Banking and Financial Services 17 Banking and Financial Services 17-1 Banks and Other Financial Institutions 17-2 Financial Services and Electronic Banking 17-3 Checks and Payment Methods

LESSON 17-1 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. Chapter 17

Key Terms Federal Reserve System (Fed) commercial bank credit union Federal Deposit Insurance Corporation (FDIC) Chapter 17

THE BANKING SYSTEM The Federal Reserve System (Fed) Supervise and regulate member banks Bank for the banks, not an individual account All national banks members, state banks may join. Federal Reserve activities Holding of Reserves Clearing of Checks Change the interest rate Banking and the economy Allows others to use deposited funds Chapter 17

>> C H E C K P O I N T What is the main purpose of the Federal Reserve System? Chapter 17

TYPES OF FINANCIAL INSTITUTIONS Deposit institutions Commercial banks Full Service Banks, offer a wide range of services Savings and loan associations Specialize in savings accounts and home loans Mutual savings banks Owned by, and operated for its depositors. Savings and Home Loans Credit unions User Owned, not for profit. Accept savings deposits and loans (personal and business), checking Chapter 17

TYPES OF FINANCIAL INSTITUTIONS (continued) Non-deposit financial institutions Life insurance companies Investment companies Consumer finance companies Mortgage companies Check-cashing outlets For those without a bank account Pawnshops Chapter 17

>> C H E C K P O I N T Types of Institutions Worksheet Chapter 17

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 – FDIC insures up to $100,000. 99% are members Convenience – Hours, locations, online services Fees and charges Restrictions Chapter 17

SELECTING A FINANCIAL INSTITUTION Group Discovery Wells Fargo US Bank West Bank Bank of the West Iowa State Bank Veridian Credit Union Chapter 17

LESSON 17-2 Financial Services and Electronic Banking CHAPTER 17 4/19/2017 LESSON 17-2 Financial Services and Electronic Banking Goals Identify the financial services used by consumers. Explain types of checking accounts. Describe electronic banking activities. Chapter 17

Key Terms safe-deposit box service charge debit card Chapter 17

TYPES OF FINANCIAL SERVICES Savings services – Safe Storage of Money Payment services – Transfer of Money Lending services – Loans – Individual or Business Electronic banking – Electronic Funds Transfer (ETF) Storage of valuables – Storage of Valuables Investment advice – Financial Guidance Management of trusts – Money Management Chapter 17

TYPES OF CHECKING ACCOUNTS Regular checking accounts – lots of checks Interest-earning checking accounts- Avg. use Special checking accounts rare use of checks. Chapter 17

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 Chapter 17

ELECTRONIC BANKING E-banking services Automatic teller machines (ATM) Payments at the point-of-sale Direct deposit - Paychecks Automatic bill payments Chapter 17

Electronic Banking - Online Bill Pay Chapter 17

ELECTRONIC PAYMENT OPTIONS Debit card transactions – deducted right from Checking Online payments – Pay Pal, Bill Pay, Online Shopping Stored-value cards – Lunch, Laundry, and Transit cards Smart cards Chapter 17

BANKING IN THE FUTURE Financial services combined with wireless technology Personalized systems for obtaining, transferring, and using funds Chapter 17

LESSON 17-3 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. Chapter 17

Key Terms endorsement check register stop payment order bank statement bank reconciliation outstanding checks Chapter 17

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 Chapter 17

THE FIRST DEPOSIT Signature card Joint account Deposit slip Chapter 17

SIGNATURE CARD Chapter 17

TYPES OF ENDORSEMENTS Blank endorsement (Traditional) Full endorsement (Special) Restrictive endorsement (Specific) Chapter 17

SAMPLE ENDORSEMENTS Chapter 17

Endorsement Practice Chapter 17

USING A CHECKING ACCOUNT Check-writing procedures Elements of a check – Drawer, Payee, Drawee. The check register Writing a check Proper check writing Stopping payment Chapter 17

PARTS OF A CHECK Chapter 17

Check Writing Practice Time to fill out your own check. Using the practice check, properly fill out the check you have been given to pay a Des Moines Roosevelt Participation fee. Drawer – Yourself Payee – Des Moines Roosevelt Amount - $190.38 Purpose - Student Fees Chapter 17

THE RECONCILIATION PROCESS Bank statement information Determine checks paid Find differences Calculate adjusted balance Chapter 17

MONTHLY ACCOUNT STATEMENT Chapter 17

RECONCILIATION FORM Chapter 17

OTHER TYPES OF PAYMENTS Certified checks Cashier’s checks Traveler’s checks Money orders Chapter 17

CERTIFIED CHECKS Personal check for which a bank has guaranteed payment Certification stamped on face Signed or initialed by a bank officer Chapter 17

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 Chapter 17

TRAVELER’S CHECKS Special forms designed for making payments when away from home Require your signature twice First Purchased Then, when you cash a check or pay for a purchase Commonly accepted throughout the world Chapter 17

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 – by the bank A postal money order – by the P.O. An express money order - by various agencies A telegraphic money order Chapter 17