17-2 Financial Services and Electronic Banking

Types of financial services Savings services Financial institutions accept money for safekeeping. A broad range of savings plans are available Payment services The ability to transfer money to others Several types Checking accounts Debit cards Online payments Automatic withdrawals

Types of Financial services cont. Lending Services Most people, businesses and government need to borrow money at some time. Banks offer many types of lending Auto loans Business loans Student loans Home loans When paying with a bank credit card (not a debit card) you are borrowing money from the bank

Types of services cont. Electronic Banking Electronic fund transfer refers to the use of computer and other technology for banking services. Includes: ATM, Point-of-sale transactions, direct deposit, and automated bill payment. Storage of valuables Banks offer safe deposit boxes Individuals keep jewelry, rare coins, investment certificates birth records, list of insurance policies, and other valuable documents Banks do not have the right to open your box only you do.

Types of services cont Investment advice Many financial institutions offer investment advice Can assist customers whether it is wise to buy a certain house, how to manage money, or how to exchange money in foreign currency Management of trusts Banks mange investments on the behalf of customers When thy do this the money or property turned over is said to be held in “trust” Mainly used for very young and very old people.

Types of Checking accounts Regular checking accounts If you write a lot of checks use a regular checking There are no service charges for writing checks You must maintain a certain balance Often $300 or higher Interest Earning Checking Accounts You earn money on your money Usually must have a high monthly balance If it falls below the monthly balance you will not receive interest and will have a service charge Usually interest rates vary depending on the amount in the account.

Types of Checking Accounts Special checking accounts If you do not write a lot of checks this may be for you Banks usually charge a monthly service charge or cents a check

Comparing Checking accounts When selecting a checking account evaluate the following items Minimum balance Interest rate earned, if any Monthly service charge Fees for other services such as printing checks and stop payment orders Other restrictions Some banks lure you by having a low monthly balance but, beware of service fees.

Electronic Banking Automatic Teller Machines A debit or cash card is used for ATM transactions With a debit card you are using money in your account Notify bank within 2 days if debit card is stolen or is being used by an unauthorized. Your liability for unauthorized use is $50 in those 2 days. If you do not notify the bank within 2 days you have a $500 liability. Some ATM’s allow you to buy bus passes, postage stamps, and gift certificates Be aware of ATM fees. Make sure the amount you are taking out is worth the fees Payment at the point of sales A merchant accepts a debit card to pay for purchases. Most gas stations, stores, and restaurants accept them Some places are starting to put them in vending machines.

Electronic banking cont. Direct Deposit Your paychecks are electronically deposited in your account. Most places use direct deposit. Automatic Bill Payment You must authorize a bank to make the payments for you. For things such as rent, utilities, loans, and other bills. The bank automatically sends a check out for you

Electronic payment Options Debit Card Transactions Most restaurant, stores and other businesses accept debit cards if they are issued by visa or MasterCard When you make a purchase the amount is taken out of your checking account. Debit cards are used in 1 of 2 ways You sign a receipt similar to a credit card You are asked to enter your pin number similar to an ATM Online Payments Many online companies offer this feature They automatically take the payment out of your account Make sure there are no fees and that it is secure.

Electronic payment Options cont. Stored-Value cards Prepaid cards for things such as phone service, transit fees, highway tolls, laundry service, and school lunches Some of them are disposable Some can be recharged. Smart cards Sometimes called “electronic wallets” They have microchips and stores prepaid amounts, account balances, transaction records, insurance information, and medical history.

Banking in the future Almost every aspect will be electronic with wireless technology. Almost any transaction will be able to be made away from the financial institution An access card or a handheld device will provide a large number of services.