Chapter 10 Section 3

 Service 1: Customer Can Store Money  Banks store currency safely  Insured against failure  Safety deposit boxes  Service 2: Customers Can Earn Money  Paying interest on savings accounts  Money market accounts and CDs pay more interest  Service 3: Customers Can Borrow Money  Banks lend money through fractional reserve banking  Bank loans to approved customers  Credit card purchases are loans

 Government regulated interest rates  1980’s, 1990’s, deregulation ended restrictions  Led to mergers, interstate banking  Advantages  More competitive  More services  More branches  Disadvantages  Fear of larger banks  Financial Services Act of 1999 lifted remaining bank restrictions  Fear of larger banks

 Technology has led to electronic banking  Automated teller machines (ATMs)-use special cards  Customers make transactions without bank officers  Linked to bank’s computer network  Need PIN  Debit Cards-used to withdraw cash or make purchases  Linked to bank account  Use at ATMs and stores  Stored-value cards-represent money holder has on deposit with issuer  Pre-paid cards

 Online deposits,  Direct deposits  Transactions reviews  Statement review