The Accounts Issue The Accounts Issue www. FirstCommand.org

Principles Discussed FDIC Insurance Checking Accounts Checks and Check Registry Bank Services Bank Products ATM/Debit Cards Savings Accounts Certificate of Deposit (CD) Money Market Accounts The Accounts Issue www. FirstCommand.org

FDIC Insurance The Federal Deposit Insurance Corporation Independent agency of the federal government Insures deposits in banks and thrift institutions for at least $250,000 Identify, monitor and address risks to the deposit insurance funds Limit the effect on the economy and the financial system when a bank or thrift institution fails Insures deposits only The FDIC directly examines and supervises about 5,250 banks and savings banks; more than half of the institutions in the banking system. The FDIC is the primary federal regulator of banks chartered by the states that do not join the Federal Reserve System. In addition, the FDIC is the back-up supervisor for the remaining insured banks and thrift institutions. FDIC Insurance safeguards an individual’s account in case of situations when a bank fails and is unable to stay in business.   The Accounts Issue www. FirstCommand.org

Checking Accounts The Accounts Issue www. FirstCommand.org

Understanding Checking Accounts Advantages Safety Control over spending Records of activity Interest income Disadvantages Fees Penalties Advantages Safety – accounts are FDIC insured up to $100,000, so there is not a likely chance of losing your money Control over spending – having cash on hand becomes hard to monitor how much you actually spend on a daily basis. Banks usually send itemized statements, which lets the customer know exactly where they are spending money Records of activity – online or paper statements helps you keep track of your deposits and withdrawals Interest income – some checking accounts allow you to accrue interest for the amount deposited Disadvantages Fees & Penalties Some of the fees associated with having a checking account are: Transfer fees – moving money from one account to another – for example from your savings to your checking ATM fee - either a fee to use your bank’s ATM or another bank’s ATM, and some cases, both Cash-advance fee – when your credit card is linked to your checking account, any overdraft amount becomes a cash advance on your credit card, causing you to be charged a cash-advance fee Bounced check – usually you get charged a bank fee and a merchant fee, plus you owe the amount you over-withdrew. This is also called a NSF fee (non-sufficient fund fee) The Accounts Issue www. FirstCommand.org

Opening a Checking Account Required documents and information Identification, Address Date of Birth Social Security Number Application Signature card Deposit Upon receipt of checks, verify personal information Read everything before signing Here is a list of documentation needed when you open a bank account. When you receive your of checks, verify all your personal information. Make sure to read everything to see what services you will be paying for and which ones are free, and how the bank will handle over-drafting and day-to-day services. The Accounts Issue www. FirstCommand.org

Maintaining a Checking Account Do not include these on your printed checks: Social Security number Driver’s license number Date of birth Phone number If using joint account, inform co-owner of all account activity There are some things that you should never put on your printed checks, including your:   Social Security number Driver’s License number Date of birth Phone number Let joint owners of the account know of any activity and changes to the account. The Accounts Issue www. FirstCommand.org

Writing a Check A C B D E F Date- The amount written in letters – The date the check is written Show cents as a fraction of 100. Pay to the Order Of – The organization or person to whom you are writing the check For Example: Fifty-Seven and 50/100----------. Ensure that the information in C and D match The numerical amount – For example: $57.50 The memo line Note what was purchased Your signature Here are the items that need to be filled when writing a check (A-F): Date- The date the check is written Pay to the Order Of – The organization or person to whom you are writing the check The numerical amount – For example: $57.50 The amount written in letters – Show cents as a fraction of 100. For Example: Fifty-Seven and 50/100----------. Ensure that the information in C and D match The memo line Note what was purchased Your signature The Accounts Issue www. FirstCommand.org

Using the Check Register Item No. – The check or transaction number Date – The date money came in or went out Description of Transaction – The organization or person to whom you wrote the check or made the debit purchase, or the type of activity (deposit, ATM, transfer...). Then in the gray area below, write the purpose. Payment, withdrawal, or fee amount The check mark – Mark this column as you are reconciling (balancing) your checkbook. Code – This optional column is to help you record the type of transaction. (Codes are listed in the register). Amount of deposit or interest – Balance – Add or subtract as appropriate to calculate the balance each time you record a transaction. The check register is used to balance your account and for an individual to keep track of their spending and deposits. This is normally found at the back of each checkbook that you receive from the bank. The Accounts Issue www. FirstCommand.org

Bank Services The Accounts Issue www. FirstCommand.org

Bank Products Online banking Overdraft services Banks offer a variety of products to their customers. One is online banking, where an individual can keep track of their account electronically.   Overdraft services are available, so if a person withdraws more money than what’s in the account the bank will pay it, out but will charge a fee and the overdrawn amount back to the individual. The Accounts Issue www. FirstCommand.org

Understanding ATM/Debit Cards These cards are issued for your checking account ATM - Automated Teller Machine Personal identification number (PIN) required Withdrawals, deposits, transfers Fees may be charged Debit PIN-based (direct) Signature-based (deferred) Record activities in check register PIN-based (direct) – purchase made using PIN; funds come directly from checking account immediately Signature-based (deferred) – carries Visa or MasterCard logo; PIN not used, sign slip; purchase amount deducted from checking account in 2-3 days The Accounts Issue www. FirstCommand.org

Understanding Savings Accounts Emergencies Short-term needs Avoid unnecessary use of credit Pay yourself first Direct deposit from paycheck Automatic transfer from checking account Automatic bank draft Although the interest gained through a savings account might not be high in comparison to other investment vehicles, having a savings account can be beneficial for several reasons. Putting money away each month into savings helps for emergencies or short-term needs. The primary role of a savings account is to help you pay yourself first. It helps individuals save for things they want to have, while a checking accounts covers the things they need. The Accounts Issue www. FirstCommand.org

Opening a Savings Account Required Information Identification Date of birth, address Social Security number Application Signature card Deposit Read everything before you sign up  Make sure to read everything to see what services you will be paying for and which ones are free, and how the bank will handle over-drafting and day-to-day services. The Accounts Issue www. FirstCommand.org

Certificates of Deposit FDIC insured up to maximum allowed Owner makes deposit of any amount CD earns specific rate of interest (usually higher than regular savings account) for a specific amount of time Larger deposits held for longer terms usually have higher interest rates At maturity, owner receives deposit amount plus interest earned Not for emergency savings Early withdrawal may be penalized Shown above are some criteria for a CD account. The Accounts Issue www. FirstCommand.org

Money Market Accounts FDIC insured up to maximum allowed Type of savings account with slightly higher interest rate than regular savings account May have limited withdrawal capability Higher interest rate if required average or minimum balance is maintained Interest compounded daily and credited at close of each statement cycle Used for monthly & emergency savings, short-term needs, larger planned purchases (vacation, car…) Shown above are some criteria for a Money Market account. The Accounts Issue www. FirstCommand.org

Questions First Command Educational Foundation 1 FirstComm Plaza Fort Worth, TX 76109-4999 Toll Free: 1-877-872-8289 www.FirstCommand.org The Accounts Issue www. FirstCommand.org