1. Banking Today Chapter 10: Sect. 3, Chapter 11 & Booklet

2. Types of Financial Institutions  Commercial Banks (aka: Bank)  Checking & Savings accounts, Deposits & loans are held here  Savings & Loans Associations  These banks give a higher level of savings and thriftier loans  Mutual Savings Banks  Serves people with smaller deposits/ accounts & other transactions  Credit Unions  Commercial bank with special services for a particular group  Finance Companies  Give out high interest loans for consumers who are usually unable to get loans, else where.

3. Money Supply  Categories  M1 is also valued with the liquidity of items  Example: currency, traveler’s checks, deposits  M2  Examples: Savings accounts & Mutual Funds

4. Functions of Financial Institutions  Store Money  FDIC (Federal Depository Insurance Corporation)  Saving Money  Savings & checking accounts, Money Market Accounts & CD (Certificate of Deposits)  Loans  Mortgages  Usually last15, 25 or 30 years, some places offer more or less.  Must put 20% M1/ cash down, first  Credit Cards  Form interest, principals, and compound interest

5. Electronic Banking  ATM ( Automated Teller Machines)  Debit Cards  Use at ATM or businesses (similar to a credit card), so money can automatically comes out of checking account  Home Banking  You can pay bills, transfer money, set-up deposits (direct deposit) & gain information  Automatic Clearing House (ACH)  Pay without writing checks on monthly bills (automatic debit)  Stored Value Cards  Ex: pre-paid cards, phone cards  Colleges tend to use for students to pay for cafeteria, copies, etc. Money comes from student’s accounts

6. Credit Reports vs. Credit Scores Credit Reports  Components  Identify Personal Information  Public Record Information  Stays on report 7 to 10 years  Other credit Information  Credit Inquiries  People/ businesses that have requested your credit report.  Paper reports (hard) remain on record for 2 years and will lower your credit score Credit Scores  Every time you apply for any form of credit it can affect your score  Bankruptcies, debt, multiple lines of credit can lower your score  Bad credit can interfere with loans, employment renting & education  FICO (Fair Isaac Corporation) sets-up the score levels between 300-850  Higher the number the better credit you have. (700-850 “Excellent”)  300-500 is “BAD”

7. How to keep a strong credit score?  Pay bills & Loans, on time  Create a long & diverse credit history  Limit account inquiries  Keep debit low  Pay-off every month, before interest gets added on.  Monitor credit score & history, at least once a year.  Free reports: www.annualcreditreport.com or (877)322-8228 www.annualcreditreport.com

8. Check & debit card OOPs!  NSF (Non Sufficient Funds) will acquire when you write checks or use your debit card without having enough money in the account.  Consequences:  Fee of $25.00 or 5% for every overage  If not paid within 15 days, bank can charge you double of what you owe.  If enough money accrues or there are too many NSF charges the bank can press charges and take you to court.

9. How to obtain credit/ loan?  Character (credit reputation)  Check to see if you pay bills on time  Capacity  Present ability to re-pay the loan  Capital  Property & other capital that totals up to more than the debt  Conditions  Consider other forms of debt, employment & personal factors  Collateral  Property that can be mortgaged or used as security for payment  Common Sense  Person’s inner ablity to make wise decisions

10. What to do when obtaining a large purchase ?  Research the item you are wanting to purchase and all its substitutes.  Ex: Price, specifications, resale value, depreciation & quality.  Compare item with its substitutes  Acquire a loan, if necessary.  Can get pre-approved and should conduct the first 2 steps in the acquiring of a loan.  Get quotes from several places  Negotiate the price  Make the purchase by signing legal documents  Be aware of warranties & return/ exchange policies  Read the entire document before signing.

11. How to choose a Credit Card?  Find out the APR (Annual Percentage Rate)  Check to see if they have an annual fee  Find out how long is the grace period  Most are 20 to 30 days, but some have 15 days.  Check what will be your credit limit  Check rules / regulations & fees for payments, if your card is stolen or your information is used.  Find out any additional fees  Balance transfer  Cash Advance  Late payments  Exceed credit limit or change credit limit  Pay by phone/ customer service

12. Credit Card Etiquette  When get your card sign the back or place “SEE ID” & call to activate it.  Never lend out your credit card or it’s information to anyone; unless you are on a secured phone line or website.  File all information and statements  Check each statement with matching receipts, every month. This will allow you to find any errors or fraud.  Sign all receipts, fully, & place a line through any blank spaces/ lines  You can monitor your credit card online for purchases to keep up with your balance & possible prevent fraud.  Create a monthly budget to avoid credit card debt.

13. How to get out of debt?  Do not use credit cards.  Sign-up to opt-out of pre-approved credit card offers (1-888-567-8688)  Pay more than minimum balance  Decide which credit cards to pay off first  Start with High APR or highest balance  Negotiate a lower APR or payment plan  Gain credit counseling services or financial advisor, if needed.  After pay-off, only keep 1 or 2 credit cards with a low APR. Only use for emergencies or necessities & then pay-off at the end of the month, before interest gets added on.