Where should I put my money? Checking? Under the mattress? Savings? An introduction to banking.

Banking vocabulary Source: PDESAS.org, Wikipedia balance - the current amount in your account ($$$) bounce: a check cannot be cashed or deposited because there is not enough money in the account it was drawn on check - a piece of paper (usually) that orders payment of money check register - where you record all account transactions checking account - a place where you can deposit and withdraw money credit - money that goes into your account debit - money that comes out of your account deposit - money put into your account depository institution – financial institution that accepts deposits from consumers Direct deposit – earnings are deposited into a checking or savings account lieu of a paper check endorse - sign your name on the back of a check Source: PDESAS.org, Wikipedia

Banking Vocabulary memo line - record what the check was written for mutual fund - investment portfolio shared with others outstanding - transaction not appearing on your bank statement overdraft - when you write a check with too little money in the bank reconcile - you and the bank agree on how much money is in your account routing number - identifies the bank where you have your account signature card – account holders’ signatures kept on file to verify signatures withdrawal - money taken out of your account Sources: PDESAS.org, Wikipedia

Depository Institutions AKA: Bank Primary source of funding is savings deposits. Banks lend money to consumers (people) and commercial customers (businesses) and make investments in real estate, treasury bills, and more. Banks have to give depositors back their money when they ask for it. Uses that money to generate profits through loans and investments Source: http://thismatter.com/money/banking/depository-institutions-types.htm

Depository Institutions Includes: Commercial banks Savings banks Savings and loan associations Credit unions Differences: Customers and products Regulation For-profit or non-profit Note: Check cashing businesses are financial institutions but are not depository institutions. More at: check cashing.com Source: http://thismatter.com/money/banking/depository-institutions-types.htm

Depository Institutions Someone deposits money Bank makes loans and other investments with money deposited Bank profits pay interest to depositors and dividends to investors Bank makes money on investments and interest on loans

Depository Institutions Anytime you give your money to someone with the expectation that the person will hold it for you and give it back when you request it, you’re either dealing with a depository institution or acting very foolishly.  -- Dummies.com

Commercial Banks Main purpose: financial services for businesses; make a profit for their shareholders Largest and most diverse depository institutions Greater emphasis on business customers Regulation State supervision-- OR -- Federally by the Office of the Comptroller of the Currency (Treasury Department). Source: http://www.ct.gov/dob/cwp/view.asp?a=2235&q=297886 and https://www.subjectmoney.com/definitiondisplay.php?word=Depository%20Financial%20Institutions

Savings Institutions AKA: Thrift institutions Main customer: local community. Keep it local by using local depositors’ money to make loans to local customers – individuals and small businesses. Include: Savings and Loans – biggest lender of consumer mortgages Savings Banks

Credit Unions Main purpose: consumer deposit and loan services Non-profit Any money made is returned to depositors through higher returns on savings and lower interest rates on loans Financial cooperatives – owned by members of some group (members of a union, religious group, etc.) Accounts are called share accounts; deposits made are purchases of shares (partial ownership) Credit Union earnings returned to members in the form of dividends Source: wdfi.org

Credit Union Promo

Federal Deposit Insurance Corporation (FDIC) What is the FDIC? An independent agency of the U.S. government that insures depoits. Since the FDIC's creation in 1933, no depositor has ever lost even one penny of FDIC-insured deposits. Insures deposits up to $250,000 More information at FDIC.gov

National Credit Union Administration (NCUA) Insurance deposits made at credit unions Insures deposits to $250,000

Money Talks Let’s look at the “Money Talks” Newsletter for an introduction to checking accounts.