© goodheart-willcox co., inc.. 8 financial institutions and services


8Financial

Institutions and Services


Chapter Objectives

• Identify different ______of financial institutions.

• _______the financial services that will best meet your needs.

• Use ______and debit cards responsibly.• _________a personal checking account.• Write and __________checks correctly.• ___________a checkbook balance.


Types of Financial Institutions

• Economic ______cannot function without financial institutions

• They are financial ____-_______ that keep money flowing throughout the economy among consumers, businesses, and government


Commercial Banks

• ___________banks offer a wide variety of services

continued


Commercial Banks

• ____________________________________(FDIC) maintains confidence in the banking system by– _______bank customers’ deposits– _______and ________financial

institution policies and operations


Savings and Loan Associations

• ____________________________(S&L) offer many of the same services of commercial banks

• _____S&L ______:– ________savings and loan associations– ________savings and loan associations


Credit Unions

• _____________memberships available through employers, unions, religious organizations, community organizations, or other groups

• ______operating ______ (no federal income taxes required) allow them to ____ _______ _______ rates on savings and charge _____ ______ on loans

continued


Credit Unions

• Either federally or state___________• __________________________________(

NCUA) – _________federal _________ – __________credit __________ across the

country– _________deposits


In Your Opinion

• Would you prefer to use a credit union if you had access to one? Why or why not?


Mutual Savings Banks

• Mutual savings banks exist in only ____states

• _______ _______ among depositors as dividends

• Offer a wide variety of services– Receive and pay dividends on

deposits– Make home mortgage and

improvement loans


Choosing a Financial Institution

• What ________ does the institution provide?

• What ______are charged?

• Is the staff helpful?


Safety

• Look for signs that say– “Insured by the________”– “Insured by the________”

• This means the institution is regularly _________and passes ongoing examinations


_______of Financial Institutions

• Electronic funds transfer (_____) makes transactions quickly and conveniently

• Automated teller machine (____) lets you access your account to ______cash, make__________, perform other services

• To use an ATM you need – an ATM_______– a personal identification number (_____)


Direct Deposits or Withdrawals

• Checks and payments are

• _________ _________into an account

• Bills can be paid _______writing and mailing _______

• Money can be _________

__________ from checking to savings


Point-of-Sale Transfers (_____)

• Moves money ______your _______to pay for a purchase without using______,______, or__________

• A merchant scans a ______card and purchase ______immediately ________ ______ customer’s to merchant’s ______account


Online Banking Services

• Online access to accounts using _________number and security______

• You can– _____account____________– _________account history– ________electronic bill__________– _________deposits, withdrawals, and

transfers

• Personal financial ________often available


Overdraft Protection

• _______—the act of withdrawing money or writing a check for an amount ______than an _______ ___________

• Financial institutions offer overdraft protection

• Banks _____ ____ for each overdraft


_____ _______

• A financial institution will _______to ______a ______ written by a customer

• A ____is usually________• Customers _______request this

service


_____-___ and _____-__ Services

• Customers make deposits and withdrawals by– _____– drive-up____________


_____-_______ Boxes

• Customers’ important documents and valuables are stored in a secure______

• An ______ ____ is usually charged


Other Special Programs

• ______ preparation ___________• ____reporting____________• ________ ____________• _______ ________ _______• __________ _______


Personal ______Accounts

• _______of checking accounts:– _____place to keep money– ____way to _____goods and services– ____way to ___ _____– Provides ________of deposits and

receipts– Aids in _______ ______________– Helps ______sound ______ ________


Accounts and Services

• Look for financial institutions that offer the accounts and services you want in a checking account

• Ask about availability of different features and their fees, if any


Restrictions and Penalties

• __________ ______requirements

• Withdrawal______________• ________penalties• ____ _________on

credit penalties


Fees and Charges

• __________ fees• ______for _____use• ____-__________ penalties• _____ -_________ fees• _______-__________ costs


Interest Rates

• Interest rates– paid on ________-________ checking

accounts– charged to _______ _________charged

to use a bank credit card

• _____for ____ _______ on _______and ____ ________ for using _________


Convenience

• Convenient_______• ______in various and convenient

____________• ______banking availability• _______ _______offered


Checking Account______

• ______checking accounts are good for people who write _____ ______ and can keep the _________balance

continued


Checking Account Types

• ________- ________account:– _________savings and checking account– Also called _____ _______ or

______accounts (Negotiable Orders of Withdrawal)

• ___________account:– An option for ____-_________ customers

(low min. dep., min. bal., low monthly fee, limit on # of checks written)


Opening a Checking Account

• _____a signature______• Those _____ ___usually need a

_____ _______with a______; spouses often share joint accounts

• ______all ____ ______ and _______ _____ that you use

• Keep ______of transactions with a ________


Managing the Cards Linked to Your Account

• ______of _____and ______cards:– _______need to carry lots of_____– ________to your ______at any_______– Access to your money almost________– Access to goods and services of

businesses that ___ ____ _____ ________

continued


Managing the Cards Linked to Your Account

• _____all __________• _______ _______ and _____in

checkbook register• __________ your card and PIN• ______ _____ ______ and don’t

overdraw your account


ATM Cards

• Use ATMs _______with your bank’s________– Usually ___ ____ charged – Other ATMs charge fees, which can

add up


Debit Cards

• Used at _____and ________that accept credit cards

• _______to writing a______; the purchase ______ ______ directly ____your ________ account


Making Deposits

• Deposits can be made– In__________– By________– at an____

• _____out a deposit_____• ______ _______ and ______ _______in

your register


_________Checks

• ______you _____or _______a ______made out in your name, you must endorse it

continued


Endorsing Checks

• _______ways to endorse a check:– _______endorsement–just the payee signs ( use at time and place of deposit or

cashing)– _________endorsement–the specific use is

noted, such as “____ ________ _____”(Used when banking by mail or ATM)– _________endorsement–the payee writes

“pay to the order of…” and signs, and the ____ _____ also ________


Writing Checks

• Use ____ _____• In case of_____, ______check and

write a new one• Fill in the

– ______– ________name – check amount in ______and_______– Your___________

continued


Writing Checks

• Filling out checkbook _________– Record check_____, _____,_______,

and_________– _______ check amount ____ __________– ______ _______ _____ and_______– ____ _______ amount to_______– For destroyed checks, write number

and “_______”


Balancing Your Checkbook

• Bank statements are sent out_________

• Always check the statements against your records

continued



• Bank statement contents include– beginning and ending___________– Total ______of ______and________– total amount of _______and_________– _______of checks paid (dates, numbers,

amounts) and canceled checks or check photocopies

– other items paid (withdrawals, fees, bills)

– deposits and credits (dates, descriptions, amounts)

continued



1. _______canceled _______with those recorded in checkbook register

2. ______ _______in register with those on statement and your receipts

3. _____ _____ transactions and _____in register against those on statement

continued



4. _______ service ______on statement from register balance

5. Account for checks, ATM transactions, and deposits not yet on statement

6. If numbers from Step 5 and bank statement ______are ___ _____, check math or _____the _____for help


In Your Opinion

• Why might you want to balance your checkbook more often if you make debit purchases or bank online?


Special-Use Checks

• Most financial institutions offer these, usually for a fee– ________ checks (A bank ck. That

guarantees payment)– _______checks (personal ck. – bank

guarantees payment)– ______orders (Order for specific amt.

to be paid to a payee)– traveler’s checks (If lost – replaced.

Sign only when cashing)


Central Ideas of the Chapter

• Financial institutions are vital to the economy because they make financial transactions possible.

• A checking account is a basic tool to help you manage your financial resources.


Glossary of Key Terms

• ATM card. A card that allows customers to withdraw cash from and make deposits to their accounts using an ATM.

• automated teller machine (ATM). A computer terminal used to transact business with a financial institution.

• bank statement. A record of checks, deposits, and charges on a checking account.

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• cashier’s check. A check drawn by a bank on its own funds and signed by an authorized officer of the bank.

• certified check. A personal check with a bank’s guarantee the check will be paid.

• commercial bank. A bank owned by stockholders and organized to receive, transfer, and lend money to individuals, businesses, and governments.

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• credit union. A nonprofit financial cooperative owned by and operated for the benefit of its members. It accepts deposits, makes loans, and provides other services.

• electronic funds transfer (EFT). The movement of money electronically from one financial institution to another.

• endorse. To sign one’s name on the back of a check in order to cash or deposit the check.

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• Federal Deposit Insurance Corporation (FDIC). A U.S. government agency that protects bank customers by insuring deposits as well as examining and supervising financial institutions.

• money order. An order for a specific amount of money payable to a specific payee.

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• mutual savings bank. A saving depository owned by the depositors that divides the profits among depositors in the form of dividends.

• National Credit Union Administration (NCUA). An agency that grants federal charters to qualified groups, supervises credit unions, and insures accounts in all federally chartered and many state chartered credit unions.

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• savings and loan association (S&L). A for-profit financial institution that receives and pays dividends on depositors’ savings, makes mortgage loans, and offers most of the services commercial banks offer.

• traveler’s checks. Checks that can be cashed in most places around the world. They are often used by people who travel and do not want to carry large amounts of cash.

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© goodheart-willcox co., inc.. 8 financial institutions and services

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