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Banking Services

Lesson Description

Knowledge of finance vocabulary is basic to understanding financial institutions and the services they offer. Students will become familiar with terms by viewing the PowerPoint presentation and discussing their understanding of terms and concepts. The activity Get a Clue is an opportunity for students to review and use their new vocabulary.

Lesson Objectives

• Compare and contrast financial institutions.

• Understand financial institution’s basic services and fees.

 

 

Banking Services Pre-Quiz

Banking Online: The Pros and Woes

Online banking has become a popular feature for customers of banks, credit unions, and other financial institutions to manage their accounts and handle their personal finances. Roughly half of US households reported using some form of Internet banking in 2007.

 

Many financial institutions charge a flat monthly fee for online banking services. Some institutions offer this as a free service. Online banking services can offer useful tools to consumers in managing their checking and savings accounts, paying bills, and sticking to personal budgets.

 

Reasons many American are using online banking include:

 

Online Bill Payment: Rather than writing personal checks and mailing monthly bills, you may use your bank’s online bill-pay feature. Online bill payment gives you more control over when the money is taken from your account, and when a bill is paid. Many people use the auto bill-pay feature which allows you to set up automatic payments for recurring bills.

 

Online Money Transfers: You can move money instantly between accounts at the same institution. For example, you can pay your credit card bill this way if the card was issued by your bank or credit union.

 

Banking at Home: With online banking, you can bank from your home or office computer 24-7.  This feature benefits consumers who may live far away from their physical bank, who don’t care to bank in person, or who wish to deal with financial issues when it’s convenient for them.

 

Statement Availability: Banks can issue online account statements more immediately, and you can track your balance at any time.

 

No new technology is without drawbacks, and online banking is no exception. Problems with online banking may include:

 

Customer service: If you bank online for the 24-7 aspect, it may surprise you to find out that customer service is still only available during “normal” banking hours, say 8 a.m. to 5 p.m., Monday-Friday. Financial institutions vary widely on this, so check it out beforehand.

 

ATM access:  If you bank with an online-only financial institution, it may not own any of its own ATMs and you may pay a fee every time you use one.

 

Technical difficulties: A lack of access, trouble with the site, and an unfriendly interface can prove frustrating. Thirty-eight percent of customers who regularly use online-banking said they would not recommend it to a friend.

 

Security: A significant risk of online banking is identity theft. You can take steps to lessen your risk when banking online, but you will still need to be vigilant in safeguarding your personal information.

 

Not full service: Online-only banks have a few additional drawbacks – you will probably have to mail in deposits (other than direct deposits), and you may not be able to get cashier’s checks or traveler’s checks from them.

 

Like any financial tool, it pays to do some research to make sure online banking is a good fit for you.

Banking Services Game

FAQs

What is the difference between a debit card and a credit card?

Debit cards allow you to spend money from your own bank account, subtracting from your balance with each purchase. Credit cards, on the other hand, are open-ended loans (up to a pre-determined amount) which you must pay back. If you fail to pay your balance in full each month you will also pay interest on outstanding credit card balances.

 

What should I look for when opening a checking account?

Review the five most important details of a checking account, which are:

1. Monthly fees. Some banks may require that you pay a monthly fee to manage an account through their institution. Make sure you read the fine print.

2. ATM fees. Most banks offer free ATM banking services within their branches and the ATMs they own. However, usually expect to be charged when you use ATMs outside of your network.

3. Minimum balance required. Some financial institutions require you to maintain a certain minimum balance – failure to do so often means you will pay extra in fees.

4. Overdraft charges and protection. Although spending over the amount in your account may seem unlikely to you, the possibility still exists and overdraft charges can be significant. Look for overdraft protection to help you avoid this problem.

5. Online banking. Many consumers use online banking to handle bills, track balances, and monitor spending. Look for this if it is important to you.

 

What are the benefits of opening a checking account as a student?

Most banks offer Free Student Checking accounts without monthly fees or minimum balance requirements. These accounts generally offer easy access to your account via your phone or the Internet, free online bill paying, links to your parents’ accounts at the same institution, and free ATM withdrawals within their network. Some institutions may offer such perks as a one-time overdraft refund.

 

When I open a checking account, will I receive a debit card or a credit card?

With most checking accounts you will receive a banking card that works at ATMs and serves as a debit card. This is linked to your checking account, allowing you to withdraw funds at an ATM or make purchases without writing checks. If you want a credit card, the financial institution where you have an account is a good place to start. The bank or credit union will check your credit report before approving you for a credit card. However, since you are already a customer of theirs, they may have extra incentive to work with you.

 

How do I know an online bank is legitimate?

The FDIC offers these tips:

  • Read key information on the bank’s Web site. Look for a brief history of the bank, the official name and address of the bank’s headquarters, and information about its insurance coverage from the FDIC.
  • Protect yourself from fraudulent Web sites. Many con artists set up sites that look very similar to real financial institution sites. The intent is to lure you to their site to gain access to your personal information.
  • Make sure your bank if FDIC insured. You can double-check this on the FDIC site, BankFind at: http://research.fdic.gov/bankfind/.

 

Is online banking more “green?”

Online banking can be completely paperless, but, if you prefer, you can set up your account so that you receive paper copies of statements and other notifications.

Banking Services Post-Quiz