Financial Institutions Pay Day Loans Commercial Bank Credit Union Brokerage Firm © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman

Pay Day Loans It works like this: You want money today, but payday is a week or two away. You write a check dated for your payday and give it to a check-cashing outlet. You get your money, minus a fee (usually about $15 per $100 borrowed). In two weeks, the check-cashing outlet does one of two things: Cashes your check. Lets you pay another fee to renew the loan for another two weeks. © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman

© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman

© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman

© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman

© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman

© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman

© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman

© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman

© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman

© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman

Victim of Pay Day Loans One young lady found out how payday loans work when she needed $200 to pay her bills. A storefront loan office, called "Check Into Cash," let her write a check she couldn't cover and gave her $200 on the spot. They agreed not to cash it until her next payday -- for a $38 fee. When payday came, the $16,000-a-year hospital food service worker didn't have $200 to spare. No problem, the payday lender said, pay another $38 and you're off the hook until next payday. A year later she had paid $1,220 in fees. And she still owed the $200. © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman

Victim of Pay Day loans Rhonda Keller* and her two daughters experienced a financial crisis last summer that sent Rhonda looking for help from payday lenders. Rhonda fell into the payday lending debt trap - the terms of the loans she took out required her to either pay them off in less than two weeks or have $90 fees automatically debited from her bank account repeatedly. Those loans, at triple-digit APR, have cost her much more than the exorbitant fees. © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman

Victim of Pay Day loans Sandy Hudson’s first payday loan was for $100, with an $18 fee. All she needed was a source of income and a banking account, so she walked into the shop, and walked out 15 minutes later with the loan. Sandy got caught up in the payday lending debt trap, taking out multiple loans to pay the fees on each one as they became due. At one point, she was paying $300 every two weeks for four different loans. Over a six month period, this added up to $3600, © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman

Commercial Bank Full-service financial institutions Wide variety of services and products Operate under state and federal laws Usually the largest financial institutions FDIC insured Examples – Wells Fargo, US Bank, First Interstate Bank © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman

Commercial Bank Services Checking Accounts They are the only financial institution allowed to offer non-interest paying checking accounts Savings Accounts Safe-Deposit Boxes Credit cards Certificate of Deposit (CDs) Financial Services Investments Loans Mortgages © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman

Credit Union Non-profit cooperative financial institution, member owned Members may have a common bond such as same employer, union, location, etc. Usually charge lower fees and loan rates and offer higher interest rates May offer free financial counseling NCUA insured Examples – America First Credit Union, University of Utah Credit Union © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman

Credit Union Services Share Draft Accounts (checking) Share Accounts (savings) Share Certificate Accounts (CDs) Safe-Deposit Box Credit Card Financial Counseling Investment Loan Mortgage Retirement Plan Account © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman

Brokerage Firm Relatively new to the marketplace Licensed institutions Offer money management plans for investing Provide financial assistance and advice Monthly statements provided to track account activity Examples – Fidelity, ING, Merrill Lynch © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman

Brokerage Firm Services Investments Bonds Stocks Mutual Funds Financial Counseling Real Estate Investment Retirement Plan Accounts **Customers can move money between accounts easily © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman

Benefits & Advantages to using Financial Institutions © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman

Benefits of Financial Institutions Convenience Quick and easy access to money Different ways to access money Teller’s window, drive-up window, automated teller machine (ATM), and electronic banking Cost savings Less expensive to purchase money orders and to cash checks Other businesses may charge to cash checks Having a checking account instead of buying money orders saves money © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman

Benefits continued Safety Security Protection from fire, theft, & loss Money is protected by the federal government in federally insured institutions Up to $100,000 for each depositor Signs are displayed if institutions are insured stating: FDIC, NCUA, or Backed by the Full Faith and Credit of the United States Government Not all are insured – look for the sign and ask! © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman

Advantages Using one financial institution may include these advantages: Simplicity – having all accounts at one place can simplify banking Relationship – establishing relationships can be beneficial when applying for loans Lower interest rates on loans may be offered to loyal customers! © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman

Remember Shop around for the best service, rates, products, and locations before choosing a financial institution!!! © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman

BANKING INSTITUTIONS COMPARISON PROJECT (40 points) Answer the questions on the assignment sheet by searching the web, visiting the institution, or calling them. Create a poster with the logo and information from the questionnaire. © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman

BANKING INSTITUTIONS COMPARISON PROJECT PAY DAY LOANS Pay Day Loans Cash Store Affordable Loans Check Cash Advance Money Mart Loans for Less Mr. Money Quick Loan Utah Money Store J & N Pawn Loan Max © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman

BANKING INSTITUTIONS COMPARISON PROJECT BANKS Bank of American Fork Barnes Bank Brighton Bank Celtic Bank Chase Bank Far West Bank Zions Bank Wells Fargo Bank Frontier Bank US Bank © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman

BANKING INSTITUTIONS COMPARISON PROJECT CREDIT UNIONS America First C. U. Cyprus Credit Union Trans West C. U. University of Utah C. U. Utah First C. U. Jordan C. U. Mt. America C. U. Intermountain C. U. Deseret First C. U. © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman

BANKING INSTITUTIONS COMPARISON PROJECT BROKERAGE FIRMS (Financial Advisers) AIG Fidelity ING Merrill Lynch Smith Barney Waddell & Reed Ameriprise Financial AAA Financial Planners Lincoln Financial Adv. Progressive Planning © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman

The End © Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Financial Institutions Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman