Banking Unit Flashcards
Debit Cards
Charges come directly out of your checking account when used
Prepaid/Cash
Purchased in advance with a set amount. Use until all money is spent.
Credit Cards
Charges accumulate and are billed monthly (pay at least the minimum payment)
Store Card (Macy’s)
Like a credit card but from a store. May offer incentives to buy at the store but often at a much higher interest rate
Types of Peer to Peer Payment Apps
Venmo, Zelle, Paypal
Benefits
Easy access / easy to use, Easy to make payments, Saves time
Risks
Requires tech knowledge and access, Concerns about security, Can be more difficult to resolve mistakes / disputes
Safety Tips
Secure password, log out of app before closing, only install from known locations, do not send $ to people you don’t know
Checking Account
Checking accounts provided quick access to funds for transactions. Use deposited money anytime by: Writing checks, Using a debit card, Withdrawing cash, Electronically transferring money. Most do not earn interest.
Savings Account
Savings accounts are used money not intended to be used for daily expenses. Access to money is more limited than a checking account but these earn interest.
Explain Compound Interest
Compound interest is when you leave your money in savings untouched and each year it earns interest. So each year you are earning interest on the interest earned from the previous year
DEPOSIT TO CHECKING ACCOUNT
Make a cash deposit at your bank
Deposit a check at your bank
Use an ATM to deposit your money
Make a mobile deposit
Use Direct Deposit
Transfer money from another account
WITHDRAW MONEY FROM CHECKING ACCOUNT
ATM withdrawal using a debit card
Visit a bank Teller to make a withdrawal
Make a purchase using a debit card
Write a check
Use online bill pay
Transfer money to another account
List 2 advantages of having an account at a credit union
Credit Unions typically have LOWER fees and charges
Credit Unions typically give back and support the local community
Explain what features / factors are important when selecting a bank or credit union
Type, location, insurance, interest rates, fees, services, features
Explain the benefits of online and mobile banking and safety tips for using these banking tools.
Easy access / easy to use, Easy to make payments, Saves time, You are able to easily see all of your historical transactions
Maintain your password safely. Keep your payment apps locked on your phone. Don’t bank on open wifi
List some reasons why it is important to read your bank statement:
Make sure there are no errors or questionable charges on your account
Check your balance, debits, credits, transactions and any fees.
How much does the FDIC or NCUA insure our bank accounts?
$250,000 per account
In what scenarios would a consumer would want high interest rates as opposed to low interest rates
Consumers want HIGH interest rates when they are depositing money into a bank and LOW interest rates when they are borrowing money from the bank
Experts recommend that an emergency fund covers __ to __ months of expenses
3-6
Monthly Service fee
Fee for having the account, automatically withdrawn each month, WAIVE (NOT CHARGE) if maintain a minimum monthly balance, direct deposit paycheck or certain # of transactions per month. Many banks offer no fee checking accounts
ATM Fee
CHARGE for using an ATM that belongs to another depository institution
Minimum Balance Fee
Some accounts require you maintain a level of money in your account and charge A FEE if you go below that amount
Insufficient Funds Fee
When you don’t have enough money in your account to cover the entire transactions & the bank RETURNS the check/ payment
Overdraft Fee
Charged if you withdraw MORE MONEY from your account than is AVAILABLE
Explain how to endorse a check
When someone pays you with a check, you must sign the back of it before you can deposit it. Signing the back of it is called “endorsing the check.”
Restricted endorsement
The most secure way - write “for deposit only to account # XXX and sign your name - it can only be deposited in that account.
Traditional Savings Account
You deposit money in the bank and it earns interest. The banks make money lending your money out. Typically low interest; usually no minimum balance.
Online Savings Account
Similar to a traditional savings account but because it is online, the overhead is lower and the interest rates are usually higher. All transactions occur online.
Money Market Account
Higher minimum balances. Usually have restrictions on withdrawals They usually offer higher interest rates because they are investment vehicles.
Certificate of Deposit
CD is a timed deposit. You agree to keep the money in the bank for a specific amount of time. The bank pays you a higher interest rate in return (ex. $1000 12 month CD with a 5% rate)
What does it mean to “Pay Yourself First” and why is it important?
An effective strategy for personal saving is to pay yourself first by taking a percentage of each paycheck and depositing it directly into your account.
Blank endorsement
LEAST SECURE - you sign the back of the check and nothing else. As soon as you sign, it is as good as cash.
