Get Started Banking
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GET STARTED BANKING Picking the right bank for you! Banks and Credit Unions are the easiest ways to save money and keep it safe. They also provide helpful tools which can make your hectic life easier. Picking the right Financial Institution is Introduction important. Depending on what you want to do with your money there are many different options when it comes to banking. The presentation will go over the different aspects of Financial Institutions and what they can offer you. Banks Vs Credit Unions Types of Deposit Accounts C h e c k i ng S a vi n g s Certificate of Deposit Money Market Lending Money TABLE OF CONTENTS: Other Services Deposit Insurance National Credit Union Administration Other Financial Service Providers Finding the Right Institutions For You BANKS Banks are for-profit Financial Institutions. This means that they have customers and most banks are owned by shareholders. Banks owned by its customers are called “Mutual”. Banks often have Banks vs multiple branches which makes accessing them easier. Credit CREDIT UNION Unions Credit Unions are non-profits, instead of having customers they have members. Qualification for membership differs at each credit union. It can be where someone lives and works, their history with the community, or military service. Credit Unions are owned by their local members which means that they rarely have more then one branch. Types of Deposit Accounts you might find at a Bank For the rest of the lesson the word “Bank” will be used to reference both Banks and Credit Unions. Checking Accounts This account is best for money that is used for everyday expenses like bills, groceries, and shopping as it easy to access the money deposited into the account. Most checking accounts are connected to a Debit card. Which can use money directly from the account to pay for items both online and in-person. Some deposit accounts accumulate interest and most have fees for using them. Common fees are overdraft, minimum balance, and bounced check fees. Don’t worry it is very easy to avoid these fees! Sometimes banks will have special accounts which will have low or no fees to help people new to banking. Savings Accounts An account designed for saving extra money. This money is not meant to move around and often banks will limit how often money can be pulled out. Some accounts will have debit cards connected them although this is rare. Saving accounts will have better interest acumination and often fees. Many of these fees occur if money is moved out of the account too often or if the money dips bellow the minimum balance. Other fees like annual or monthly charges for maintaining the account can sometimes be removed if regular deposits are made. When getting any type of account at a bank ask about the fees. Certificate Of Deposit Certificate of Deposit (CD) accounts are a great way to grow a sum of money as they have higher interest rates than a savings accounts. However the money cannot pulled out of a CD until after a certain amount of time expires. This time can range from six months to several years. If the money is pulled out there can be a large penalty fee or all of the interest gathered will be lost. There are a wide variety of CD accounts to choose from. Money Market These types of deposit accounts are not offered at all banks. They are similar to saving accounts, however they have large deposit requirements for opening the account (normally starting at $1,000) and often a minimum balance requirement. This means that the amount of money in the account cannot be below a certain number. If the account balance falls bellow this number you will be charged a fee. These accounts will have higher interest rates than a regular savings account which means your money will grow faster. Check out our Introduction to Credit lesson for more information on how credit works Lending Money Credit Cards Personal Loans Auto Loans A card linked to account Banks offer personal loans that Some people believe that you which can be used to can be used for a number of can only get a car loan from a borrow money from the projects, such as remodeling a dealership. This is not true. bank. Credit cards are home. They are a form of Banks offer auto loans and often unsecured credit and can have they have safer rates then those unsecured credit and thus high interest rates and fees. offered at dealerships. have high interest rates. Normally these accounts Student Loans Mortgages have fees and a minimum payment that is due A unsecured loan that can be Mortgages are loans secured monthly. used to pay for collage or by a home. They often have schooling. They have varying rates and a fixed Some of them have installment plans and many installment plan. The bank rewards like cash back and start while the student is in will verify the homes value travel miles. school. before offering a loan for it. Cashier’s Checks Check Cashing A check that is certified Banks can take checks by a bank and thus has and exchange them for better security. These cash. Often you don’t are good for larger have to be a customer Automated Teller purchases like down Online or mobile to use this service, but Machines (ATMs) payments on cars or banking you do have to pay A machine that can be houses. They have Using banking services used for banking needs fees for acquiring online or with an app can fees. outside of banking hours. them. be very helpful. It is a ATMs can withdraw, good idea to keep on eye deposit, or transfer on your accounts. money. They can also accept payments services. Some other services are If you use an ATM not transferring money, associated with your bank depositing checks, and you will be charged a fee. paying bills. Other Services When looking for a bank check to see if it’s insured by the FDIC. This means that if the bank fails money you deposited into it will be returned to you. This insurance covers the deposit accounts we mentioned, cashier’s checks, and money orders. Deposit The FDIC will not cover stocks, bonds, and mutual funds which banks offer as well. For information about FDIC visit www.fdic.gov or call Insurance 1-877-275-3342. NCUA is similar to the FDIC but it insures Credit Unions. For information about the NCUA visit www.mycreditunion.gov. Money Order P2P Payments Prepaid Cards Money orders can be A service which will A card which funds transfers money from acquired from banks, can be loaded onto one person to stores, and post Other another. Sometimes and then used. It offices. They are through a bank, but can be bought in similar to cashier most often through a Financial checks accept with stores and third party. Examples: sometimes have fees lower fees. It is Paypal, Zelle, Venmo, Services important to be carful and Facebook Pay. for using them. when using them Often used by because they have employers or as an Available less security then easy way send cashiers checks. money as a gift. Note: Try to avoid Prepaid cards as payment from employers. Checks, money orders, or direct deposit are the best options because depositing income gives it a chance to grow. Even if you know how banks work it can be hard to figure out what THAT'S GOOD TO you need from one. On the next slide we will go over different KNOW, BUT WHAT questions you can ask yourself to help discover your financial DO I NEED? needs. Questions to Ask Yourself Do I need a safe place to keep Do I have extra money left I need to send some money. over every month? my money? What should I use? A: No A: No A: Money Order (Consider other reasons you (Create a Budget to make this (If paying bills or giving a large might need a bank) possible) amount to friend/family) A: Yes A: Yes A: Cashiers Check (You need a Deposit or Savings (You need a Savings, Money Account) Market, or a CD Account) (Paying Rent, down payments, or giving a great amount to Yes Yes friend/family) Do I need access to this Do I need access to this money regularly? money? Do I have a lot of extra money? A: Yes A: No A: Yes (You need a Deposit Account) (You need a CD Account) (You need a Money Market A: No A: Yes Yes Account) (You need a Savings Account) (You need a Savings or Money A: No Market Account) (You need a Saving Account) Questions to Ask Yourself Do I need to borrow Do I need to build credit or Ask yourself these questions have a small amount regularly before shopping for a loan: money or build my available for me to use? What do I need this loan for? credit? A: Yes Yes No A: Yes (You need a credit card) A: No How much money do I need? A: No (You need a loan) What can I afford right now? No Yes Should I focus on rewards? How much can I afford if I Awesome! Look into wait and save money? budgeting to lower your A: If you are trying to build current debt or start saving credit no. Try to find a low fee and low interest card. more money. Never borrow How long can I wait? money unless it has a A: If your finances are stable specific purpose and you and your credit is already strong you should focus on have the ability to pay it Do I actually need this loan? rewards.