Depository Institution Discovery 1 2 1 G 1

Depository Institution Discovery

1. 2. 1. G 1 Depository Institution l Business that offers and sells financial services to people Checking Accounts l Savings Tools l l Assist people with daily financial tasks © Take Charge Today – Revised April 2006– Depository Institution Discovery – Slide 2 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

1. 2. 1. G 1 Types of Depository Institutions l Credit Union l Savings and Loan Institution l Commercial Bank © Take Charge Today – Revised April 2006– Depository Institution Discovery – Slide 3 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

1. 2. 1. G 1 Commercial Bank l The most popular type of depository institution l Lend, issue, borrow and protect customer’s money l Offer a better way to track and manage money l Provide records of money deposited, or put into an account, and money withdrawn, or taken out of an account © Take Charge Today – Revised April 2006– Depository Institution Discovery – Slide 4 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

1. 2. 1. G 1 Checking Account l Very common type of account l Offers safety and convenience l Most do not pay interest, or additional money earned l Frequent withdrawals and deposits are expected © Take Charge Today – Revised April 2006– Depository Institution Discovery – Slide 5 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

1. 2. 1. G 1 Withdrawing Money l Checks l l Legal documents that function like cash If sufficient funds are not in the account, checks can “bounce” l l l Fee Harm future opportunities for credit Debit Card l l l Electronically connected to an account When purchases are made, money is automatically withdrawn from the designated account A PIN (Personal Identification Number) is required to confirm the user is authorized to access the account © Take Charge Today – Revised April 2006– Depository Institution Discovery – Slide 6 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

1. 2. 1. G 1 Check 21 l Check Clearing for the 21 st Century Act Money is automatically withdrawn from an account as soon as a check is written l Makes it difficult to “bounce checks” l An individual must have money in his/her account to make a purchase l © Take Charge Today – Revised April 2006– Depository Institution Discovery – Slide 7 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

1. 2. 1. G 1 Opening a Checking Account l Read through the contract from the bank l Complete a Signature Authorization Card Printed name l Signature l Social Security number l Telephone number l Address l Date of birth l l Make an initial deposit © Take Charge Today – Revised April 2006– Depository Institution Discovery – Slide 8 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

1. 2. 1. G 1 Interest Earning Checking Account l Checking account that pays a small amount of interest l Usually require a minimum balance, which is the smallest amount of money that must be kept in the account in order to keep paying interest © Take Charge Today – Revised April 2006– Depository Institution Discovery – Slide 9 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

1. 2. 1. G 1 Savings Tools l Savings Account l Money Market Deposit Account l Certificate of Deposit (CD) © Take Charge Today – Revised April 2006– Depository Institution Discovery – Slide 10 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

1. 2. 1. G 1 Savings Account l Keeps money safe until the owner needs it l l Emergencies Purchase expensive items Money can be deposited and withdrawn an unlimited number of times each month l No check writing privileges l A debit card may be used with certain accounts l Money has the opportunity to earn more interest than if it was in an interest earning checking account l © Take Charge Today – Revised April 2006– Depository Institution Discovery – Slide 11 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

1. 2. 1. G 1 Money Market Deposit Account l Pays a higher interest rate than a regular savings account l Requires more money to open than a regular savings account l Money can be withdrawn only a limited number of times each month with checks or a debit card © Take Charge Today – Revised April 2006– Depository Institution Discovery – Slide 12 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

1. 2. 1. G 1 Certificate of Deposit l l l Pays interest on a lump sum of money Once money is placed in a CD, it must remain there for a specific time period If withdrawn early, a penalty fee is charged Interest rate is higher than a savings account and Money Market Deposit account The rate of interest money earns in a CD increases as the length of time the money is required to stay in the CD increases © Take Charge Today – Revised April 2006– Depository Institution Discovery – Slide 13 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

1. 2. 1. G 1 Commercial Banks Safety l Storing large amounts of money in a commercial bank is safer than at home l Fire, burglary, or other type of disaster l Federal Deposit Insurance Corporation (FDIC) l Protects money in bank accounts from loss © Take Charge Today – Revised April 2006– Depository Institution Discovery – Slide 14 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

1. 2. 1. G 1 Quick Review l Depository Institution l Checking Account l Savings Tools Savings Account l Money Market Deposit Account l Certificate of Deposit (CD) l l FDIC © Take Charge Today – Revised April 2006– Depository Institution Discovery – Slide 15 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona