Banking Keep your money safe! Banking

Banking Fees

• ATM fees
• Debit Card fees (few still charge)
• Check printing fees
• Stop payment fees
• Bounced check fees
• Checking fees

Types of Accounts

• Checking Accounts
• Savings Accounts
• Certificate off Deposits (CDs)
• Money Market Accounts

Checking Accounts

• Bank holds on to your money for you to access by writing a check. Checks tell the bank it is okay to transfer that amount of money to another person.
• Stop Payment: if you contact your bank before the check is paid, they can stop the payment on the check and the person will not get the money.

Advantages/Disadvantages of Checking Accounts

• Adv.
• Easy access to money via. Check or ATM/Debit card
• Money is safe, no need to carry large sums of cash
• Dis.
• Most checking accounts do not earn interest. As inflation increases, the value of your money decreases.

Bounced Check

• If there is not enough money in your account, the bank can refuse to honor the check. Your bank will charge a fee and the person who you wrote the check to may charge a fee. Overdraft privileges with your bank prevents bouncing checks.

Special Checks

• Cashier’s check: guarantee that the check is good because it is drawn from a bank’s account
• Certified Check: personal check guaranteed by the bank
• Traveler’s Check: issued by travel companies and can be used where personal checks will not be accepted
• Money Order: pay teller amount and they create a check for you.

Savings or Deposit Accounts

• Bank account where money earns interest but less accessible than checking accounts.

Advantages/Disadvantages of Savings Accounts

• Adv.
• Deposited money earns interest (1-2%)
• Money is safe and relatively easy to access
• Dis.
• Interest earned is low, often lower than inflation.
• Cannot access with checks

Certificate of Deposit (CD)

• Person deposits money with a bank and promises they will not withdraw money for a set period of time (6 months, a year)
• Money withdrawn early is charged a fee.

Advantages/Disadvantages of CDs.

• Adv.
• Earns a higher interest rate than savings account or inflation
• No fees
• Money is safe form changes in the economy
• Dis.
• Money is locked into set interest rate. If other interest rates go up, still stuck with lower one.
• Cannot access money until set period of time. Penalty fees for taking money out early.

Why do banks pay interest?

• Interest is payment by the bank for use of your money.
• Banks take deposits made and use them a loans for homes, cars, etc. Money that is more likely to remain in the bank earns a higher rate of interest (CDs), while money that may be used receive little to no interest (Savings/Checking accounts)

Money Market Accounts

• Accounts where the bank invests the money in short-term investments. These investments pay out interest.

Advantages/Disadvantages of Money Market Accounts

• Adv.
• Pay out more interest than CDs or other accounts
• Dis.
• They require a high minimum deposit to open, usually between $1000 and $10,000 and must keep a high balance to avoid fees
• Subject to change in market/interest rates
• Strict limits on the number of checks that access these accounts.