Fundamentals
Of Banking
By-DR.Akhil Goyal
NIMS
UNIVERSITY,JAIPUR
What is a Financial Institution?
An organization that provides services that
everyone needs to manage money
Banks, credit unions and thrifts are government
regulated and FDIC insured
Investment and Insurance companies offer
financial services but are non-banking institutions
Other non-banking institutions: check-cashing,
pawnshops, financing companies
DISCUSSION
THE BANK What is a bank?
Why do some people
choose not to have a
bank account?
What are the
advantages of having a
bank account?
What is the difference
between a bank and a
credit union?
SERVICES/PRODUCTS OFFERED BY
BANKS (chapter 8, pp57-68)
Bank Products
Checking Accounts Savings Accounts Money Market Accounts Certificate of Deposits
Basic Checking
Joint
Express
Debit Cards ATMs
ADVANTAGES OF
CHECKING ACCOUNTS
Your money is safe in a checking account.
A checking account can help you improve your credit
record.
You can use a checking account to cash your
paycheck and pay bills.
You can cash checks at your bank or credit union for
free.
Carrying checks is safer than carrying cash or leaving
your money at home.
Your checkbook is a good record of your spending.
A checking account may be cheaper than using a
check cashing service.
A checking account lets you get money from your
account 24 hours a day because you can use an ATM.
Disadvantages of
Checking Accounts
You have to balance your
checkbook every month.
Too many bounced checks can
damage your credit record and
you have to pay a fee if you
bounce a check.
You may have to pay a fee or
keep a minimum balance.
You may have to pay to have
checks printed.
You may be charged a fee for
using an ATM.
Advantages of cash
Checking Stores
Check cashing stores
are very easy to use.
They have stores
where you live.
They are open late
and on the weekends.
The employees are
usually people that
you know.
Disadvantages of
Check Cashing Stores
You have to pay a fee for getting
your check cashed.
You have to buy money orders
to pay your bills.
The fees add up over time, and
could be costly.
How much you pay to cash your
check depends on the amount of
the check. In some states, check
cashing stores will charge you a
percentage of the check amount.
If you lose a money order, you
may have difficulty tracking it
down or getting it replaced.
Selecting a Bank or
Credit Union
Does the financial institution have branches or
ATMs where you live or work?
What hours are they open?
Do they close before you get off work?
Are they open on the weekend?
Is the staff friendly and eager to help you open
an account?
Did they hand you papers and send you on your
way, or did they take time to explain their
services, products and fees?
Did they try to convince you to get an account
you did not want?
If you speak a language other than English, did
they still take the time to talk to you?
Tips for Finding the
Right Account
Money needed to open an
account
Minimum balance
requirement
Monthly service charges
Fees for bouncing checks
(overdraft charges)
Number of checks that
you can write
Number of withdrawals
that can be made.
Any holds on deposits
THINGS YOU NEED TO KNOW ABOUT
ATMS
Access to your account seven days a week,
twenty-four hours a day.
ATMs encourage you to take more money out of
your account that you need.
If you do not keep track of how much you are
getting from the ATM, you will not know what is in
your account and you may start to bounce checks.
ATMs are not always free. Before opening an
account, make sure that you understand the
financial institution’s rules about ATMs.
Your financial institution probably will not charge
you for using ATMs that they own, but others may
charge you for using their ATMs and your financial
institution may charge you for using an ATM that
they do not own. If your bank or credit union owns
the ATM, their name will be on it.
WRITING A CHECK
Always write in ink
Always write clearly and be sure spelling is
correct
Record each check in your checkbook register
The date on which you are writing the check. Do not
postdate.
The person or business to whom the check is to be
paid (the payee).
The dollar amount of the check written in numbers.
The amount of the check in words.
Signature
Memo
MAKING DEPOSITS
Your account number
Your name and address
The date the check is being deposited into your account
This section is divided as follows:
Currency-write the amount of paper money that you are
depositing.
Coins- Write the amount of change that you are depositing.
Checks-Write the amount of each check that you are depositing.
If you run out of room, write on the back of the deposit slip. Make
sure that the dollar and cent amounts are in the right columns.
Total Checks- Add up all the checks that you are depositing and
write it here.
Subtotal-Add up currency, coins and checks. Then write total
here.
Less cash-If you want cash back, write the amount here.
Total-Write the total amount of the deposit here. This is the
subtotal minus the cash you are getting back.
Your signature (This is only required if you are getting cash
back.)
Things You Will Need To
Open an Account
First, middle and last name
Social security number
Photo ID (drivers license or state ID)
Home address
Home telephone number
Work address
Work telephone number
Name and address of two people who could serve as
references
A reference is someone who will tell the bank or credit
union that you are a good and hard-working person,
that you can handle your financial and work situations
and that you can be trusted to take care of a checking
account.
