 Groups
of stocks, bonds, and other investments managed by an
investment firm

Real Estate Investment
 Purchasing real
estate as an investment
 May buy a lower priced house, make improvements, and sell at a
higher price
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.3.G1
Services continued

Retirement Plan Account
 Plans
to set aside money for retirement
 Money is tax-deferred until withdrawn
 May be offered through an employer or set up through
a financial institution

Safe-Deposit Box
A
secured box in a bank to be used for valuable and
important personal items
 Items are safe from theft and fire
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.3.G1
Services continued

Savings Account
 Money
is deposited into an account to earn interest
 Funds are easily accessible and safe

Share Account
A

Share Certificate Account
A

savings account at a Credit Union
certificate of deposit at a Credit Union
Share Draft Account
A
checking account at a Credit Union
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.3.G1
Services continued

Stock
 Ownership
in corporation
 Represented by shares
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.3.G1
Review
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.3.G1
Review
Money management is part of everyday life!
 Financial institutions offer multiple services – shop
around for the one which best fits your needs!
 Check to see if the financial institution is insured
by the FDIC, SAIF, or the NCUA.
 Learn about the financial services before choosing
one.

 Example
– checking, savings, investments, etc.
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.3.G1
The End
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman