Types of

MoneyHow should I pay?

Types of moneyI listed these in the order I think you are most likely to encounter them. Cash Check Debit card (use for a Debit or Credit

transaction) Credit card (use for a Credit transaction or a

cash advance) Electronic Funds Transfer (EFT) Money Order Cashier’s Check Certified Check Traveler’s Check

Cash Anonymity

No purchase tracking Mindful spending (cash can

seem more real than plastic)

No purchase protection

Check“A written order instructing a bank to pay upon its presentation to the person designated in it, or to the person possessing it, a certain sum of money from the account of the person who draws it.” Free Dictionary.com At some point in your life you will need to write

a personal check. You may also receive checks for:

Gifts Working Rebates on purchases Stuff you sell to other

people

Debit Card Debit cards are associated with your

checking or savings account; money is deducted right away.

Purchases can be made 2 ways1. As a Debit.

1. Enter your pin number2. May get cash back

2. As a Credit. It is still actually a debit purchase as the funds will be directly deducted from your checking or savings account. 1. Signature may be required

Credit Card Allows you to pay for purchases with the

bank’s money. Credit purchases will be added to your

credit card balance; you pay when the monthly statement comes.

Video: Difference between Debit and Credit cards (start at 0:30) and Debit vs. Credit

Electronic funds transfer EFTs are payments made from one person or organization to

another using a computerized device. EFTs include:

Direct-debit transactions Wire transfers Direct deposits ATM withdrawals Online bill pay services

Transactions are processed through the Automated Clearing House (ACH) network, the secure transfer system of the Federal Reserve that connects all U.S. banks, credit unions and other financial institutions.

Source: investinganswer.com

Electronic funds transfer You might use it for

Direct deposit of your paycheck into your checking or savings account

Repeating payments you make (Ex: car loan)

Paying for purchases Sending and receiving money with

friends/family (see PayPal) Note: It costs the U.S. government $1.03

to issue each check payment, it costs only 10.5 cents to issue an EFT payment.

Money order Alterative to using a

personal check Safe – don’t have to

share your checking account information

Purchase with cash, debit or credit

Purchase at bank, credit union, Post Office Fees apply – $1.25 – 1.50 for domestic Maximum $1000 face value Can use stop payment and tracking just like a check Find out what you need to know about “Accepting

Money Orders” at usps.com

Sources: ohiocatholicfcu, about.com and USPS.com

Cashier’s check As good as cash because clear immediately

(personal check sometimes take a few days to clear before you can withdraw the funds)

Guaranteed by the bank it’s drawn on; banks issue cashier’s check with bank funds and signs it.

Can be more secure than a personal check. Required for certain transactions such as real

estate transfers. You have to go to a bank to get a cashier’s

check. More info at wikihow.com You also have to pay a fee, from $0 to $10

Certified check A personal check can be certified by the bank

they are drawn on; the bank where the check payer's funds are deposited.

“A certified check is the written acceptance for a specific check (essentially an acknowledgment), by the Bank, that the Bank's Customer's signature on that check (1) is genuine and (2) there are sufficient funds in the Customer's account to honor the check when it is properly presented for payment. The check is signed by both the Customer and the Bank.” Credittoday.net

May be required for a car purchase. You can get one from your bank Fees apply ($5 - $10)

Traveler’s check Traveler’s checks are paper money that can be

used like cash; usually used for travel. Can protect you from identity theft because there

is no personal information on them. Safer than carrying cash plus no ATM fees Unlike cash, they can be replaced if lost or stolen

as long as you have your receipt. Fees apply, usually 1-2% Purchase at a bank or through American Express

or AAA. Video: American Express Traveler's Checks Ad

AssignmentCreate a comparison table.

List each type of money we talked (cash, check, etc.) on one side. On the other side list the situation where that type of money would be the best choice for you. For example, you might use cash when you go to the Flea Market; everyone’s answers will be different.

Create the table in Word and upload to Moodle, Unit 3 "Types of Money Comparison Table". You may work with a partner.