2. Financial Intermediaries Channels funds from savers to borrowers When you save you are essentially lending funds to others.

3. Types of Financial Institutions Commercial Banks: usually more branches Savings and Loans: fees usually lower Credit Unions: better loan rates Finance Companies: high risk customers/poor credit Life Insurance Companies: policy holders only Pension Funds: money contributions from employers, employees, or both. Investment banks: helps companies access capital markets (stock and bond market, for instance) to raise money for expansion or other needs.

4. Banks: Business that sells financial services Consumer loans Home mortgage loans Business loans (commercial loans) Checking accounts Credit card services Certificates of deposits Individual Retirement Accounts Safety Deposit Box

5. Choosing a Bank Top five Bank giveaways: Free Cash, Free McAfee, Museums on Us, Airline miles, Saks gift card. Check out the services they offer and the prices for the services Deposit $1 million in 60 month CD, get a Mercedes!

6. Questions to consider Competitive interest rate? Convenient location? Hours compatible to your hours? Insured by the FDIC? Provides the services you require? Provides courteous and efficient service?

7. What types of accounts? Savings – safe and earn interest Money Market Accounts Checking accounts Debit cards Certificates of Deposits IRA’s – Individual Retirement Accounts Money transfers

8. Opening an Account Money to deposit – DUH! Identification Social security # If under 18 – parents are added to account as guardian

9. Fees, Fees, and more Fees! ATM fees Debit card fees Check printing fees Stop payment fees Money order and bank check fees Balance inquiry fees Money market checking fees

10. Checking Accounts Checks were the hub of the banking system. You used to and still may get paid with a check or pay bills with checks

11. Life of a Check 1.You go shopping at Joe’s Electronics and buy a CD player for $100 with a check from an account you have with First National Bank, Your Town, USA. 2.Joe’s Electronics deposits the check in its account with Citizen’s Bank, Main Town, USA This can be done physically or by Check 21 Electronic Check Exchange allows for paper checks to be made into an electronic image. This reduced costs associated with sorting, transporting, and reconciling of paper checks. A merchant or bank will provide this service. 3.The store or bank places a magnetic ink code for the dollar amount in the lower right-hand corner of the check. 4.Citizen’s Bank credits Joe’s account. 5.Citizen’s bank sends an electronic image of the check to the Fed 6.The checks are read for financial institution information and amounts 7.After the Federal Reserve Bank processes your check, Citizen’s bank is credited with $100. 8.After processing the Federal Reserve presents the check to First National Bank for payment. 9.Your bank pays the Federal Reserve and debits your account.

12. Minimum Balances The least amount of money a bank requires you to keep on deposit to qualify for certain benefits like reduced fees or free checking, or to earn a stated rate of interest. Usually figured on the average minimum balance for the month. Be careful not to sign up for accounts with required minimums for earning interest or avoiding fees if you’re not likely to meet them. Can be costly mistake!!!

13. Float There is a short period of time between when the store’s bank is credited for the check and when your bank is presented with the check. During this time, both financial institutions have the same funds available to them, called float. During week-ends or holidays when high volumes of checks are being processed, float is created. Imaging (Check 21) has been created to reduce float.

14. Issues: Bounced Checks Bouncing checks – if there’s not enough money in your account when you write a check – your bank can refuse to honor it, or pay it. The person who cashed it could be charged a fee as well as you who wrote it. Today those charges are typically $30!!!

15. Overdraft Protection Best way to avoid bounced checks A special line of credit that covers checks you write when there isn’t enough money in your account The bank automatically transfers money to your account to cover the check. Some banks now have you apply for a credit card They charge you interest on the amount transferred but it is less than the Insufficient Funds charges

16. Stop Payment If you write a check and then decide you don’t want to pay, or if you lose the check, you can – for an extra fee – stop payment. This has to be done with 14 days of the issued check and lasts for six months. The fee is usually $15.00. The bank must honor your order if it is timely. Always keep receipts to show written proof of a stop payment

17. Special Checks There are times when your personal checks are just not good enough!! Sometimes you will need to guarantee the payment if a large amount of money is involved. Banks can provide several types of special checks, as can the U.S. Post Office.

18. 1. Special: Cashier’s Checks Guarantee that the check is good because it is drawn against the bank’s account You give the bank money and they write the check on a machine-printed check. You get a carbon copy of the check. 2. Special: Certified Checks Personal checks that your bank guarantees it will honor. You write the check, your bank freezes, or puts a hold on your account for the amount of the check, and stamps certified on the face. There is a fee for each certified check, and you can’t stop payment once it reaches its destination.

19. 3. Special: Traveler’s Checks Issued by travel companies, banks, and credit card companies to be used in place of cash. Purchase various fixed denominations in local or overseas currencies. Sign your name on checks, and when you redeem them the vendor makes sure they match, along with some ID. If lost or stolen you can replace them immediately. 4. Special: Money Orders Useful if you don’t have a checking account. They cost about $3.00 at banks and about 80 cents at post offices. Also available at Wal-mart, Albertsons, etc. for much lower. Least expensive of the guaranteed checks.

20. ATMs You can avoid long lines for deposits or cash by using an ATM Most banks are part of regional and international networks that let you withdraw cash from your accounts at ATMs around the world. You can complete as many separate transaction as you want, but you can only withdraw from $200-$500 per day.

21. Monthly Statements Balancing your checkbook every month helps you keep tabs on where your money is going. You have a monthly snapshot of your dealings with the bank all on one document. CHECK YOUR STATEMENTS MONTHLY!!! WEEKLY!!! DAILY!!! This is how you can notice if you have had your account information hacked.

22. Certificates of Deposits (CDs) Minimum deposit is $500. Time length: 30 days - 5 years. Money put in = principal, the length of the CD = term, and the time it ends = date of maturity. The yield or interest is higher and it is insured up to $250,000 (FDIC) Interest is compounded daily, monthly, quarterly, or semi- annually. Risks of CD’s Money locked in at a specific rate, even if interest rates rise. Lose interest if you withdraw money early – usually 3-6 months interest If your bank merges – your CD terms and rates may change

23. Savings Putting money away for a rainy day is the basic idea behind savings accounts. Most banks allow transfers from savings to checking, checking to savings, savings, to checking, etc., etc., etc. You can get your money any time you want, but interest is usually lower Insured up to $250,000 (FDIC)

24. Safety Deposit Box Designed to keep important papers and objects, such as deeds, jewelry, birth and marriage certificates, plus an inventory of your valuable possessions. Usually a shoe box size is about $25/year Can be important in case of emergency or tragedy.