MoneyWi$e: Banking Basics MoneyWi$e ‘Banking Basics’ MoneyWi$e is a joint financial education...

MoneyWi$e: Banking Basics

MoneyWi$e ‘Banking Basics’

MoneyWi$e is a joint financial education project of Consumer Action and Capital One


What will the ‘Banking Basics’ training each us?

We want you to gain a thorough understanding of personal banking services and how they can benefit you.


You will learn about:

The difference between banks and credit unions.

How to select a bank. How to open a bank account. How to keep bank costs down. How to get more interest on your

savings.


Participants’ folders contain:

You Can Bank On It (brochure) Check Writing (class activity) Sample ChexSystems Report Sample Account Application Choosing a Bank or Credit Union

(take-home worksheet) Evaluation of the MoneyWi$e Banking

Basics Seminar


Bank accounts

What are some of the advantages to having a bank account?


Advantages of a bank account include:

Your money is safe. Each account is insured. Canceled checks are proof that you

paid a bill. Using check-cashing stores and

money orders is more expensive than paying bank fees.

A bank account can help you keep track of how you spend your money


Banks and credit unions

What is the difference between a bank and a credit union?


Banks vs. credit unions

A credit union is a non-profit cooperative financial institution owned and controlled by its members.

A bank is a for-profit company that makes money from charging fees and lending money.


Credit unions...

Serve groups that share something in common, such as their profession, place of worship or neighborhood.

Provide checking and savings accounts and loans, often with better rates than banks.


Account verification services

How do banks find out about your past account history?


ChexSystems...

Is the major national account verification company.– When you apply for a new checking

account, the bank finds out if you are in the ChexSystems database.

– If you ever abandoned a checking account with a negative balance, you are probably listed in the ChexSystems database.


ChexSystems records

Reports about overdrafts or closed accounts remain in your file for five years

You can get a copy of your report ($9 in most states) by contacting ChexSystems

You have the right to dispute inaccurate information in your account verification report.


Your rights

You can get a free copy of your ChexSystems report if:– You have been denied a bank

account in the past 60 days because of information provided by ChexSystems.

– Your checks were stolen and used by an impostor or you are the victim of any bank fraud.


Don’t get discouraged

If you try to open a new checking account and are turned down by a bank or credit union because of your past account history, don’t give up.

Different banks and credit unions have different requirements, so shop around.


ChexSystems sample report

Let’s review the categories of the ChexSystems sample report:– Reported information– Drivers license validation– Drivers license verification– Consumer initiated inquiries– Customer initiated inquiries– Retail information– Check printing order history


Checking accounts

What kinds of things can you do with a checking account?


Checking accounts

Checking accounts allow you to:– Write checks. – Use your ATM/debit card to get

cash at ATM machines and to make purchases at point-of-sale terminals (such as at the supermarket).

– In some cases, your ATM/debit card can be used to make purchases where credit cards are accepted.


Checking accounts

Free checking Direct deposit Electronic transfer accounts

(ETAs) Basic (Lifeline) accounts Online banking and bill payment Low cost accounts for seniors or

students


Debit cards

You can use your debit card in two ways:– At an ATM or a point-of-sale (POS)

terminal with your personal identification number, or PIN.

– At stores and restaurants that accept credit cards, without providing your PIN. You will be asked to sign a receipt.


Debit cards

If your debit card is lost or stolen:– Alert your bank as soon as

possible. The longer you wait, the more money you might be responsible for if an unauthorized person uses your card to buy things.


Check writing activity

In this activity you will practice writing a check and entering it into a sample checkbook register.


Check writing

Why is it important to enter the checks you write in your checkbook register?


Keep a record of your checks:

So that you don’t bounce checks.

So that you know how much money you have in the bank.

So that you can track your spending and stick to a budget.


Savings accounts

How is a savings account different from a checking account?


What is interest?

Interest is the cost of lending money. – When a bank gives you a loan, you

pay interest to them. When you keep your savings in a bank, they pay interest to you.

In a savings account, your money works for you by earning interest.


Types of interest

There are two types of interest:– Simple interest means that you only

earn interest on your initial deposit.

– Compound interest allows you to earn interest not only on your initial deposit, but also on the interest you earn as you go along.


How to figure interest

The annual percentage rate (APR) is the amount of money you would earn if you left your money on deposit for one year.

For example, if you left $100 on deposit for one year at a 2% APR, you would earn $2 in interest at the end of the year.


Session One Wrap-up

Next time we will discuss:– ways to earn more interest.– safe deposit boxes.– what to consider when you are

looking for a bank or credit union. – how to complain if you have a

problem with your bank. See you then!


Banking Basics

Session Two (2 hours)


Banking Basics

Session Two– Today we’ll learn how you can earn

more interest on your money with CDs, what to keep in a safe deposit box, things to consider when you are looking for a bank or credit union and how to complain if you have a problem with your bank.


Certificates of deposit (CDs)

What is a certificate of deposit?


Certificates of deposit (CDs)

A certificate of deposit, or CD, is a kind of savings account in which you leave your money on deposit for a set period of time in order to earn interest.

The longer the term of your CD, the higher your interest rate will be.

If you withdraw your money before the term ends, you will lose interest and might have to pay a penalty.


Safe deposit boxes

What is a safe deposit box?

What are some things that you might keep in a safe deposit box?


Safe deposit boxes

Copies of insurance policies. Birth, marriage and death

certificates. Mortgages, leases and other

important contracts. Stock and bond certificates and

certificates of deposit (CDs). Valuable jewelry.


Safe deposit boxes

What should you not keep in a safe deposit box?


Safe deposit boxes

The originals of your will and life insurance policies should not be kept in a safe deposit box.

The box might be sealed at the time of your death and your survivors will need a court’s permission to open it.


Opening a bank account

What are some questions you should ask when you are deciding on a bank or credit union?


Questions to ask:

– What is the minimum to open an account?

– What is the interest rate on the account?

– Is there a monthly fee?– Is there any way to avoid monthly

fees?– What happens if my balance falls

below the minimum requirement?


Questions to ask:

– Is there a maximum number of checks I can write each month?

– Is there a fee for using your ATMs?

TIP: Use the MoneyWi$e worksheet in your folders as a guide when you apply for an account at a bank or credit union.


Opening a bank account

What should you bring with you to the bank when you are opening a new account?


Identification

When you go to the bank branch to open a new account, bring:– Photo identification, such as a

driver’s license, state ID card or passport

– Proof of your address, such as a utility bill or lease

– Your Social Security number for tax purposes


Keeping your account straight

Once you have an account, write down and deduct in your checkbook:– Every check you write– Every ATM or debit card transaction

you make– Any bank fees you pay


Banking costs

What are some ways you can save money on banking costs?


Ideas to keep banking costs down

Combine checking and saving balances to avoid monthly fees.

Save on ATM fees by using your own bank’s machines.

If you can’t avoid an ATM fee, take out larger sums less frequently.


Ideas to keep banking costs down

Use direct deposit for your paycheck or government benefits check.

Buy checks from a mail-order company instead of your bank.

Ask the bank to reverse the occasional late fee or bounced check fee.


Saving on checks

These are two mail-order sources for buying checks for less:– Checks in the Mail, 877-397-1541,

(www.citm.com)– Current Checks, 800-426-0822,

www.currentchecks.com


Overdraft protection

An optional bank service called overdraft protection can save you from bouncing checks.

It can work with a loan or line of credit or with your savings account.


Sample savings account application — an activity

This is a sample application for an interest-bearing account at “MoneyWi$e Bank.”

Let’s walk through the activity together.


Savings account application

Ownership W-9 Certification


Savings account application

Optional Services– ATM Cards– Linking accounts

ATM fees


Signing the application

When you sign a bank account application you are giving the bank or credit union legal permission to access your credit report or ChexSystems report.


How to complain

If your bank or credit union makes a mistake, such as mixed-up deposit, no-show bill payment or double debit, you have the right to complain


Solving a bank problem

– Complain as soon as you can.– Always write down the name of the

person who helped you.– Offer a solution and ask the bank to

correct the problem.– Don’t lose your temper. – Send a summary letter (registered

mail receipt requested) to prove you took timely action.


Taking it higher

If you are not able to resolve your complaint with your bank or credit union, you can complain to the government regulator.

Read the ‘You can bank on it’ brochure in your folders for more information.


Now you can grade us

Please fill out the evaluation form and leave it with me before you leave.

The information helps us provide you with better programs.


Congratulations!

By attending the MoneyWi$e ‘Banking Basics’ training you’ve empowered yourself to make good decisions about banking services.

MoneyWi$e: Banking Basics MoneyWi$e ‘Banking Basics’ MoneyWi$e is a joint financial education...

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