Money Counts A Financial Literacy Series Banking 11

Money. Counts: A Financial Literacy Series Banking 11 -A Grange Building University Park, PA 16802 financialliteracy. psu. edu finlit@psu. edu 814 -863 -0214

• Banking: business activity of Description accepting and safeguarding money owned by other individuals and entities, and then lending out this money in order to conduct economic activities (e. g. , making profit, covering operating expenses)

Learning Outcomes • Know the key terms you need for banking • Understand what a bank is and what a credit union is • Understand how to decide who should safeguard your money • Expect what would happen if you do not use a bank or a credit union • Understand how to get the most of your banking experience

What is Banking?

Banking System in the USA?

Federal Reserve System – 12 Central

Why use a financial institution? Safeguard your cash Use debit and credit card services Manage your finances (Record keeping and budgeting) Earn interest Receive your paycheck quickly using direct deposit Borrow loans Facilitate financial transactions Invest your money Insure your liquid assets Establish a credit history to generate a FICO credit score instrumental in borrowing funds and building wealth

Key terms you need to know Checking account & Saving account Certificate of Deposit Routing number Money market account Debit card & Credit card Online banking Automatic bill payment & bill-pay Automated teller machine (ATM) Payroll direct deposit Account number

Banks • Can be central, commercial, retail, and investment financial institutions • Insured by the Federal Deposit Insurance Corporation • Can have multiple locations (national and international) • Eligibility to join has little restrictions to none • Convenience and numerous ATM machines • Sophisticated electronic banking technology • Wide range of choices in services and products • Profit-driven to satisfy shareholders • They serve customers

Credit Unions • Can be federally or State chartered • Insured by different insurance corporations other than FDIC • Have limited locations by region or state • Eligibility to join is restricted to individuals affiliated with certain groups • Limited ATM locations • Limited online banking services, depending on size • Limited range of choices in services and products, depending on size • not-for-profit driven to satisfy members/owners • They serve members/ de facto owners

Bank Credit Union Types Central, commercial, retail, and investment financial institutions Federally or State chartered Insured by Federal Deposit Insurance Corporation (FDIC) Different insurance corporations other than FDIC Locations Multiple locations (national and international) Limited locations by region or state Eligibility to join Little restrictions to none Restricted to individuals affiliated with certain groups ATM Convenience and numerous machines Limited ATM locations Online Sophisticated electronic banking technology Limited online banking services, depending on size Choice Wide range of choices in services and products Limited range of choices in services and products, depending on size Profit-driven to satisfy shareholders Not-for-profit driven to satisfy members/owners For whom Serve customers Side by side! Serve members/ de facto owners

Who should guard your money? Your lifestyle Services In-person you want/need or online Temporary or long-term Current location YOUR decision Your occupation Price or convenience

Un-Banked?

Tips to get the most of banking experience! Know the value of each institution Know what you “need” and “want” Find free services for students Find the highest interest rate on a saving account Adopt an emergency fund Consider the cost of using ATM Know that you are free to deposit financial aid refund checks Seek trusted information!

Money. Counts: A Financial Literacy Series Comments and questions 11 A Grange Building University Park, PA 16802 financialliteracy. psu. edu finlit@psu. edu 814 -863 -0214