 In order to stay competitive in today’s marketplace, banks and other financial institutions have expanded the range of services that they offer.  Four main categories:  Savings  Payment services  Borrowing  Other Financial Services

 Safe storage of funds for future use is a basic need for everyone.  Money that is going to be left in a financial institution for months or years is called a time deposit.  Money kept in savings  Certificates of Deposit  Selection of a savings plan is commonly based on interest rate, liquidity, safety, and convenience.

 Transferring money from a personal account to businesses or individuals for payments is a basic function of day-to-day financial activity at a bank.  Checking Accounts are the most commonly used payment service.  Money that you place in a checking account is called a demand deposit because you can withdraw the money at any time, or on demand.

 Most people use credit at some time during their lives.  Options for borrowing money:  Short term by using a credit card or taking out a personal cash loan.  Longer term borrowing may include car or mortgage loans.

 Insurance protection  Stocks  Bonds  Mutual Fund Investment accounts  Income Tax Assistance  Financial Planning Services

 Obtain cash; check account balance  Transfer funds:  From savings to checking  From savings to loan  From checking to loan  From checking to savings  Direct Deposit of paychecks, government payments  Preauthorized payments for insurance, mortgage, utilities, and other bills  Automated Teller Machines – Obtain cash; check account balances  Access “e-banks” with a complete range of financial services  Debit card retail purchases

 Many businesses offer their employees direct deposit, an automatic deposit of net pay to an employee’s designated bank account.  Direct Deposit saves time, money, and effort – and offers a safe way to transfer funds.

 Utility companies, lenders, and other businesses allow customers to use an automatic payment system.  With your authorization, or permission, your bank will withdraw the amount of your monthly payment or bill from your bank account.  It is very important when using Automatic payments that you have enough money in your account for the payment.  Arrange payments with when you receive your paycheck.  Check monthly statements to make sure payments were made correctly.

 A cash machine, or automated teller machine(ATM), is a computer terminal that allows a withdrawal of cash from an account.  ATMs are located in banks, shopping malls, grocery stores, and even sports arenas.  To use an ATM for banking, you must apply for a debit card, which is a cash card that allows you to withdraw money or pay for purchases from your checking or saving account.

 Some financial institutions may charge a small fee for the use of the card.  A debit card is in contrast to a credit card since you are spending your own money instead of borrowing additional money.  When using your debit card the computer will ask you to enter your personal identification number(PIN).  Never give this number to anyone!

 Although cash and checks are very common methods of paying for goods and services, various access cards are also available.  Electronic Payments  Online Payments  Stored-Value Cards  Smart Cards

 Commercial Banks: a for-profit institution that offers a full range of financial services, including checking, savings and lending.  Serve both individuals and businesses.  Organized as corporations with individual investors, or stockholders, contributing the capital the bank needs to operate.

 Savings and Loan Associations is a financial institution that traditionally specialized in savings accounts and mortgage loans but now offers many of the same services as commercial banks.  Services include checking accounts, business loans, and investment services.

 Mutual Savings Bonds: Owned by depositors and specialize in savings accounts and mortgage loans.  Some offer personal and automobile loans as well.  The interest rate on loans from a mutual savings bank may be lower than those that a commercial bank charges.  Sometimes pay a higher interest rate on savings accounts.

 A credit union is a non-profit financial institution that is owned by its members and organized for their benefit.  Most credit unions offer a full range of services

 Life Insurance Companies  Investment Companies  Finance Companies

 Would you pay $20.00 to borrow $100 for two weeks?  Most people without access to financial services use pawnshops, check-cashing outlets, loan stores, and rent-to-own centers.  Pawnshops  Make loans based on the value of tangible possessions such as jewelry or other valuable items  Usually small loans usually around $75 to be repaid in days.  State regulate rates, but 3% interest per month or higher is common

 Check Cashing Outlets  Charge anywhere from one to twenty percent of the face value of a check; the average cost is two to three percent.  Sometimes called currency exchanges, also offer services, including electronic tax filing, money orders, private postal boxes, utility bill payment, and the sale of transit tokens.

 Payday Loans:  Desperate borrowers pay annual interest rates of as much as 780 percent and more to obtain needed cash from payday loan companies.  In a typical payday loan, a consumer writes a personal check for $115 to borrow $100 for fourteen days.  The payday lender agrees to hold the check unitl the next payday. This $15 for the $100 loan for the next fourteen days translates into an annual percentage rate of 391%. Some consumers “roll-over” their loans. Paying another $15 for the $100. After a few roll-overs, the finance charge can exceed the amount borrowed

 Rent-to-Own centers:  Defined as stores that lease products to consumers who can own the item if they complete a certain number of monthly or weekly payments