Unit 8 Test Career Prep

FDIC will insure who much money

$250,000

Which of the following types of financial institutions is considered non-profit and owned by its members? Banks Credit unions Payday lenders Mortgage companies

Credit Unions

FDIC

Federal Deposit Insurance Corporation

How do financial institutions make money?

Savers and borrowers, interest, Savers (Savers deposit money into their savings accounts) → Banks (Banks loan money to borrowers for houses, cars, and student loans, etc.) → Borrowers Savers (Banks pay savers a low interest rate.) ← Banks (Borrowers pay a high interest rate to the bank.) ← Borrowers

What are the 4 main services banks offer?

Savings, payment, loans, and electronic banking In addition they offer cashier's check and notary public

Loan Services

Many people take advantage of a financial institution's loan services. Many loans are secured, loans that are backed up by something of value, and include car loans and mortgages, however loans like credit cards are unsecured which are loans that are backed up by something of value. What do you think happens if a person does not make payments on their car loan? That's right, the bank will repossess (or re-po) that car. The same thing happens with a mortgage on a home. The bank will foreclose on the mortgage if the buyer doesn't make timely payments.

Example of Credit Unions

Mutual Savings Credit Union, Alabama Credit Union, Avadian Credit Union

Is a direct deposit a payment service?

No, that is when your employer pays you

ATM Fee

Normally you don't get a fee for using your banks ATM, but you may get a fee for using another banks ATM

Which of the following is NOT a typical fee charged by a bank or credit union? Notary public fee Overdraft fee Minimum balance fee ATM fee

Notary Public fee

High service fees

Often disguised with a low price

Banks are always trying to remove costs. Which of the following strategies fees are designed to encourage you save the bank money? Overdraft fee debit card fee ATM fee Paper fee

Paper fee

Example of Commercial Banks

Regions, Wells Fargo, BB&T, Renasant

Browser cache

Set of temporary files your web browser stores

Antivirus software

Software used to prevent, detect and remove malicious software

Credit/ Debit Card info

You details are located in the magnetic strip on the back of your card, where the data is not encrypted or sealed in a code

Which of the following is an example of a loan service? direct deposit credit card checking account money market account

credit card

Which of the following is not an example of an electronic banking service? credit card direct deposit Internet banking ATM machines

credit card

Which of the following is an example of an electronic banking service? direct deposit credit card checking account money market account

direct deposit

Balance Fee

fee charged when you fall below a certain balance

Credit Unions usually pay a ___________ (Fill in the blank)interest rate on savings accounts and charge a _______ (Fill in the blank)interest rate on loans than commercial banks.

higher; lower

Saving Services

include traditional savings accounts, Certificates of Deposit (CDs), and money market accounts

Understand bank statements

look over 8.03 task and look over practice on 8.03

Which of the following is an example of a savings service? direct deposits credit card checking account money market account

money market account

Which of the following types of financial institutions is the best choice for customers to find a loan to purchase a home? banks payday lenders check cashing services mortgage companies

mortgage companies

which of the following is not insured by FDIC insurance? traditional savings account certificate of deposit money market account mortgages

mortgages

Paper fee

Banks want to save cost and so they encourage you to get electronic statements, getting a paper statement will cost money

How do people keep track of their checking and savings account balance?

1. Keeping accurate records 2. Reconciling, or balancing, their accounts

At what age can you open a bank without a co signer in Alabama

19

Payment services

A checking account is how you truly manage your money. You deposit money into a checking account, and you have multiple ways to spend money from a checking account. Those include writing checks, using a debit card, receiving cash from an ATM, or even online. This is the most common payment service is a checking account.

Identity Theft

A type of fraud that uses a person's private identifying information

Banks and Credit Unions

Both offer: checking accounts, saving accounts, money market accounts, and certificates of deposit, and they also offer electronic banking services like direct deposit, ATM, online banking, and apps, they also both offer a variety of loans like car loans, mortgage, student loans, and credit cards Credit Unions- non-profit, costumers(members)= owners, lower interest on loans, higher interest on savings Banks- corporation, stockholders = owners, lower interest on savings, higher interest on loans Advantage of banks- many branches, more amenities, whereas Credit Unions tend to have smaller branches, less amenities

Firewall

Designed to block unauthorized access while permitting outward communication

Some things banking institutions offer are

Direct deposit - allows money to be deposited directly from your employer into your checking or savings account Internet Banking - customers can sign in to their account via the Internet or a phone app to check balances and pay bills ATM - Anytime Teller Machines - if you don't like banker's hours, you can stop at an ATM anytime, day or night to receive cash or make a deposit Apps - Many banks now have apps that allow you to take a picture of a check and deposit it directly via the app.

Strong password Includes all of the following: an uppercase letter, a lowercase letter, a number, and a special character such as $@*: Your birthdate, your initials, anything with your birth year, family members names, pet names, and qwerty

Includes all of the following: an uppercase letter, a lowercase letter, a number, and a special character such as $@*:

Fraud

Intentional deception of a person or entity by another made for monetary or personal gain note: Credit cards and Debit cards are very at risk

What services do banks offer?

The four main services are savings, payment, loan, and electronic

Why can credit unions give customers better rates?

The reason credit unions are able to do this is how they see the customer. At credit unions, the customers are called members, and are essentially the owners of the credit union. So, when a credit union is making a profit, the profit is returned to the members in the form of better interest rates than commercial banks. By comparison, banks are usually owned by shareholders, who receive a share of the profits.

What are some other types of institutions?

There are many other types of banking and financial institutions including pawn shops, pay day lenders, check cashing services, and mortgage companies. You will learn more about these later in the Unit.

How do mortgage companies make a profit?

They charge a "finder's fee" to the bank who eventually loans money to the customer.

How do banks and credit unions make a profit?

They charge a high interest rate.

How do check cashing services make a profit?

They charge their customers a fee for the service.

Encrypted chip technology

This is where the magnetic chip will be replaced with your personal info sealed in a code, making it hard to steal. It took so long because banks and companies did not want to spend the money getting new cards and buying new processing machines

Electronic Banking Services

Today, many people want more than simply a checking and savings account so banks offering a wide variety of services make banking more convenient.

Unethical Sales Practices

Usually involves misrepresenting a product in order to trick a customer into making a purchase

How to fill out a deposit slip?

You only need to sign the deposit slip if you are receiving cash You enter in the money on the right side The first line is for any cash you have Then you list all of your checks individually Must of the time you have three or less checks (line on the left line is for the check number) If you have more than three checks than you have to fill out the back side After you have all your checks in you add your money and checks on the subtotal line Then if you are taking cash out you write that on the line below the subtotal and subtract from subtotal which gives you your total

Which of the following best describes a cashier's check? a check drawn from the customer's funds a check that is drawn from the bank's own funds an official of integrity appointed by state government a small box or container store inside a bank's vault

a check that is drawn from the bank's own funds

Notary Public

an official of integrity appointed by state government - typically by the secretary of state - to serve the public as an impartial witness in performing a variety of official fraud-deterrent acts related to the signing of important documents

Commercial Banks

are what most of us think of when we think of banking services.

Which of the following types of financial intstitutions is considered for-profit and owned by stockholders? banks payday lenders credit unions mortgage companies

banks

Convenience Fee

banks also want to save money by having less employees, so in person banking might cost you a fee

Unethical Sales Practice

broad category of fraud that usually involve misrepresenting a product in order to trick a customer into making a purchase

Which of the following types of financial institutions cash checks mainly for people who don't have checking or savings accounts? credit unions banks payday lenders check cashing services

check cashing services

Which of the following is an example of a payment service? savings account credit card checking account money market account

checking account

Which of the following is not an example of a loan service? credit card mortgage automobile loan checking account

checking account

Which of the following is not an example of a savings service? traditional savings account certificate of deposit money market account checking account

checking account

Understand how to write a check

note: pay to the order of - is where you write who it is for To avoid fraud draw a line from the amount in words down to the word "DOLLARS" on the line under pay to the order of On memo you write what the check is for or ?the account number? then on the second line you sign your signature

Credit Unions

offer all the same services as commercial banks, but often pay a higher interest rate on savings accounts, and charge a lower interest rate on loans.

What is the result of insufficient funds?

overdrafts charges, fees charged when your balance goes below zero, Overdraft Fee- charged when your balance goes below zero. Normally around $36

Which of the following types of financial institutions provides short-term loans at an extremely high interest rate? banks payday lenders mortgage companies credit unions

payday lenders

How can cards be stolen?

skimming devices (often at gasoline pumps), another risky place is restaurants or place where they take your card away to process it, or when an entire companies network is broken into

Debit Card Fee

they normally don't have a fee, but sometimes if you use your card to many times you will get a fee

Which of the following is NOT a way to avoid an overdraft charge? Maintain a higher balance link your checking account to a savings account visit the branch within 1 business day after the overcharge to have the fee removed. maintain an accurate balance in your checking account.

visit the branch within 1 business day after the overcharge to have the fee removed.

Insufficient Funds

when your balance goes below zero

Cashiers check

which is a check that is drawn from the bank's own funds when the person receiving your money needs something a little more secure than a personal check normally a $10 fee