Financial Services and Electronic Banking

1. Financial Services and Electronic Banking 17-2

2. Types of financial services • Savings services • Financial institutions accept money for safekeeping. • A broad range of savings plans are available • Payment services • The ability to transfer money to others • Several types • Checkingaccounts • Debit cards • Online payments • Automatic withdrawals

3. Types of Financial services cont. • Lending Services • Most people, businesses and government need to borrow money at some time. • Banks offer many types of lending • Auto loans • Business loans • Student loans • Home loans • When paying with a bank credit card (not a debit card) you are borrowing money from the bank

4. Types of services cont. • Electronic Banking • Electronic fund transfer refers to the use of computer and other technology for banking services. • Includes: ATM, Point-of-sale transactions, direct deposit, and automated bill payment. • Storage of valuables • Banks offer safe deposit boxes • Individuals keep jewelry, rare coins, investment certificates birth records, list of insurance policies, and other valuable documents • Banks do not have the right to open your box only you do.

5. Types of services cont • Investment advice • Many financial institutions offer investment advice • Can assist customers whether it is wise to buy a certain house, how to manage money, or how to exchange money in foreign currency • Management of trusts • Banks mange investments on the behalf of customers • When thy do this the money or property turned over is said to be held in “trust” • Mainly used for very young and very old people.

6. Types of Checking accounts • Regular checking accounts • If you write a lot of checks use a regular checking • There are no service charges for writing checks • You must maintain a certain balance • Often $300 or higher • Interest Earning Checking Accounts • You earn money on your money • Usually must have a high monthly balance • If it falls below the monthly balance you will not receive interest and will have a service charge • Usually interest rates vary depending on the amount in the account.

7. Types of Checking Accounts • Special checking accounts • If you do not write a lot of checks this may be for you • Banks usually charge a monthly service charge or 10-20 cents a check

8. Comparing Checking accounts • When selecting a checking account evaluate the following items • Minimum balance • Interest rate earned, if any • Monthly service charge • Fees for other services such as printing checks and stop payment orders • Other restrictions • Some banks lure you by having a low monthly balance but, beware of service fees.

9. Electronic Banking • Automatic Teller Machines • A debit or cash card is used for ATM transactions • With a debit card you are using money in your account • Notify bank within 2 days if debit card is stolen or is being used by an unauthorized. Your liability for unauthorized use is $50 in those 2 days. If you do not notify the bank within 2 days you have a $500 liability. • Some ATM’s allow you to buy bus passes, postage stamps, and gift certificates • Be aware of ATM fees. • Make sure the amount you are taking out is worth the fees • Payment at the point of sales • A merchant accepts a debit card to pay for purchases. • Most gas stations, stores, and restaurants accept them • Some places are starting to put them in vending machines.

10. Electronic banking cont. • Direct Deposit • Your paychecks are electronically deposited in your account. • Most places use direct deposit. • Automatic Bill Payment • You must authorize a bank to make the payments for you. • For things such as rent, utilities, loans, and other bills. • The bank automatically sends a check out for you

11. Electronic payment Options • Debit Card Transactions • Most restaurant, stores and other businesses accept debit cards if they are issued by visa or MasterCard • When you make a purchase the amount is taken out of your checking account. • Debit cards are used in 1 of 2 ways • You sign a receipt similar to a credit card • You are asked to enter your pin number similar to an ATM • Online Payments • Many online companies offer this feature • They automatically take the payment out of your account • Make sure there are no fees and that it is secure.

12. Electronic payment Options cont. • Stored-Value cards • Prepaid cards for things such as phone service, transit fees, highway tolls, laundry service, and school lunches • Some of them are disposable • Some can be recharged. • Smart cards • Sometimes called “electronic wallets” • They have microchips and stores prepaid amounts, account balances, transaction records, insurance information, and medical history.

13. Banking in the future • Almost every aspect will be electronic with wireless technology. • Almost any transaction will be able to be made away from the financial institution • An access card or a handheld device will provide a large number of services.