personal finance unit 3

cyberbanking (type of electronic banking service)

banking through online services.banks with web site "cyber" branches allow customers to check balances,pay bills, transfer funds, compare savings plans

money market accounts

benefits: -good rate of return, some check writing,insured drawbacks: minimum balance, no interest and possible service charge if below a certain balance

regular savings account

benefits: drawbacks: -low minimum balance -low rate of return -ease of withdrawal -insured

U.S savings banks

benefits: good rate of return, low minimum deposit, guaranteed by the government,free from state and local taxes drawbacks: lowest rate of return when chased in before bond reaches ,maturity date

certificates

benefits:guaranteed rate of return for time of CD, insured drawbacks: possible penalty for early withdrawal; an minimum deposit

check cashing outlet(high cost of financial service)

charge high fees just to have a paycheck or government check cashed

pawn shops(high cost of financial service)

charge very high interest for loans based on the value of tangible assets(such as jewelry or other valuable items)

-direct deposit type of electronic banking service

earnings automatically deposited into bank accounts, saving time, effort, and money

smart cards

electronic wallets looked like ATM cards however they also include a microchip. This minicomputer stores prepaid amounts for buying goods and services. A smart card can also store data about a person's account balances transaction records insurance information and medical history

are the bank statement and your checking book supposed to match

yes

is your money insured against in a bank? with what? and what can a bank do with your money

yes FDIC use it to make profit

check deferel

Check deferral services allow consumers to get a cash advance on their next paycheck. However, these short term loans are very expensive. A 20 hundred two week advance may cost over 30 dollars with annual costs exceeding 900 dollars.

rate of return and when is it the most compounded

% increase in the value of your savings from earned interest, daily

how to recognize identity theft

-New accounts or charges that you did not make -Calls from collection agencies -Being denied credit -Missing bills/statements -Incorrect info. On your credit report

bank statement

Detail of all activity that occurs in your account for one month

what finance companies charge higher interest rates

Finance companies charge higher interest rate

how thieves steal your identity describe stealing, diverting mail, dumpster diving, skimming, phising, pretexting, spyware, hacking

-Stealing:purse,wallet,bank statement, pre-approval credit card forms -Diverting mail: complete a change of address form -Dumpster diving: digging through garbage -Skimming: attaching device to credit card readers -Phishing: email pretending to be a company/bank to get your personal info -Pretexting: use false pretenses to get your info from banks -Spyware: software on your personal computer that tracks you -Hacking:break into your computer and steal info.

writing checks 1) how is cents written 2) describe steps

-cents is that number over a hundred and write out full amount with dash Write the current date in the date line Write the name of payee that will receive check in pay to the order of Record amount of the payment in figures #'s in the box (right) Write amount in words Make a note in the memo and the sign the check like your original signature in your signature card.

non deposit type institutions

-life insurance companies -Investment Companies -finance companies- -mortgage companies

types of financial institutions that are deposit type instutions

-mutual savings bank -Savings and Loan association -commercial banks -credit unions

evaluating savings plan make sure you take into consideration these factors:

-rate of return -inflation -tax consideration -liquidity -restrictions and fees

selecting a pin

-the pin should be easy to remember but avoid numbers such as birth dates, social security numbers, addresses, or phone numbers. These numbers are easily guessed or gathered from other sources of info. Such as checkbooks, driver's licenses, or social security -the pin should be memorized and never written on the atm card or anything kept with or near the card -the pin should never be given over the phone . likewise don't include it in mail orders.

how do you make a deposit

-to make a deposit, you fill out a deposit slip and endorse, or sign, the back of the check

list some benefits of saving your money in the institutions

-using a savings account to set aside funds for your financial goals -keeps the money in a secure place -lets you keep track of what you have saved -earns a small amount of interest in the process

before you write a check use your check register too...

-write the check number/code -date -name of the party receiving the check -exact amount in the payment column

tips for endorsing a check

-write your signature on the left end of the check, on the lines printed for endorsement -use only a pen so that your signature cannot be erased -sign your name exactly as it is spelled on the front of the check.

steps if identity theft happens to you

1.act immediately 2.Keep a detailed record of all correspondence and phone records 3.Contact the three major credit bureaus and request fraud alert; 4.Close all accounts which have been opened fraudulently 5.file a police report 6.file a complaint

Banks

For profit companies owned by shareholders, anyone can become a customer and it benefits stockholders

what do you do when you mess up writing a check

If you make a mistake don't try to erase the error, write a new check tear up the old one and write void in your check register

what do you do if you mess up an endorsement

If your name has been misspelled on the front, the endorsement should include the incorrect spelling, followed by your correct signature

hints to finding math errors

Look for a missing entry for the same amount Search for a duplicate entry of the same amount -is the difference twice a transaction amount Check for a deposit mistakenly labeled as withdrawal or vice versa -is there a difference of $1,10,100,1000 Recheck work for an addition or subtraction error -is it divisible by 9?

types of financial services (3)

Savings is that you safe storage or funds for future Payment services are the transfer of money from your account to businesses or individuals for payments Borrowing for either short-term such as credit cards or a personal cash loan or long term, such as mortgages or auto loans

Reconciling a Checking Account steps

Step 1: obtain current balance from your bank statement Step 2: add any deposits that you have recorded in your check register but that are not on this statement Step 3: subtract any outstanding checks(you have written but that have not yet cleared the banking system) Step 4: compare the results with the current balance in your check register -the balance in your check register should be adjusted to include: deductions for service fees or other charges, additions for direct deposits and interest earned

how to use a debit card

Swipe the debit card in the card reader, or give it to the clerk to swipe Choose the "debit" option Enter your pin number Enter the amount of cash back if desired Money is taken directly out of your checking account, so enter the amount spent into your checking ledger.

fdic

The federal deposit insurance corporation fdic was created by the federal government in 1933 to protect deposits in banks (up to 250,000) all federally chartered banks must participate. The FDIC also administers the Savings Association Insurance Fund (SAIF)

when do you give up your liquididty

You give up liquidity by buying a cd certificate of deposit

point of sale transaction (type of electronic banking service)

acceptance of ATM/check cards at retail stores and restaurants for payment of goods and services

automatic teller machines (type of electronic banking service)

allow customers to obtain cash and conduct banking transactions, some ATMs sell bus passes, postage stamps, gift certificates, and mutual funds

blank endorsement

anyone can cash check, all you do is sign your name

restrictive endorsement and when to use it

more secure than blank endorsement, for deposit only then the number and then sign your name if you are depositing a check by mail or using the night deposit box, use the restrictive endorsement, for deposit only

credit unions

nonprofit financial institutions that are owned by their members and organized for their members and organized for their benefit. Most credit unions offer a full range of services, including checking accounts,loans,credit cards and investment services.

rent to own programs (high cost of financial service)

offer an opportunity to obtain home entertainment systems or appliances for a small weekly fee. However the amount paid for the item usually far exceeds the cost if the item were bought on credit

what is a pin

personal identification number

stored value cards (type of electronic banking service)

prepaid cards for telephone service transit fares, highway tolls, laundry service, library fees, and school lunches

deposit types institutions

profit institutions that offer a full range of financial services including checking savings and lending

rapid-refund tax service

provide instant refunds when you pay to have your federal tax return prepared. However, this instant refund is a loan with interest rates as high as 120%

life insurance company

providing financial security offer some savings and investment features

types of savings plans

regular savings account certificates money market us saving banks

stop payment order (type of electronic banking service)

request to cancel a check not cleared yet

Savings and loan associations

s&ls traditionally specialized in savings accounts and mortgage loans. Today they also offer many of the same services as commercial banks

mortgage companies

specialize in loans for the purchase of homes

finance companies

specialize in making loans to consumers and small businesses, often to people who cannot borrow elsewhere

mutual saving bank

specialize in saving accounts and mortgage loans

who are targets in identity theft

teens and elders

electronic funds transfer (type of electronic banking service)

the electronic exchange of money from one account to another through computer based systems

payee drawee

the person to whom the check is written to The bank at which the funds are drawn

investment companies

these companies combine your money with that of other investors to buy stock, bonds, and other securities

reconcile(bank reconciliation form) purpose

to bring your check register into agreement with the bank statement or your account

special endorsement

transfer check to another party, pay to the order of blank with signature underneath

automatic payments (type of electronic banking service)

utility companies, loan payments, and other businesses use an automatic payment system with bills paid through direct withdrawal from a bank account