Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE1 CHAPTER Banks and Other Financial Institutions Financial Services and Electronic Banking Checks and Payment Methods Banking and Financial Services

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE2 Banks and Other Financial Institutions Goals Explain the purpose of the Federal Reserve System. List the types of financial institutions. Discuss factors for selecting a financial institution. 17-1

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 17 3 Key Terms Federal Reserve System (Fed) commercial bank credit union Federal Deposit Insurance Corporation (FDIC)

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 17 4 THE BANKING SYSTEM The Federal Reserve System (Fed) Federal Reserve activities Banking and the economy

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 17 5 What is the main purpose of the Federal Reserve System? Answer The Federal Reserve System was created by the federal government to supervise and regulate member banks and to help banks serve the public efficiently by holding reserves and clearing checks. Checkpoint >>

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 17 6 TYPES OF FINANCIAL INSTITUTIONS Deposit institutions Commercial banks Savings and loan associations Mutual savings banks Credit unions

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 17 7 TYPES OF FINANCIAL INSTITUTIONS Non-deposit financial institutions Life insurance companies Investment companies Consumer finance companies Mortgage companies Check-cashing outlets Pawnshops (continued)

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 17 8 What are some examples of non-deposit financial institutions? Answer Examples of non-deposit financial institutions include life insurance companies, investment companies, consumer finance companies, mortgage companies, check-cashing outlets, and pawnshops. Checkpoint >>

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 17 9 SELECTING A FINANCIAL INSTITUTION Services offered Savings accounts Checking and payment accounts Loans and other credit plans Other services, such as safe-deposit boxes Safety Convenience Fees and charges Restrictions

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter What factors should be considered when selecting a financial institution? Answer Factors to consider when shopping for a financial institution include the services offered, safety, convenience, fees and charges, and restrictions. Checkpoint >>

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE11 Financial Services and Electronic Banking Goals Identify the financial services used by consumers. Explain types of checking accounts. Describe electronic banking activities. 17-2

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter Key Terms safe-deposit box service charge debit card

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter TYPES OF FINANCIAL SERVICES Savings services Payment services Lending services Electronic banking Storage of valuables Investment advice Management of trusts

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter What are the main financial services used by consumers? Answer The main financial services used by consumers are savings services, payment services, lending services, electronic banking, storage of valuables, investment advice, and management of trusts. Checkpoint >>

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter TYPES OF CHECKING ACCOUNTS Regular checking accounts Interest-earning Checking accounts Special checking accounts

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter COMPARING CHECKING ACCOUNTS Minimum balance Interest rate earned, if any Monthly service charge Fees for other services, such as printing checks and stop payment orders Other restrictions

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter What are three main types of checking accounts? Answer regular checking accounts interest-earning checking accounts special checking accounts Checkpoint >>

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter ELECTRONIC BANKING E-banking services Automatic teller machines Payments at the point-of-sale Direct deposit Automatic bill payments

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter Examples of Electronic Banking Activities

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter ELECTRONIC PAYMENT OPTIONS Debit card transactions Online payments Stored-value cards Smart cards

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter BANKING IN THE FUTURE Financial services combined with wireless technology Personalized systems for obtaining, transferring, and using funds

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter What are common electronic banking services? Answer Common electronic banking services include automatic teller machines (ATMs), point-of-sale payments, direct deposit, and automatic bill payments. E-banking also includes electronic payment options such as debit card transactions, online payments, stored-value cards, and smart cards. Checkpoint >>

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE23 Checks and Payment Methods Goals Describe three main types of endorsements. Describe proper check-writing procedures. Explain the bank reconciliation process. Identify other payment methods. 17-3

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter Key Terms endorsement check register stop payment order bank statement bank reconciliation outstanding checks

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter OPENING A CHECKING ACCOUNT Benefits of checking accounts Convenience and ease of making payments Safety to make payments with less risk than using cash Proof of payment A record of finances for managing your money

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter THE FIRST DEPOSIT Signature card Joint account Deposit slip

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter Signature Card

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter TYPES OF ENDORSEMENTS Blank endorsement Full endorsement Restrictive endorsement Special endorsement Two signatures required Restrictive endorsement

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter Sample Endorsements Restrictive Endorsement Two Signatures Required Special Endorsement

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter What are the three types of endorsements? Answer Blank endorsement Full endorsement Restrictive endorsement Checkpoint >>

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter USING A CHECKING ACCOUNT Check-writing procedures Elements of a check The check register Writing a check Proper check writing Stopping payment

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter Parts of a Check

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter What is the purpose of a check register? Answer The purpose of a check register is to record all account activities so that the account holder will always know the account balance. The check register is also used for reconciling a checkbook with a bank’s monthly statement. Checkpoint >>

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter THE RECONCILIATION PROCESS Bank statement information Determine checks paid Find differences Calculate adjusted balance

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter Monthly Account Statement

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter Reconciliation Form

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter What are causes of differences between the bank statement balance and a person’s check register? Answer Checks that have not cleared Transactions that may not have been recorded in the check register Service charges Deposits mailed to the bank that may not have arrived by the time the statement was issued Interest earned Transactions whose amounts were not recorded correctly Checkpoint >>

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter OTHER TYPES OF PAYMENTS Certified checks Cashier’s checks Traveler’s checks Money orders

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter CERTIFIED CHECKS Personal check for which a bank has guaranteed payment Certification stamped on face Signed or initialed by a bank officer

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter CASHIER’S CHECKS Check that a bank draws on its own funds Costs the amount of the check plus a service fee More acceptable than the personal checks

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter TRAVELER’S CHECKS Special forms designed for making payments when away from home Require your signature in two places Cash a check or pay for a purchase Commonly accepted throughout the world

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter MONEY ORDERS Form of payment that orders the issuing agency to pay the amount printed on the form to another party A bank money order A postal money order An express money order A telegraphic money order

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter How does a certified check differ from a cashier’s check? Answer A certified check is a personal check for which a bank has guaranteed payment. A cashier’s check is a check that a bank draws on its own funds. Checkpoint >>