Depository Institution Discovery

Depository Institution Business that offers and sells financial services to people Checking Accounts Savings Tools Assist people with daily financial tasks

Types of Depository Institutions Credit Union Savings and Loan Institution Commercial Bank

Commercial Bank The most popular type of depository institution Lend, issue, borrow and protect customer’s money Offer a better way to track and manage money Provide records of money deposited, or put into an account, and money withdrawn, or taken out of an account

Checking Account Very common type of account Offers safety and convenience Most do not pay interest, or additional money earned Frequent withdrawals and deposits are expected

Withdrawing Money Checks Debit Card Legal documents that function like cash If sufficient funds are not in the account, checks can “bounce” Fee Harm future opportunities for credit Debit Card Electronically connected to an account When purchases are made, money is automatically withdrawn from the designated account A PIN (Personal Identification Number) is required to confirm the user is authorized to access the account

Check 21 Check Clearing for the 21st Century Act Money is automatically withdrawn from an account as soon as a check is written Makes it difficult to “bounce checks” An individual must have money in his/her account to make a purchase

Opening a Checking Account Read through the contract from the bank Complete a Signature Authorization Card Printed name Signature Social Security number Telephone number Address Date of birth Make an initial deposit

Interest Earning Checking Account Checking account that pays a small amount of interest 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

Savings Tools Savings Account Money Market Deposit Account Certificate of Deposit (CD)

Savings Account Keeps money safe until the owner needs it Emergencies Purchase expensive items Money can be deposited and withdrawn an unlimited number of times each month No check writing privileges A debit card may be used with certain accounts Money has the opportunity to earn more interest than if it was in an interest earning checking account

Money Market Deposit Account Pays a higher interest rate than a regular savings account Requires more money to open than a regular savings account Money can be withdrawn only a limited number of times each month with checks or a debit card

Certificate of Deposit 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

Commercial Banks Safety Storing large amounts of money in a commercial bank is safer than at home Fire, burglary, or other type of disaster Federal Deposit Insurance Corporation (FDIC) Protects money in bank accounts from loss

Quick Review Depository Institution Checking Account Savings Tools Savings Account Money Market Deposit Account Certificate of Deposit (CD) FDIC