Welcome to

Banking
BASICS
aa

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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A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

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
(take-home 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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A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

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 checkcashing stores and money orders
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A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

Banks and credit unions

What is the difference

between a bank and a credit
union?

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A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

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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A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

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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A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

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
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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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A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

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

MoneyWI$E
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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A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

Checking accounts

What kinds of things can you

do with a checking account?

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A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

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
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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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A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

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
practice writing
entering it into
checking account

you will
a check and
a sample
register.

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A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

Check writing

Why is it important to
enter your checks and debit
transactions in your
account register?

MoneyWI$E
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
MoneyWI$E

A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

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
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percentage of
the amount loaned
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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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A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

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 MoneyWI$E
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
MoneyWI$E
A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

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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A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

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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A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

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
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A CONSUMER ACTION AND CAPITAL ONE PARTNERSHIP

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
MoneyWI$E
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
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dont overdraw your account and
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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