1. Section 5.1 Financial Services and Institutions
Chapter 5: Banking
Section 5.1
Financial Services and Institutions

2. How to manage your cash
When banking started in 1791 there were only 8 branches.
Today there are over 11,000 banks, 2,000 savings and loans, and 12,000 credit unions
Your choice of financial services will depend on your daily cash needs

3. Daily Cash Needs What do you spend money on from day to day?
Do you carry around cash?
Do you have a debit card?

4. Sources of Quick Cash Sometimes you need more cash than you have
Do you take it from your savings?
Do you borrow from a financial institution?
What are the pros and cons of each?

5. Types of Financial Services
Banks offer a variety of services to stay competitive with other banks
Savings
Payment services
Borrowing

6. Savings
What are some types of savings that we have already talked about?

7. Payment Services
Transferring money from your personal account to a business or another individual
This can sometime be referred to as an auto transfer or a bill payment

8. Borrowing
What are some ways that you can borrow money that we have already discussed?

9. Other Services
Larger banks and their affiliates can offer a wide range of other services such as
Stocks
Bonds
Mutual Investments
Income tax assistance
Financial Planning Services

10. Electronic Banking Service
Online services can help customers get up to date account information
Security is the number one issue for online customers
Make sure you set your information up with a strong password or security code.

11. Direct Deposit How Many of you have a Direct Deposit?
An automatic deposit of net pay into your personal account
What are some advantages? Can you think of any disadvantages?

12. Automatic Payments
With your authorization a bank can either make a bill payment for you or you can set up for a company to take money automatically out of your account
Pros and cons??

13. ATM (Automated Teller Machine)
Did you know that using an ATM that is not owned by your bank charges you?
What happens if you lose your card?

14. Plastic Payments
POS (point of sale) transactions – a purchase with your debit card
Stored- Value cards – prepaid cards, can be reloadable or rechargeable

15. Opportunity Costs of Financial Services
Find a balance between your short term financial goals and your future financial goals
Are there locations near you
Are there convenient ATM locations
Do they offer free checking
What hidden fees are there

16. FDIC FDIC (Federal Deposit Insurance Corporation)
FDIC insures the money in your account up to $100,000

17. Commercial Banks
They are a for profit organization that offers a wide range of financial services
They serve individuals and businesses
They are authorized by the state or federal government to conduct business.

18. Savings and Loan Associations
Specializes in savings accounts and mortgage loans
They may offer the some services that a commercial bank offers such as, checking accounts, and loans
Insured by (SAIF) Like FDIC but for savings and loans associations

19. Mutual Savings Banks
Specialize in only savings accoutns and mortgage loans.
Do not offer commercial bank services
Have lower interest rates on their loans and higher interest rates on savings

20. Credit Unions
Nonprofit financial institution that is owned by its members.
Members usually have some type of bond like teachers credit union, or a labor union credit union.
May have lower fees and interest rates than commercial banks

21. Non- Deposit Institutions
Life insurance companies
Investment companies
Finance Companies
Mortgage Companies

22. Questions you need to ask yourself
Where can you get the highest interest rate?
Where can you bank with little to no fees?
Can you borrow money when you need to?
Do they offer free financial advice?
Do they have convenient locations?
Is online banking available?
Are they FDIC or SAIF insured?