Welcome to

Banking
BASICS
a

YOU can bank on it

2011

MoneyWI$E
A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

MoneyWI$E Banking Basics

MoneyWI$E
A joint financial education project of
Consumer Action and Capital One

MoneyWI$E
A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

What will the Banking Basics

training teach us?
We want you to have a thorough
understanding of personal
banking services and how they
can benefit you.

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A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

You will learn about:

Banks and credit unions

How to select a financial

institution
How to open an account
How to keep account costs down
How to get more interest on your
savings
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Participants folders contain:

You Can Bank On It (brochure)
Check Writing (class activity)
Sample ChexSystems Report

Sample Account Application

Choosing a Bank or Credit Union (takehome worksheet)
Evaluation of the MoneyWI$E Banking
Basics Seminar

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A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

Checking and savings accounts

What are some of the advantages

to having a checking and savings
account?

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Advantages of checking and

savings accounts include:
Your money is safe
Each account is insured

Checking account records provide proof

that you paid bills and help you keep
track of spending
Money in a savings account earns
interest to help it grow
Less expensive than check-cashing
stores and money orders
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Banks and credit unions

What is the difference between a

bank and a credit union?

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Banks
Banks are financial institutions
that take deposits, engage in
lending and operate for a profit
Banks offer checking and
savings accounts to the general
public

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Credit unions
Credit unions are financial cooperatives
that are owned by and serve individuals
with a common affiliation

for example, a workplace, church,

employees union, neighborhood, etc.

Credit unions offer checking and savings

accounts to members

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Account verification services

How do banks and credit unions

learn how you have handled your
accounts in the past?

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ChexSystems...
Is the major nationalaccount
verificationcompany
When you apply for a new checking
account, banks and credit unions
search for your name in the
ChexSystems database

If you ever abandoned an account,

leaving a negative balance, you are
probably listed in this database
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ChexSystems records
Reports about overdrafts or closed
accounts remain in your file for five
years
You can get a free copy of your report
by contacting ChexSystems at
www.consumerdebit.com
You have the right to dispute
inaccurate information in your account
verification report
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Your rights
You can get a free copy of your
ChexSystems report if:
you have been denied an account in
the past 60 days because of
information listed in ChexSystems
your checks were stolen and used by
an impostor or you are the victim of
any banking or account fraud

Get a copy anytime for about $10

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Dont get discouraged

If you try to open a new checking
account and are turned down by a
bank or credit union because of
your past account history, dont
give up
Different banks and credit unions
have different requirements, so
shop around
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A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

ChexSystems sample report

Lets review the categories of the
ChexSystems sample report:

Reported information
Drivers license validation
Drivers license verification
Consumer-initiated inquiries
Customer-initiated inquiries
Retail information
Check printing order history
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Checking accounts

What kinds of things can you do with

a checking account?

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Checking accounts
Checking accounts allow you to:

Pay bills with checks/online bill pay

Get cash, transfer money and make
purchases using your debit card

Access your checking account:

At an ATM or bank branch

On your computer (online banking)
By phone or using a data-ready mobile
device (mobile banking)
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Banking/checking online
Also known as Internet banking

Via a secure website operated by your

financial institution (or via an app)
Pay bills, view transactions, transfer funds
between accounts
Benefits: convenient, low or no acct fees,
quick access to info, savings on postage
and checks
But, may still need to visit the ATM

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Safe Internet banking

Make sure the institution is legitimate
Create a strong password
Keep your ID and password private
Dont fall for phishing scams
Be careful when using public wireless
networks (Wi-Fi) or shared computers
Monitor account activity regularly

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Keeping checking account fees in

check
Shop around for free or low-cost
checking accounts
e-Accounts
Electronic transfer accounts
(ETAs)
Basic (Lifeline) accounts
Low-cost accounts for seniors or
students
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Debit cards
You can use your debit card in
these ways:
Enter your personal identification
number (PIN) at an ATM or at a
retailers point-of-sale (POS) terminal
Sign a receipt
Swipe without a signature or PIN on
purchases under $25 at some stores

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Debit cards
If your debit card is lost or stolen:
Alert your bank or credit union as
soon as possible. The longer you
wait, the more money you might be
responsible for if an unauthorized
person uses your card to buy things.

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Check writing activity

In this activity you will practice

writing a check and entering it into a
sample checking account register.

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Check writing

Why is it important to enter your

checks and debit transactions in
your account register?

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A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

Keep a record of your transactions:

So that you dont forget checks, cash
withdrawals, and purchases with your debit
card

If you forget to record a transaction, it could

overdraw your account. This could lead to a
fee for non-sufficient funds (bounced
check) being charged to your account.

So that you know how much money you have

in your account
So that you can track your spending and
stick to a budget
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Savings accounts

How is a savings account different

from a checking account?

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A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

What is interest?
Interest is the cost of borrowing money

When a bank/credit union gives you a

loan, you pay interest to them
When you keep your savings in a
bank/credit union, they pay interest to
you

APR, or annual percentage rate, is the

annual amount of interest, expressed
as a percentage of the amount loaned
or borrowed
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Types of interest
There are two types of interest:
Simple interest means that you only
earn interest on your initial deposit

Compound interest allows you to

earn interest not only on your initial
deposit, but also on the interest you
earn as you go along

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Interest
Simple interest

$100 on deposit for 10 years at a 1% APR

would earn $10 in interest

Compound interest

The same deposit, compounded monthly,

would earn $10.51 (51 more because of
compounding)

Compounding earns more, especially if

you save regularly
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In the second half of Banking

Basics, well discuss:

How to earn more interest

Safe deposit boxes
Choosing and opening an account
Managing your checking account
How to resolve any issues with your
account

See you then!

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A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

Certificates of deposit (CDs)

What is a certificate of deposit?

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Certificates of deposit (CDs)

A certificate of deposit, or CD, is a kind of
savings account in which you leave your
money on deposit for a set period of time
in order to earn interest
The longer the term of your CD, the higher
your interest rate will be

If you withdraw your money before the

term ends, you will lose interest and might
have to pay a penalty
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Safe deposit boxes

What is a safe deposit box?
What are some things that you might
keep in a safe deposit box?

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A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

What to keep in a safe deposit box

Copies of insurance policies

Birth, marriage and death certificates

Mortgages, leases and other
important contracts
Stock and bond certificates and
certificates of deposit (CDs)
Valuable jewelry
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A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

Safe deposit boxes

What should you not keep in a safe

deposit box?

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A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

Safe deposit boxes

The originals of your will and life
insurance policies should not be
kept in a safe deposit box
The box might be sealed at the time
of your death and your survivors
would need a courts permission to
open it

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Opening an account
Questions to ask:
What is the minimum to open an
account?
What is the interest rate on the
account?
Is there a monthly fee?
Is there any way to avoid monthly
fees?
-

(more questions on next slide)

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More questions to ask when

opening an account
Is there a maximum number of
checks I can write each month?
Is there a fee for using your ATMs?
What happens if my balance falls
below the minimum requirement?
TIP: Use the MoneyWI$E worksheet in
your folders as a guide when you apply
for an account
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A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

Opening an account

What should you bring with you when

you are opening a new account?

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Identification
When you go to a financial institution
to open a new account, bring:

Photo identification, such as a drivers

license, state ID card or passport

Proof of your address, such as a utility

bill or lease

Your Social Security number for tax

purposes

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A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

Activity
Sample savings account application
This is a sample application for an
interest-bearing account at MoneyWI$E
Bank
Lets walk through the activity together

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A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

Savings account application

Ownership
W-9 certification
Optional services

ATM cards

Linking accounts

ATM fees
Sign and date your application
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Keeping your account straight

Once you have an account, write down
and deduct in your check register:

Every check you write

Every debit card transaction you make
(including cash back at stores)
ATM cash withdrawals
Any bank fees you pay
Any online transactions
Any automatic payments/deductions
All deposits and credits
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Account costs

How can you save money on

account costs?

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A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

Ideas to keep account costs down

Combine checking and saving balances to
avoid monthly fees

Save on ATM fees by using your own

banks machines
If you cant avoid an ATM fee, take out
larger sums less frequently
Use direct deposit for your paycheck or
government benefits check

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A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

Ideas to keep account costs down

Ask your local bank or credit union about
accounts with free checks

Order from a reputable mail-order company

Check with the Better Business Bureau
before buying checks from a company
you are not familiar with
Write down all transactions and reconcile
your account so you dont overdraw your
account and incur overdraft fees
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Standard overdraft protection

Your overdraft transaction is covered if you
pay a fee
There is a separate fee for each overdraft
transaction
You must give your permission (opt in) to
allow overdrafts on debit card and ATM
transactions
If you dont opt in, you cant be charged but
your overdraft debit transactions will be
declined
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Overdraft protection plans

An optional bank service called overdraft
protection waives overdraft fees

It can work with a loan or line of credit or

with your savings account

For the line of credit, you must have a good

credit history
You will be charged a small transaction fee
when you overdraw your account
Youll pay interest on funds from the credit
line when you use them

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Resolving problems
Mistakes happen!
Bring issues or errors on your
account or account statements to
the attention of your bank or credit
union
Dont delaywaiting too long
could make a situation worse
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A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

Solving an account problem

Contact the financial institution as soon as
you can
Write down the date of all calls and the
names of the people who help you resolve
the issue
Send a summary letter (by registered mail,
receipt requested, or by email) to establish a
paper trail on your problem (and keep
copies of email)
Offer a solution and a date by which you
hope to resolve the issue
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Escalating your issue

Give your bank or credit union time to solve
or report back to you on your problem
If you are not able to resolve your issue with
your bank or credit union after a reasonable
time, you can contact the institutions
regulator

Call the FDIC at 877-275-3342 to find the

name and contact info for your institutions
regulator

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Now you can grade us

Please fill out the evaluation form
and hand it to the trainer before you
leave
The information helps us provide
you with better programs

MoneyWI$E
A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

Congratulations

By attending the MoneyWI$E

Banking Basics training, youve
empowered yourself to make good
decisions about your account needs.

MoneyWI$E
A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

Visit money-wise.org
for additional information and to access
free financial education materials

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A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP