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Unit 5 – Money Management ○ Types of Financial Services Providers ○ Savings Accounts ○ Checking Accounts and Debit Cards ○ Automated Financial Services ○ Identity Thefts and Deception
“What Do You Think?” Fill in the Blank 55 More than _____% of teens have a savings account. 17 _____% of teens ages 16-17 have a checking account. 64 _____% of those ages 18-19 have one. 13 Likewise, only _____% of teens ages 16-17 have a debit card. 55 ____% of those ages 18-19 have one. 13 Among teens ages 16-17, _____% have one of their parents’ credit cards. 36 ____% of teens ages 16-19 have their own credit card.
Financial Services Banks are owned by investors in its stock. Anyone can walk up to a bank and open an account. Agree to carry government insurance to protect up to $100.00 of your deposits. Credit Unions are owned by their members and serve a defined segment of the population. You have to work for or have a family member who works for an employer in that segment, by becoming a member in a church or social group, by having a certain type of job, or by living or working in a certain community. Both provide basic financial services, including savings and checking accounts, issuing credit and debit cards, and providing loans for cars, homes, and other purposes.
Savings/Share Account Savings Account (bank) and Share Account (credit union) You can get cash without penalty Good place for short to medium-term financial goals You receive monthly interest Opening a savings account: Cash or check for your first deposit Picture ID Driver’s license Passport Student ID Social Security number Form including address, phone number, date of birth, current employment information Maintaining a savings account: Fill out a withdrawal slip, transfer slip, or use a automated teller machine (ATM) when you want to use/spend the money in your account Review monthly statement showing your account balance, total of deposits, withdrawals, and interest earned Keep your account number and information in a safe place
Checking/Share Draft Account Checking Account (bank) and Share Draft Account (credit union) Manage your day-to-day finances Safe place for your money Offers easy access to your money Opening a checking account: Cash or check for your first deposit Social Security number Two or more forms of picture identification Maintaining a checking account: Record each check you write, along with your deposits and withdrawals Always write checks in ink Review your monthly statement showing your account balance, total of deposits, withdrawals, and interest earned Keep your blank checks, account number, and information in a safe place
Checking/Share Draft Account Benefits of a checking account: Convenient Safe Easy to budget Proof of payment Consequences of misusing a checking account: Excessive number of overdrafts may close your checking account. This can prevent you from obtaining another checking account and damage your credit history. Intentionally writing checks without enough funds to cover them is considered check fraud – a serious crime
What is a “Bounced” Check? If you wrote a check without enough funds to cover the amount of the check and the business you wrote it to deposits it into their account, the check will be “bounced” - Meaning it will be sent back to the business due to insufficient funds and the business will be charged a fee, which will in turn be charged to you.
Debit Cards Debit Cards (check cards) are like checks, deducting the amount of your purchase from your checking account. There’s usually no interest associated with your debit card purchases because you’re not actually borrowing money. Black magnetic strip on the back of card stores data such as your name, account number, PIN, and financial limits. If you accidentally wash the card, place it too close to a magnet, or scratch the strip, your card may not work anymore. Always read the terms of the debit card agreement carefully to find out what kinds of charges you might be assessed and for how much. You have less protection against fraud with a debit card than with a credit card. If you report a missing card within 2 business days after you realize that it’s missing, you’ll only be responsible for up to $50 of unauthorized charges. Wait longer than that, and you could lose up to $500. Wait more than 60 days to report it, and you could be liable for the entire amount.
Credit Cards Credit Cards are a separate supply of money. (major: Visa, MasterCard, & Discover) Taking a loan from the company that issued the card (the issuer). Purchases are totaled and sent to you in a monthly statement or bill. If you pay your bill in full and on time, you’ll owe no interest. Every credit card has a credit limit – maximum amount you can spend. Your credit card issuer won’t necessarily deny a charge that will put you over your credit limit. It may just accept it and hit you with an over-the-limit fee. Always sign the back of your card and always read the terms and conditions for your new card. Always check your monthly statement to make sure that your previous month’s payment was credited to your account. Review all listed charges for accuracy. As a card holder you agree to certain responsibilities and rights. You promise to repay the entire amount you charge, with interest, and to make at least a minimum payment on time each month. You agree to notify the issuer promptly if the card is lost or stolen, or if you suspect that it’s being used without your permission. By law, your liability is limited to $50 if you credit card is lost or stolen – so your credit card company can’t make you pay any more of the fraudulent charges if you report the theft promptly.
Automated Access to Your Money Automated Teller Machines (ATM) provides 24-7 access to cash anywhere in the world. Some machines allow you to check your account balance, make deposits, and transfer money between accounts. Online banking allows you to view your savings and checking account activity, transfer money between accounts, and even pay bills. Electronic Funds Transfer (EFT) allows employers to deposit paychecks directly into your account instead of giving you an old-fashioned paper check that you have to deposit in person.
The Pros and Cons of Automated Services What do you think the benefits of using automated services are? What do you think are the concerns of using automated services?
Automated Services Automated services offer: • Convenience • Personal Safety • Knowledge • Time Saving Research before choosing a financial services institution because some automated services come with a fee. Keep your personal information safe.
Fraud Fraud is very serious; it can take months to years to clean up the mess. Victims of identity theft can lose job opportunities, be turned down for loans, and possibly get arrested for crimes they didn’t commit. Save yourself from Fraud by: Throwing away account statements and receipts with your full account number listed. Shred or tear up these items before you throw them away. Giving them your credit or debit card numbers in a practice known as “skimming.” Avoid letting your card out of your sight during a transaction. Giving out your information over the telephone, “pretexting” when you’re called to learn there’s a “problem” with one of your financial accounts. Any legitimate company may call to discuss your account and need to verify your identity, but will do so in ways other than asking for your personal information (for example your mother’s maiden name).
Forms of Fraud/Scams Phishing: E-mail or pop-up message prompts you to click on a link to “update” or “verify” your information, DON’T DO IT! Companies will never ask for this information via E-mail or pop-up messages. Free Software or Freeware (file-sharing): Check the software’s sharing permissions (under properties, preferences, options, or settings menus). You may unknowingly provide access to your entire hard drive (including tax returns, e-mail messages, medical records, photos, or other personal documents). Spyware: Some downloads install spyware onto your hard drive without your consent. May be used to send you pop-up ads, redirect your computer to unwanted websites, monitor your internet surfing, or record your keystrokes. Resist installing any software unless you know exactly what it is and the reputation of the company offering it.
Luring You In “We suspect an unauthorized transaction on your account. To ensure that your account is not compromised, please click the link below and confirm your identity.” Phishing “The bank’s technical department is performing a scheduled software upgrade to improve the quality of its services. By clicking on the link below, you will begin the procedure of the user details confirmation.” Phishing “You’ve won a free copy of xxxx software! Click here to begin your free download.” Spyware and Freeware
Identity Theft 3 nationwide credit reporting bureaus Equifax, Experian, & TransUnion Immediately close any compromised accounts and file a police report. Call one of the toll-free fraud numbers. Explain you’re possibly a victim of identity theft. Provide bureau with appropriate information to prove your identity. For the next 90 days businesses will have to verify your identity before issuing credit in your name. File a complaint with the FTC (www.ftc.gov/idtheft).
Vocabulary Bank For-profit company, owned by investors in its stock Credit Unions Financial institutions owned by their customers Savings account/share account Deposit money you don’t plan to spend right away Automated Teller Machine (ATM) Withdraw your money Checking account/share draft account Manage day-to-day finances Debit Cards “Check Cards” – act like a check Personal Identification Number (PIN) “Password” that identifies you
Vocabulary Online Banking Ability to do financial business from any internet-enabled computer Electronic Funds Transfer (EFT) Automatic deposit Identity Theft Someone uses your name, social security number, credit card number, or other personal information without your permission Phishing E-mail or pop-up messages Free software/freeware Free software or file-sharing Spyware Free downloads