INTRODUCTION TO DEPOSITORY INSTITUTIONS - …studypersonalfinance.weebly.com/uploads/1/1/5/1/11519829/... · i. Agree – One of the most important services a depository ... Introduction

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© Take Charge Today – August 2013 – Introduction to Depository Institutions Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona

RECOMMENDED

GRADE LEVELS AVERAGE TIME TO COMPLETE

EACH LESSON PLAN IS DESIGNED AND CONTINUALLY EVALUATED “BY

EDUCATORS, FOR EDUCATORS.” THANK YOU TO THE FOLLOWING

EDUCATORS FOR DEVELOPING COMPONENTS OF THIS LESSON PLAN.

10‐12

Anticipatory Set & Facilitation: 100‐105 minutes

Conclusion/Assessment Options: 15‐60 minutes

Time does not include optional items.

Tracey Newman, Family and Consumer Sciences Educator, Ste. Genevieve, Missouri

Amy Broekhuizen, Family and Consumer Sciences Educator, Kentwood, Michigan

Kathie Beck, Family and Consumer Sciences Educator, Holland, Michigan

NATIONAL STANDARDS LESSON PLAN OBJECTIVES

The curriculum is aligned to the following national standards: National Standards for Financial Literacy American Association of Family and Consumer

Sciences Council for Economic Education National Business Education National Jump$tart Common Core English Language Arts

Upon completion of this lesson, participants will be able to: Analyze the benefits of using a depository institution Research services offered by different depository

institutions Summarize factors to consider when choosing a

depository institution

MATERIALS

MATERIALS PROVIDED IN THIS LESSON PLAN

MATERIALS SPECIFIC TO THIS LESSON PLAN BUT

AVAILABLE IN A SEPARATE DOWNLOAD MATERIALS TO ACQUIRE SEPARATELY

DEPENDING ON OPTIONS TAUGHT

Alike but Different 2.2.1.A1 Agree or Disagree? 2.2.1.A2 Josie’s Depository Institution

Comparison Chart 2.2.1.A3 Help Josie Choose a Depository

Institution 2.2.1.A4 What Do You Know About

Depository Institutions? 2.2.1.A5 Depository Institution Research

2.2.1.A6 Depository Institution

Advertisement 2.2.1.B1 Depository Institution Research

Rubric 2.2.1.B2 Introduction to Depository

Institutions Vocabulary List 2.2.1.E1

Introduction to Depository Institutions Answer Key 2.2.1.C1

Introduction to Depository Institutions PowerPoint Presentation 2.2.1.G1

Introduction to Depository Institutions PowerPoint Presentation 2.2.1.G2

Managing Your Money Unit Multiple Choice Test Bank and Answer Key 2.2.0.M1 & C1

Computer access and/or Internet access

Large pieces of paper (1 per 2‐5 participants)

Colored paper

Crayons, colored pencils, markers, etc.

INTRODUCTION TO DEPOSITORY INSTITUTIONS Advanced Level

www.takechargetoday.arizona.edu

Material List Continued on Page 2

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Depository Institution Advertisement Examples 2.2.1.E2

Introduction to Depository Institutions Information Sheet 2.2.1.F1

Help Josie Choose a Depository Institution Scavenger Hunt Cards 2.2.1.H1

Introduction to Depository Institutions Note Taking Guide2.2.1.L1

RESOURCES

EXTERNAL RESOURCES

External resources referenced in this lesson plan: Katrina’s Classroom: Financial Lessons from a Hurricane: www.frbatlanta.org/forms/katrina_aftermath.cfm

The Fed Explains Regional Banks videos www.federalreserveeducation.org/resources/detail.cfm?r_id=83165294‐571e‐4940‐af70‐8939434adb28

Find A Better Bank: www.findabetterbank.com

“Elderly Man Accidently Gives Life Savings to Goodwill” article: http://abcnews.go.com/blogs/headlines/2011/11/elderly‐man‐accidentally‐gives‐life‐savings‐to‐goodwill/

Consumer Jungle student‐oriented website: www.consumerjungle.org

TAKE CHARGE TODAY RESOURCES

Similar lesson plan at a different level:

Depository Institution Discovery 1.2.1

Electronic Banking Bonanza 1.2.2

Checking Account and Debit Card Simulation 1.2.3

Optional lesson plan resources:

Technology Integration Options Active Learning Tool 3.0.50

Financial Facts Feud Active Learning Tool 3.0.19

Tablets Applications for the Personal Finance Classroom Active Learning Tool 3.0.52

CONTENT

EDUCATOR MATERIALS PARTICIPANT READING

Materials to support educators when preparing to teach this lesson plan are available on the Take Charge Today website.

Introduction to Depository Institutions Information Sheet 2.2.1.F1

LESSON FACILITATION

PREPARE

Visual indicators to help prepare the lesson INSTRUCT

Instructions to conduct the lesson facilitation

CUSTOMIZE

Potential modifications to lesson facilitation

VOCABULARY ACTIVITY

Alike but Different Approximate time: 10 minutes prior to instruction and 15 minutes at the end Materials to prepare: 1 Alike but Different 2.2.1.A1 per participant Before instruction:

https://takechargetoday.arizona.edu/lessonplans/depository-institution-discovery

https://takechargetoday.arizona.edu/lessonplans/electronic-banking-bonanza

https://takechargetoday.arizona.edu/lessonplans/checking-account-and-debit-card-simulation

http://takechargetoday.arizona.edu/lessonplans/technology-integration-options

http://takechargetoday.arizona.edu/lessonplans/financial-facts-feud

http://takechargetoday.arizona.edu/lessonplans/tablet-applications-personal-finance-classroom

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1. Provide each participant with Alike but Different 2.2.1.A1. 2. Instruct participants to write what they think the definition of each word is in

the spaces provided. 3. Conduct the lesson facilitation. After instruction: 4. At the end of the facilitation have participants complete the remainder of the

Alike but Different 2.2.1.A1 by identifying how each set of terms are similar and different. Instruct participants to edit their definitions if they are wrong.

ANTICIPATORY SET OPTIONS There are two anticipatory set options provided for this lesson: 1. Option one: Agree or Disagree? 2. Option two: Katrina’s Classroom: Financial Lessons from a Hurricane

Option 1: Agree or Disagree? Approximate time: 5 minutes at the beginning of instruction and 5 minutes at the end of instruction Materials to prepare: 1. 1 Agree or Disagree? 2.2.1.A2 per participant Before instruction: 2. Provide each participant with an Agree or Disagree? 2.2.1.A2. 3. Instruct participants to complete the “Before” section by determining

whether they agree or disagree with each statement. 4. After determining if they agree or disagree, they should explain why that

choice was made in the “comment” section. After instruction: 5. At the end of the lesson facilitation, have participants complete the “After”

section to determine if their views regarding depository institutions have changed during the course of the lesson.

a. A bank can help me positively manage my money. i. Agree – Using a depository institution has many benefits that

can help a person manage their money. b. I trust that my money is safe if I store it in a bank.

i. Agree – One of the most important services a depository institution offers is a safe and secure place to store your money due to security and insurance.

c. My money has the possibility to increase in value if stored at a bank. i. Agree – If you store your money in an interest earning

account it will increase in value.

Option 2: Katrina’s Classroom: Financial Lessons from a Hurricane Approximate time: 15 minutes Materials to prepare: Katrina’s Classroom: Financial Lessons from a Hurricane video – In the

Aftermath (link available in the supplemental resources section) 1. The Federal Reserve Bank of Atlanta’s series “Katrina’s Classroom: Financial

Order a free DVD of the Katrina’s Classroom videos from the Federal Reserve Bank of Atlanta website.

For the definition of each word in the Alike but Different 2.2.1.A1 have participants “tweet” the definition by encouraging 140 characters or less.

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Lessons from a Hurricane” series consists of four different videos. For this activity, it is recommended to watch the second video in the series called “In the Aftermath.” This video is 6:32 minutes.

2. Explain to participants that they are going to watch the story of Nick, a young man whose family fled from New Orleans during Hurricane Katrina. Ask participants to pay attention to how Nick and his family were able to get money while they were away from home.

3. Show the video “In the Aftermath.” 4. After the video hold a class discussion. Have participants think about how

using a depository institution helped Nick and his family. The following discussion questions may be used:

a. What would the family have done in the aftermath of Hurricane Katrina if they didn’t have a bank account?

b. What would have happened if the family stored their money at home and was unable to return home to retrieve it before the hurricane destroyed their house?

c. What ways did Nick’s mom prepare the family for a natural disaster? d. Why did Nick open a bank account of his own? e. From watching this video, what are benefits of having a bank

account? f. If the family hadn’t been victim to a natural disaster do you think they

would still benefit from having a bank account?

RECOMMENDED FACILITATION There are two facilitation options provided for this lesson: 1. Option one: PowerPoint Presentation With Josie Throughout 2. Option two: PowerPoint Presentation with Josie at the End

Option 1: PowerPoint Presentation with Josie Throughout Approximate time: 90 minutes Materials to prepare: Introduction to Depository Institutions PowerPoint Presentation 2.2.1.G1 1 Josie’s Depository Institution Comparison Chart 2.2.1.A3 per participant 1 set of Help Josie Choose a Depository Institution Scavenger Hunt Cards

2.2.1.H1 1. Split participants into groups of 2‐5 to conduct group discussion and

brainstorming throughout the lesson. 2. Present the Introduction to Depository Institutions PowerPoint Presentation

2.2.1.G1. Part 1: What is a Depository Institution? 3. Slide 1: Introduction 4. Slide 2: What is a Depository Institution?

a. The term depository institution may be unfamiliar, but they have probably heard of a bank. A bank is a type of depository institution.

b. Ask participants to name one depository institution in their community.

5. Slide 3: Meet Josie a. Describe Josie and explain that she is looking for a depository

Write the names of the depository institutions in your community on the board and refer to them throughout the rest of the facilitation.

The Introduction to Depository Institutions Note Taking Guide 2.2.1.L1 is provided but not included as part of the recommended facilitation instructions or approximate time.

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institution to keep her money safe and pay her bills when she starts college next year.

6. Slide 4: Help Josie manage her money by choosing a depository institution a. Hand one Josie’s Depository Institution Comparison Chart 2.2.1.A3 to

each participant. b. Josie has found two depository institutions with branches in her

hometown and near the college she will be attending. c. She has summarized the information for both of these depository

institutions in the Josie’s Depository Institution Comparison Chart 2.2.1.A3 to help her make an informed decision.

d. Their mission is to learn more about Josie and about depository institutions to help Josie determine which depository institution she should choose to use.

Part 2: Types of Depository Institutions and Location 7. Slide 5: Types of Depository Institutions

a. Stress that there are multiple types of depository institutions. Commercial banks and credit unions are the two most common.

b. Although each type of depository institution is a little different, they are often referred to as “banks”.

c. Each type of depository institution is unique, so they should choose the type that works best to help them manage their money.

8. Slide 6: Josie a. Refer participants to the Josie’s Depository Institution Comparison

Chart 2.2.1.A3. b. Have participants work within their groups to analyze the chart to

determine if Josie’s depository institutions options 1 and 2 are credit unions or banks.

c. Have each group share their answers making sure they provide at least one reason for their choice.

d. Discuss the answers. i. Option 1 is a bank because it is open to anyone. ii. Option 2 is a credit union because it has membership

requirements (members must be a family member of a particular railroad system employee).

9. Slide 7: Location a. In addition to determining which type of depository institution is the

best match, a person may also want to consider the location of a depository institution.

b. Refer back to the depository institution in your community identified on slide 2. Ask participants if that depository institution has more than one branch.

10. Slide 8: Josie a. Ask participants to determine how Josie considered location when

choosing her top two depository institutions. Part 3: Depository Institution Insurance 11. Slide 9: Depository institutions keep your money safe

a. One of the most important services a depository institution offers is a

Show a video clip from the movie “It’s a Wonderful Life” to illustrate how banks work.

Learn how the center bank’s structure helps form a big picture view of the United States economy by watching “The Fed Explains Regional Banks” videos available on the Federal Reserve Bank website.

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safe and secure place to store money. b. Part of this security is offered by the bank itself in terms of having

security features such as safes and storing data on a secured network. However, the other part of this security is offered by depository institution insurance.

c. Discuss FDIC and NCUA insurance noting that the only difference is that FDIC covers all types of depository institutions except for credit unions. Since credit unions are a not‐for‐profit business they are covered by their own type of insurance.

d. Ask participants to determine how insurance can play a role in choosing a depository institution.

i. Tell participants that the majority of depository institutions are insured but there are some that are not insured. Therefore, before depositing your money into a depository institution account, make sure to ask if that depository institution is insured.

12. Slide 10: Josie a. Have participants refer to the Josie’s Depository Institution

Comparison Chart 2.2.1.A3 and work within their groups to determine if Josie’s choices are insured.

b. Discuss the correct answers. Insurance coverage is another clue to what type of depository institution option 1 and 2 are (option 2 is a credit union because it is covered by NCUA insurance).

Part 4: Depository Institution Services 13. Slide 11: Businesses offer services to the public

a. Assign each group one of the businesses listed on slide 11. b. In the first section, ask participants to brainstorm what type of

services their business offers to the public. i. For example, a gas station provides fuel, snacks, and limited

groceries. c. Allow a few minutes for participants to brainstorm services and then

ask a few groups to share what services their business type provides. 14. Slide 12: Services offered by depository institutions

a. Depository institutions are business just like gas stations, grocery stores, restaurants and clothing stores that provide services to the public.

b. Have participants brainstorm what types of services the depository institution in their community offers to the public.

c. Explain that depository institution services can be divided into five categories.

15. Slide 13: Depository institutions offer the ability to earn interest a. Discuss the definitions of interest and interest rates. b. Stress that a person may earn or be charged interest. When

depositing money at a depository institution you may earn interest, which is another benefit of using a depository institution.

16. Slide 14: Savings Tools a. Savings tools are one type of service a depository institution offers.

Savings tools help people manage their money by decreasing the

To reinforce the concept of keeping money safe in a depository institution, discuss the article regarding a man who accidently gave his life savings to goodwill. A link to one article is available in the supplemental resources section of this lesson.

Further explore the concept of depository institutions by reading articles on the student‐oriented Consumer Jungle website.

Use the Savings Tools Lesson Plan 2.4.3 to further explore features of savings tools.

http://consumerjungle.org/

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need to carry large amount of cash. b. Although there are many different types of savings tools, checking

accounts and savings accounts are the most common types. 17. Slide 15: Checking Account vs. Savings Account

a. Discuss the function of checking and savings accounts and how they differ from each other.

b. Ask participants if they should look for a high or low interest rate on a savings account. Discuss that they should look for a high interest rate because the higher the interest rate the more interest they will earn.

18. Slide 16: Josie a. Josie is looking for both a checking account and a savings account.

She would like a checking account that is linked to her savings account so she can transfer money into her savings account whenever needed.

b. Have participants review their Josie’s Depository Institution Comparison Chart 2.2.1.A3 and determine if both depository institution options have this ability. Both options do have the ability for a linked savings account.

c. Ask participants to determine why having a checking account linked to a savings account would be beneficial.

19. Slide 17: Credit a. If money is borrowed from a depository institution the borrower has

to pay back the money borrowed plus interest. 20. Slide 18: Other Services

a. Discuss financial advice, safe‐deposit boxes, and special needs payment instruments as other services that may be offered by depository institutions.

21. Slide 19: Using depository institution services a. If you want to use a depository institution service you should

determine what steps are needed to use that service by calling, visiting, emailing, or researching online.

b. A person may be required to have an account at a depository institution in order to use other services. For example, most depository institutions won’t cash a check unless you have an account with them.

c. If you are under the age of 18, in most cases you will need a parent/guardian signature to open an account at a depository institution. However, this does vary between depository institutions so ask about individual policies for those under 18.

Part 5: Depository Institution Features 22. Slide 20: Features of Depository Institutions

a. The services offered by depository institutions may offer certain features.

23. Slide 21: Online Banking a. Discuss online banking stressing that it may be used with many

different services, such as savings tools and credit. 24. Slide 22: Mobile Banking

a. Mobile banking is the same as online banking but it is an application

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that allows access from mobile devices such as smartphones and tablets.

25. Slide 23: Debit Cards a. A debit card has the same function as a check but it is electronic. b. Debit cards are common with checking and savings accounts.

26. Slide 24: ATM a. Stress that some number of ATMs available varies between

depository institutions. 27. Slide 25: Contactless Payment

a. If depository institutions offer contactless payment it will be used for debit and credit cards.

28. Slide 26: Cast your vote! a. Conduct a class survey to see which feature of depository institutions

is the most popular. b. The vote could be conducted in a variety of ways:

i. List each feature and have participants raise their hand to determine their vote.

ii. Have a station for each feature around the room and instruct participants to move to the part of the room coordinating with their favorite feature.

iii. If you have access to an interactive whiteboard, use the polling feature provided (if available).

iv. Use an online poll creator or brainstorming/discussion tool to conduct the vote. Refer to the Technology Integration Options Active Learning Tool 3.0.50 for samples and instructions.

c. Ask for volunteers from each group to explain why the feature chosen is their favorite.

Part 6: Depository Institution Fees 29. Slide 27: Fees

a. Depository institutions are a business and just as with any other business they may charge fees for certain services.

b. There are many different types of fees that vary between depository institutions and within different services offered at the same institution.

c. Discuss the example fees given stressing that these are only three examples; there are many other types of fees.

30. Slide 28: How do you manage fees? a. Discuss how with research and responsible management of accounts,

most fees can be avoided. Part 7: Choosing a Depository Institution 31. Slide 29: How do you choose one depository institution over another?

a. Discuss the factors to consider when choosing an institution that matches personal goals.

32. Slide 30: Which checking account should Josie choose? a. Print one copy of Help Josie Choose a Depository Institution Scavenger

Hunt Cards 2.2.1.H1 and cut apart the eight cards.

In addition to polling on the favorite feature, conduct a poll to determine which depository institution services and features participants already use (for example, checking accounts, debit cards, online banking, etc.).

Instead of conducting a scavenger hunt, hand one or two cards to each group. Or, read the cards yourself.


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b. Before class, place the eight cards in different places around the room.

c. Tell participants that there are eight cards hidden around the room that tell us more about Josie. In order to help her make a decision about which checking account to choose we need to find those cards.

d. Send participants on a “scavenger hunt” around the room to find the cards.

e. Once all eight cards have been found have participants return to their groups.

f. Have each person who found a card read that card to the class. After each card is read allow time for participants to complete the instructions given.

33. Slide 31: What did you learn about Josie? a. Review the factors that they should consider when helping Josie

choose option 1 or option 2 b. Have participants work within their groups to determine if they would

recommend Josie choose option 1 or 2. c. Ask groups to share their choice and a brief explanation as to why

they made that choice. Remind participants that there is no right or wrong answer.

34. Slide 32: Summary a. Review the major points of the lesson.

Option 2: PowerPoint Presentation with Josie at the End Approximate time: 90 minutes Materials to prepare: Introduction to Depository Institutions PowerPoint Presentation 2.2.1.G2 1 Introduction to Depository Institutions Note Taking Guide 2.2.1.L1 per

participant Optional: 1 Introduction to Depository Institutions Information Sheet 2.2.1.F1

per group of 2‐5 1 Josie’s Depository Institution Comparison Chart 2.2.1.A3 per participant 1 set of Help Josie Choose a Depository Institution Scavenger Hunt Cards

2.2.1.H1 1. Split participants into groups of 2‐5 to conduct group discussion and

brainstorming throughout the lesson. 2. Present the Introduction to Depository Institutions PowerPoint Presentation

2.2.1.G2. Part 1: What is a Depository Institution? 3. Slide 1: Introduction 4. Slide 2: What is a Depository Institution?

a. The term depository institution may be unfamiliar, but they have probably heard of a bank. A bank is a type of depository institution.

b. Ask participants to name one depository institution in their community.

Part 2: Locations and Insurance

Don’t distribute the Josie materials until the end of the presentation.

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5. Slide 3: Types of Depository Institutions a. Stress that there are multiple types of depository institutions.

Commercial banks and credit unions are the two most common. b. Although each type of depository institution is a little different, they

are often referred to as “banks”. c. Each type of depository institution is unique, so they should choose

the type that works best to help them manage their money. 6. Slide 4: Location

a. In addition to determining which type of depository institution is the best match, a person may also want to consider the location of a depository institution.

b. Refer back to the depository institution in your community identified on slide 2. Ask participants if that depository institution has more than one branch.

7. Slide 5: Depository institutions keep your money safe a. One of the most important services a depository institution offers is a

safe and secure place to store money. b. Part of this security is offered by the bank itself in terms of having

security features such as safes and storing data on a secured network. However, the other part of this security is offered by depository institution insurance.

c. Discuss FDIC and NCUA insurance noting that the only difference is that FDIC covers all types of depository institutions except for credit unions. Since credit unions are a not‐for‐profit business they are covered by their own type of insurance.

d. Ask participants to determine how insurance can play a role in choosing a depository institution.

i. Tell participants that the majority of depository institutions are insured but there are some that are not insured. Therefore, before depositing your money into a depository institution account, make sure to ask if that depository institution is insured.

Part 3: Depository Institution Services 8. Slide 6: Businesses offer services to the public

a. Assign each group one of the businesses listed on slide 6. b. In the first section, ask participants to brainstorm what type of

services their business offers to the public. i. For example, a gas station provides fuel, snacks, and limited

groceries. c. Allow a few minutes for participants to brainstorm services and then

ask a few groups to share what services their business type provides. 9. Slide 7: Services offered by depository institutions

a. Depository institutions are business just like gas stations, grocery stores, restaurants and clothing stores that provide services to the public.

b. Have participants brainstorm what types of services the depository institution in their community offers to the public.

c. Explain that depository institution services can be divided into five

Use an interactive whiteboard application to complete the activity on slides 11‐12 using tablets. Refer to the Tablets Applications for the Personal Finance Classroom Active Learning Tool 3.0.52.

http://takechargetoday.arizona.edu/lessonplans/tablet-applications-personal-finance-classroom

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categories. 10. Slide 8: Depository institutions offer the ability to earn interest

a. Discuss the definitions of interest and interest rates. b. Stress that a person may earn or be charged interest. When

depositing money at a depository institution you may earn interest, which is another benefit of using a depository institution.

11. Slide 9: Savings Tools a. Savings tools are one type of service a depository institution offers.

Savings tools help people manage their money by decreasing the need to carry large amount of cash.

b. Although there are many different types of savings tools, checking accounts and savings accounts are the most common types.

12. Slide 10: Checking Account vs. Savings Account a. Discuss the function of checking and savings accounts and how they

differ from each other. b. Ask participants if they should look for a high or low interest rate on a

savings account. Discuss that they should look for a high interest rate because the higher the interest rate the more interest they will earn.

13. Slide 11: Credit a. If money is borrowed from a depository institution the borrower has

to pay back the money borrowed plus interest. 14. Slide 12: Other Services

a. Discuss financial advice, safe‐deposit boxes, and special needs payment instruments as other services that may be offered by depository institutions.

15. Slide 13: Using depository institution services a. If you want to use a depository institution service you should

determine what steps are needed to use that service by calling, visiting, emailing, or researching online.

b. A person may be required to have an account at a depository institution in order to use other services. For example, most depository institutions won’t cash a check unless you have an account with them.

c. If you are under the age of 18, in most cases you will need a parent/guardian signature to open an account at a depository institution. However, this does vary between depository institutions so ask about individual policies for those under 18.

Part 4: Depository Institution Features 16. Slide 14: Features of Depository Institutions

a. The services offered by depository institutions may offer certain features.

b. Assign each small group to one feature (online banking, mobile banking, debit cards, ATMs or contactless payment). Each group must identify what their feature is, what you can do with it and one piece of additional information.

i. If participants are familiar with depository institutions, have them complete this activity using their prior background knowledge. If they are unfamiliar with depository institutions,

Have groups record their responses on butcher paper.

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give each group one Introduction to Depository Institutions Information Sheet 2.2.1.F1.

c. Have groups share with the rest of the class and supplement the information shared with information on slides 15‐19 if necessary.

17. Slide 15: Online Banking a. Discuss online banking stressing that it may be used with many

different services, such as savings tools and credit. 18. Slide 16: Mobile Banking

a. Mobile banking is the same as online banking but it is an application that allows access from mobile devices such as smartphones and tablets.

19. Slide 17: Debit Cards a. A debit card has the same function as a check but it is electronic. b. Debit cards are common with checking and savings accounts.

20. Slide 18: ATM a. Stress that some number of ATMs available varies between

depository institutions. 21. Slide 19: Contactless Payment

a. If depository institutions offer contactless payment it will be used for debit and credit cards.

22. Slide 20: Cast your vote! a. Conduct a class survey to see which feature of depository institutions

is the most popular. b. The vote could be conducted in a variety of ways:

i. List each feature and have participants raise their hand to determine their vote.

ii. Have a station for each feature around the room and instruct participants to move to the part of the room coordinating with their favorite feature.

iii. If you have access to an interactive whiteboard, use the polling feature provided (if available).

iv. Use an online poll creator or brainstorming/discussion tool to conduct the vote. Refer to the Technology Integration Options Active Learning Tool 3.0.50 for samples and instructions.

c. Ask for volunteers from each group to explain why the feature chosen is their favorite.

Part 5: Depository Institution Fees & Choosing a Depository Institution 23. Slide 21: Fees

a. Depository institutions are a business and just as with any other business they may charge fees for certain services.

b. There are many different types of fees that vary between depository institutions and within different services offered at the same institution.

c. Discuss the example fees given stressing that these are only three examples; there are many other types of fees.

24. Slide 22: How do you manage fees? a. Discuss how with research and responsible management of accounts,

most fees can be avoided.


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b. Slide 23: How do you choose one depository institution over another? i. Discuss the factors to consider when choosing an institution

that matches personal goals. c. Slide 24: Summary

i. Review the major points of the lesson. Optional: Part 6: Josie 25. Slide 25: Meet Josie

a. Describe Josie and explain that she is looking for a depository institution to keep her money safe and pay her bills when she starts college next year.

26. Slide 26: Help Josie manage her money by choosing a depository institution a. Hand one Josie’s Depository Institution Comparison Chart 2.2.1.A3 to

each participant. b. Josie has found two depository institutions with branches in her

hometown and near the college she will be attending. c. She has summarized the information for both of these depository

institutions in the Josie’s Depository Institution Comparison Chart 2.2.1.A3 to help her make an informed decision.

d. Their mission is to learn more about Josie and about depository institutions to help Josie determine which depository institution she should choose to use.

27. Slide 27: Josie a. Have participants work within their groups to analyze the chart to

determine if Josie’s depository institutions options 1 and 2 are credit unions or banks.

b. Have each group share their answers making sure they provide at least one reason for their choice.

c. Discuss the answers. i. Option 1 is a bank because it is open to anyone. ii. Option 2 is a credit union because it has membership

requirements (members must be a family member of a particular railroad system employee).

28. Slide 28: Josie a. Ask participants to determine how Josie considered location when

choosing her top two depository institutions. b. Slide 29: Josie

i. Determine if Josie’s choices are insured. ii. Discuss the correct answers. Insurance coverage is another

clue to what type of depository institution option 1 and 2 are (option 2 is a credit union because it is covered by NCUA insurance).

29. Slide 30: Josie a. Josie is looking for both a checking account and a savings account. She

would like a checking account that is linked to her savings account so she can transfer money into her savings account whenever needed.

b. Determine if both depository institution options have this ability. i. Both options do have the ability for a linked savings account.

c. Ask participants to determine why having a checking account linked

Use the Help Josie Choose a Depository Institution 2.2.1.A4 worksheet instead of the PowerPoint to facilitate the Josie activity.

Page | 14 2.2.1


to a savings account would be beneficial. 30. Slide 31: Which checking account should Josie choose?

a. Print one copy of Help Josie Choose a Depository Institution Scavenger Hunt Cards 2.2.1.H1 and cut apart the eight cards.

b. Before class, place the eight cards in different places around the room.

c. Tell participants that there are eight cards hidden around the room that tell us more about Josie. In order to help her make a decision about which checking account to choose we need to find those cards.

d. Send participants on a “scavenger hunt” around the room to find the cards.

e. Once all eight cards have been found have participants return to their groups.

f. Have each person who found a card read that card to the class. After each card is read allow time for participants to complete the instructions given.

31. Slide 32: What did you learn about Josie? a. Review the factors that they should consider when helping Josie

choose option 1 or option 2 b. Have participants work within their groups to determine if they would

recommend Josie choose option 1 or 2. c. Ask groups to share their choice and a brief explanation as to why

they made that choice. Remind participants that there is no right or wrong answer.

CONCLUSION OPTIONS There are two conclusion options provided for this lesson: 1. Option one: Financial Facts Feud 2. Option two: Depository Institution Advertisement

Option 1: Financial Facts Feud Approximate time: 30 minutes Materials to prepare: Financial Facts Feud Active Learning Tool 3.0.19.

o Feud Questions for Introduction to Depository Institutions Lesson Plan 3.0.19.K1

o Financial Facts Feud PowerPoint for Introduction to Depository Institutions Lesson Plan 3.0.19.G2.

2 taplights or buzzers at the front of the room set up for a face‐off 1. Conduct the Financial Facts Feud activity. This activity is similar to the

television game show Family Feud©. Instructions and questions for this activity are included in the Financial Facts Feud Active Learning Tool 3.0.19.

Option 2: Depository Institution Advertisement Approximate time: 15‐ 30 minutes depending upon the method used Materials to prepare: 1 Depository Institution Advertisement 2.2.1.B1 per participant Optional: Technology Integration Options Active Learning Tool 3.0.50 Optional: Depository Institution Advertisement Examples 2.2.1.E2

Let participants choose which option they would like to complete.




Page | 15 2.2.1


1. Conduct the Depository Institution Advertisement 2.2.1.B1 activity. Two

options are available for the advertisement: a radio spot and a billboard. 2. If completing the billboard option consider providing participants with one or

all of the following options: a. Manually by using paper, crayons, colored pencils, markers, etc.

b. Electronically by utilizing desktop publishing software or an online

poster/collage maker. Refer to the Technology Integration Options

Active Learning Tool 3.0.50 for online poster/collage maker websites

and instructions.

3. An example is provided for both options on the Depository Institution Advertisement Examples 2.2.1.E2.

ASSESSMENT OPTIONS There are two assessment options provided for this lesson: 1. Option one: Reinforcement Worksheet 2. Option Two: Depository Institution Research

Option 1: Reinforcement Worksheet Approximate time: 20 minutes Materials to prepare: 1 What Do You Know About Depository Institutions 2.2.1.A5 per participant 1. Complete the What Do You Know About Depository Institutions 2.2.1.A5

worksheet as instructed.

Option 2: Depository Institution Research Approximate time: 60 minutes – possible time outside of class may be needed to conduct the research Materials to prepare: 1 Depository Institution Research 2.2.1.A6 per participant Optional: 1 Depository Institution Research Rubric 2.2.1.B2 per participant Optional: internet access

1. Individually or in small groups, complete the Depository Institution Research

2.2.1.A6. Participants conduct research on a depository institution and then write a short essay describing whether or not they would become a customer of that depository institution. Research may be conducted in a variety of ways depending upon what works in your classroom:

a. Call the depository institution b. Visit the depository institution website c. Visit the depository institution d. Email the depository institution

2. The Depository Institution Research Rubric 2.2.1.B2 is available for grading if desired.

Have participants create a presentation or some type of creation to share their research with the class. Then, have participants choose which depository institution they would choose out of those chosen.

Use the online resource “Find A Better Bank” to find depository institutions and conduct some or all of the research.

Require that the depository institution researched be one in your local community.

After the radio spot is written, have participants translate it into a speaking avatar. Refer to the Technology Integration Options Active Learning Tool 3.0.50 for websites and instructions.



Page | 16 2.2.1.E1


Introduction to Depository Institutions Vocabulary List

TERM DEFINITION

1 Automated teller machine (ATM)

A machine that allows individuals to complete certain transactions from the machine without human assistance

2 Checking account An account that allows quick access to funds for transactions

3 Commercial bank For‐profit depository businesses that offer financial services to both consumers and other

businesses

4 Contactless payment Payment transactions that can be completed with no physical connection between the payment device and the physical point of sale (POS) terminal or store clerk

5 Credit Union Depository institutions that offer many banking services and are owned by their customers

6 Debit card A plastic card that is electronically connected to the cardholder’s depository institution account

7 Depository institution Businesses that provide financial services

8 Interest The price paid for using someone else’s money

9 Interest rate The percentage rate used to calculate interest

10 Mobile banking Apps that many depository institutions have developed that allow online banking access from devices such as smartphones, tablets and other mobile devices

11 Online banking Allows customers to complete certain transactions from a secured Internet site by using a username and password from any place in the world with Internet access

12 Savings account An account at a depository institution that is designed to hold money not spent on current consumption

13 Savings tool Accounts offered by depository institutions whose main purpose is to help people manage their money

Page | 17 2.2.1.A1


Alike but Different

Total Points Earned Name

20 (1 point per box)

Total Points Possible Date

Percentage Class

Directions: Write the definition of each term in the space provided. When prompted by your instructor answer the remaining questions.

Commercial Bank

Definition:

Credit Union

Definition:

Checking Account

Definition:

Savings Account

Definition:

How are these terms alike? How are these terms alike?

How are these terms unique?

How are these terms unique?

Page | 18 2.2.1.A1


Online Banking

Definition:

Mobile Banking

Definition:

ATM

Definition:

Debit Card

Definition:

How are these terms alike? How are these terms alike?

How are these terms unique? How are these terms unique?

Page | 19 2.2.1.A2


Agree or Disagree?


12 (4 points per question)


Percentage Class

Directions: Complete the “Before” section by determining whether you agree or disagree with each statement and explaining your decision in the “comment” section. Complete the “After” section when prompted by your instructor.

A bank can help me positively manage my money.

Before After

Agree

Disagree

Agree

Disagree

Comment:

Comment:

I trust that my money is safe if I store it in a bank.

Before After

Agree

Disagree

Agree

Disagree

Comment:

Comment:

My money has the possibility to increase in value if stored at a bank.

Before After

Agree

Disagree

Agree

Disagree

Comment:

Comment:

Page | 20 2.2.1.L1


Introduction to Depository Institutions Note Taking Guide

Total Points Earned

Name

Total Points Possible

Date

Percentage

Class

Directions: Use the prompts provided to help you take notes during the lesson.

What is a depository institution?

Types of depository institutions

What are two characteristics of a commercial bank? 1.

2.

What are two characteristics of a credit union?1.

2.

Location How does location play a factor in choosing a depository institution?

Insurance What does depository institution insurance cover?

Services A person may earn or be charged interest from depository institution services.

What is interest?

What is an interest rate?

Savings tools are accounts that help you manage your money.The two most common accounts are checking accounts and savings accounts:

What is a checking account?

What is a savings account?

Page | 21 2.2.1.L1


What is credit?

What other services do depository institutions offer?

Features Online banking allows customers to complete certain transactions with their depository institution from a secured Internet site by using a username and password. What are two activities that may be completed with online banking? 1.

2.

How is mobile banking different from online banking?

What is a debit card?

An ATM is a machine that allows depository institution customers to complete certain transactions from the machine without the need for human assistance. What are two activities that may be completed with ATMs? 1.

2.

What is contactless payment?

Fees Fees will vary between institutions and within different services at the same institution.

Explain one type of fee that a depository institution may charge:

Page | 22 2.2.1.A3


Josie’s Depository Institution Comparison Chart


10 points for completion


Percentage Class

Directions: Josie has determined that she will use one of two depository institutions and has summarized the information regarding each depository institution below. Use the information provided by your instructor to determine which depository institution is the best choice for Josie.

Features Depository Institution Option 1 Depository Institution Option 2

Minimum account balance $0 $100; a $10 fee is charged if the balance is below $100

Monthly Service Fee None None

Debit Card Yes; free and unlimited usage Yes; free and unlimited usage

ATM Fee Yes; $2 if another institution’s ATM is used

No

ATM locations five within the college campus; three within the hometown area

two within the college campus area; two within the hometown area

Online banking Yes Yes

Mobile banking/Smartphone application

Yes No

Unlimited check writing Yes No; up to ten checks may be written each month

Free checks Yes Yes

Insufficient fund fees $24 per transaction $22 per transaction

Account overdraft protection Yes Yes

Linked Savings Account Option

Yes; ability to transfer unlimited funds to a savings account

Yes; ability to transfer unlimited funds to a savings account

Interest earned on balance No .02%

Branch locations within 5 miles of college

Yes; three of them Yes; one of them

Branch locations within 5 miles of hometown

Yes; two of them Yes; two of them

Branches in neighboring states

Yes No

Insurance provided on deposits

$250,000 per depositor, per account; covered by FDIC

$250,000 per depositor, per account; covered by NCUA

Accountholder requirements None Must be an employee (or related to an employee) of the railroad system Josie’s father is employed by

Page | 23 2.2.1.H1


Help Josie Choose a Depository Institution Scavenger Hunt Cards

Josie is super excited—in today’s mail

she received a letter that she was

selected to represent her new school on

the university track team! She is not

only excited because she will earn a

scholarship and loves track, but she will

also get to travel to neighboring states

for track meets.

Underline any information in Josie’s Depository Institution Comparison Chart that might help Josie make a choice related to this new information.

As an early graduation gift, Josie’s

grandmother purchased a smart

phone for her. She immediately grows

to enjoy the phone’s efficiency and

quickly learns that apps may be used

in many different ways—not only for

fun and communications but also for

managing her finances.

Write an “x” next to any information in Josie’s Depository Institution Comparison Chart that might help Josie make a choice related to this new information.

Since Josie is still learning about how to

best manage her finances, she has been

making some mistakes and not writing

down every transaction. This resulted in

four instances where Josie had

insufficient funds to cover all the

transactions she had authorized in the

last six months.

Place a checkmark beside any information in Josie’s Depository Institution Comparison Chart that might help Josie make a choice related to this new information

Each month, Josie will need to pay her

automobile insurance, cell phone bill,

and tuition. She will also need to write

some checks or use a debit card for

purchases such as textbooks, food, and

entertainment.

Circle any information in Josie’s Depository Institution Comparison Chart that might help Josie make a choice related to this new information.

Page | 24 2.2.1.H1


Josie is still learning to be responsible

with her finances, and sometimes

forgets to write down every transaction.

She will need an easy, quick way to

check her recent transactions as well as

her current checking account balance.

Write a “%” next to any information in Josie’s Depository Institution Comparison Chart that might help Josie make a choice related to this new information.

Josie’s sister opened an account at a

depository institution and later

learned that the monthly fees made

her responsible for nearly $50 a month

in charges. Josie wants to avoid this

costly mistake.

Draw a box around any information in Josie’s Depository Institution Comparison Chart that might help Josie make a choice related to this new information.

Since she will be on a tight budget as a

college student, she would prefer if she

didn’t have any minimum balance

constraints on her checking account.

Draw a star next to any information in Josie’s Depository Institution Comparison Chart that might help Josie make a choice related to this new information.

In an effort to save extra money, Josie

would like to find a depository

institution that offers additional

earnings for deposits.

Draw a “$” next to any information in Josie’s Depository Institution Comparison Chart that might help Josie make a choice related to this new information.

Page | 25 2.2.1.A4


Help Josie Choose a Depository Institution Total Points Earned

Name

24 Total Points Possible

Date

Percentage

Class

Josie is a senior in high school who will be graduating in a few months. She has already been accepted to a

university that is a three hour drive from her home. While she is excited about moving on to the next phase

of her life, she’s a little nervous about some of the important decisions she will be making‐‐‐moving out of

her parents’ home and into the dorms at a college, choosing classes for her schedule, and finding a part‐time

job.

Josie is also going to need to make some decisions about her money. She knows it’s not safe to carry all of

her cash in her pocket, and while she won’t have a lot of bills to pay, she needs to be able to write a few

checks each month and utilize a debit card to have access to her funds. Josie has done a little research on

depository institutions in her area that also have branches nearby the college she will be attending, and has

narrowed her choices to the two options described in the Josie’s Depository Institutions Comparison Chart.

Follow the steps below to learn more about depository institutions in order to help Josie choose the

depository institution that is best for her.

Step One:

1. Examine Josie’s Depository Institutions Comparison Chart 2.2.1.A3 and determine if Depository Institution

Option 1 and Option 2 are a bank or a credit union. (4 points)

Depository Institution Option 1 Depository Institution Option 2

Is this depository institution a bank or a credit union?

Give one reason to support your answer.

2. How did location influence Josie’s selection of her top two depository institutions? (1 point)

Page | 26 2.2.1.A4


Step Two:

3. While watching the news today, Josie saw that a local depository institution is closing. Now that she understands the importance of depository institution insurance, she wants to ensure her choices are insured. (4 points)

Is Depository Institution Option 1 insured? Explain how you determined the answer.

Is Depository Institution Option 2 insured? Explain how you determined the answer.

Step Three:

4. Josie is looking for a checking account that is linked to a savings account. This will allow her to transfer money from her checking account to her savings account when needed. (2 points)

Does Depository Institution Option 1 have a savings account linked to the checking account?

Does Depository Institution Option 2 have a savings account linked to the checking account?

Step Four:

5. Your instructor will provide you with more information about Josie to help make a decision regarding which depository institution is best for her. Record what you learned about Josie below: (8 points)

1. 2.

3. 4.

5. 6.

7. 8.

6. Using the information you know about Josie, which checking account would you recommend she choose

– option 1 or option 2? Explain your choice with at least three reasons. (5 points)

Page | 27 2.2.1.B1


Depository Institution Advertisement Total Points Earned

Name

21 Total Points Possible Date

Percentage Class

Directions: You work at a depository institution and have volunteered to create an advertisement for the

depository institution. The advertisement should convince current and potential customers that your depository

institution is the best to use. You have two options for the advertisement: a radio spot or a billboard.

Radio Spot: A radio advertisement is often known as a “radio spot.” If you choose this option you will

write a script for the radio advertisement that is approximately 30 seconds long.

Billboard: A billboard is a large outdoor sign that is used to advertise businesses, goods, services, and

ideas to consumers. If you choose this option, you will design a billboard using the materials provided by

your instructor. Remember that billboards must be eye‐catching and appealing so that those passing by

will take time to read the advertisement (the words must be large enough to read as well).

Be creative! You will be graded on the following:

Exemplary Satisfactory Unsatisfactory No Performance

Score

Content: The advertisement convinces current

and potential customers that the depository institution is the best to use

Information is accurate

9‐7 6‐4 3‐1 0

Writing Skills: Sentences are fluent and effective Very few errors in mechanics,

punctuation and word choice

6‐5 4‐3 2‐1 0

Effectiveness of Presentation: Clearly prepared Easily read and neatly assembled Eye catching and compelling Minimum of one‐page, double‐

spaced with 12 font and 1‐inch margins.

6‐5 4‐3 2‐1 0

Total Points Earned Total Points Available 21

Percentage

Page | 28 2.2.1.E2


Depository Institution Advertisement Examples

Billboard example:

Radio Spot Example: Is your piggy bank overflowing…. or maybe not flowing at all? In either case, “Interest”ed In You Bank can help you! We offer a wide variety of services to

our customers along with knowledgeable employees and a convenient location to make your daily financial tasks as simple and quick as possible. Do you

need to open a savings account to store the money in that overflowing piggy bank? With our high interest rates, there is no reason not to make a visit to

“Interest”ed In You Bank, located at the intersection of Savings and Spending Streets in Depository Institution Square. No matter what your financial

needs are we can help, because we are “Interest”ed In You!

Considerate Credit Union

Then, you will love our FREE electronic banking options!

We care about you!

Mobile Banking Online Banking Debit Cards

Dislike paper cuts?

Despise writer’s cramp?

Page | 29 2.2.1.A5


What Do You Know About Depository Institutions?

Total Points Earned

Name

29 Total Points Possible

Date

Percentage

Class

Directions: Choose whether each statement describes a credit union, commercial bank, or both by placing the corresponding letter in the blank. (1 point each) _____ 1. Anyone can open an account here _____ 2. Offers financial services to the public _____ 3. Owned by their customers _____ 4. In business to make money _____ 5. Membership requirements to open an account

A. Credit Union B. Commercial Bank C. Both

Directions: Answer the following questions with complete sentences. 6. What are two benefits depository institutions can provide? (2 points) 7. What would be the three most important factors that you would consider when deciding which

depository institution fits your needs? Explain. (3 points) 8. What are two ways depository institutions keep your money safe? (2 points) 9. What is the difference between a checking account and a savings account? (2 points)

Page | 30 2.2.1.A5


10. What is one example of a special needs payment instrument? (1 point) 11. Describe the difference between online banking and mobile banking. (2 points) 12. What are three activities that may be completed with online banking? (3 points) 13. What are two activities that may be completed with an ATM? (2 points) Directions: Circle whether each of the following statements are true or false. (1 point each) T F 14. A debit card can be described as an electronic check that requires a PIN. T F 15. All depository institutions offer ATM’s in many different locations. T F 16. If a merchant accepts debit cards, that place of business will also offer contactless payment as an option. T F 17. An overdraft fee may be charged if you exceed your checking account balance when using your debit card. T F 18. All depository institutions are required by law to charge the same fees. T F 19. One person can open accounts at more than one depository institution. T F 20. A person can earn and be charged interest.

Page | 31 2.2.1.A6


Depository Institution Research

Total Points Earned

Name


Date

Percentage

Class

Directions: Complete each section below by following the directions provided. Before Research

What would be the three most important things you would look for in a depository institution? (3 points) 1.

2.

3.

Research

Find a depository institution that offers at least one type of checking account and one type of savings account. Decide whether or not you should become a customer of this depository institution by conducting research and answering the questions in the table below. (15 points for completion)

What is the name of the depository institution you are researching?

What type of depository institution is it?

Commercial Bank Credit Union Other. Please indicate the type:

Location:

Does this depository institution have a physical location or is it available only online? If there are physical locations, how many locations does the depository institution have?

Online only

Physical location(s) available

Only one location available

Multiple locations available locally

Multiple locations are available across the state

Multiple locations are available across the nation

Other. Please explain:

Page | 32 2.2.1.A6


Insurance:

Is this depository institution insured?

Yes No

Checking account:

Does the depository institution offer more than one type of checking account? If so, choose one checking account and answer the questions below.

Only one type of checking account is available

Multiple types of checking accounts are available.

Which checking account did you choose?

Are there any fees associated with this checking account? If so, can you avoid the fee(s) by managing your account responsibly or is there a non‐avoidable fee(s)? Explain.

No fees Fees:

Does the checking account offer unlimited check writing? If not, what is the limit?

Unlimited check writing Limited check writing. What is the limit?

What is one other thing you would like to know about checking accounts before making your decision?

Savings account:

Does the depository institution offer more than one type of savings account? If so, choose one savings account and answer the questions below.

Only one type of savings account is available

Multiple types of savings accounts are available. Which savings account did you choose?

What is the current interest rate on the savings account? If the rate is not listed online, what email or phone number could you use to learn?

Are there any fees associated with this savings account? If so, can you avoid the fee(s) by managing your account responsibly or is there a non‐avoidable fee(s)? Explain.

No fees Fees:

Is there any other information that is important to consider about this savings account?

Page | 33 2.2.1.A6


Features Offered

Does the depository institution offer debit cards as part of their accounts?

Yes No

How many (if any) ATMs does the depository institution have?

ATMs are not available

ATMs are available. Describe how you know ATM’s are available in your desired location.

Does the depository institution offer online and/or mobile banking?

Online banking is not available Online banking is available Online and mobile banking is available

Other Services:

Describe one other service this depository institution offers.

Other information:

What is one other piece of information that is important to know if deciding whether or not to become a customer of this depository institution.

Research Reflection

After examining your research, is this a depository institution that you would become a customer of? Make sure to consider the three items you identified as important factors to consider when choosing a depository institution. Answer this question in a well‐written paragraph. Provide at least three reasons to support your decision. (21 points – see rubric)

Page | 34 2.2.1.B2


Depository Institution Research Rubric

Total Points Earned

Name


Date

Percentage

Class

Directions: After examining your research, is this a depository institution that you would become a customer of? Make sure to consider the three items you identified as important factors to consider when choosing a depository institution. Answer this question in a well‐written paragraph. Provide at least three reasons to support your decision.

Exemplary Satisfactory Unsatisfactory No Performance

Score

Content: Identified the three most important

factors to consider when choosing a depository institution

Information is accurate Thorough research was conducted

and all questions were answered More than 3 reasons were provide to

support the decision

9‐7 6‐4 3‐1 0

Writing Skills: Sentences are fluent and effective Very few errors in mechanics,

punctuation and word choice

6‐5 4‐3 2‐1 0

Effectiveness of Presentation: Easily read and neatly assembled Minimum of one‐page, double‐

spaced with 12 font and 1‐inch margins.

6‐5 4‐3 2‐1 0

Total Points Earned Total Points Available 21

Percentage

2.2.1.F1

© Take Charge Today – August 2013 – Introduc on to Depository Ins tu ons – Page 1 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Ins tute at The University of Arizona

Introduc on to Depository Ins tu ons

Advanced Level Millions of people use financial services offered by depository ins tu ons on a daily basis to help them manage their

money. Commercial banks, credit unions, and savings banks are all examples of depository ins tu ons. Many types of

companies offer financial services to consumers. But, depository ins tu ons are special in that they accept deposits from

consumers and the safety of those deposits is o en guaranteed by the government. The range of valuable services ed to

deposit accounts (online banking, checking accounts and debit cards, bill payment services, automa c savings transfers)

makes depository ins tu ons an important component to a financial plan.

Types of Depository Ins tu ons

Do you use a depository ins tu on? If so, what kind of depository ins tu on is it? If not, what features of a depository

ins tu on do you think would work best for you?

Commercial banks are for‐profit depository businesses that offer financial services to both consumers and other

businesses. Banks are usually the largest depository ins tu ons and offer the widest variety of services to customers.

Credit unions are depository ins tu ons that offer many banking services. But, unlike banks, they are owned by their

customers, who are usually called members. A credit union has membership qualifica ons that require its members share

a common bond such as the same employer, the geographic area in which they live or membership in an organiza on.

Credit unions are non‐profit organiza ons exempt from federal income tax. This feature o en allows them to pay higher

interest rates on deposits, charge lower interest rates on loans and charge lower fees, compared to banks and other

depository ins tu ons.

Commercial banks and credit unions are the most commonly used depository ins tu ons. Although both types of

ins tu ons offer a range of “banking” services, they are actually quite different in terms of their ownership structure

and the types of consumers they serve.

The physical loca on of a depository ins tu on may influence your choice. Here are some ques ons to consider when

choosing a depository ins tu on that best fits your financial needs:

Is the depository ins tu on accessible; does it have mul ple loca ons close to home, work and school?

Does the depository ins tu on have loca ons (branches) throughout the United States (something to consider if

you travel a lot or plan to move)?

What type of transporta on is required to access a branch if it isn’t within walking distance?

If you are considering a depository ins tu on whose services are offered only online, will that type of access meet

your financial needs?

2.2.1.F1


Deposit Insurance

One of the most important services that a depository ins tu on offers is a safe and secure place to deposit your money

for future use. Stashing your money away in what you might consider a “safe” loca on within your home or having large

sums of cash in your wallet is financially risky. If lost or stolen your money is most likely gone for good.

However, depository ins tu ons offer secure storage of both cash and transac on data. Most importantly, deposits in

many banks and credit unions are protected by insurance provided by two federal government agencies know as the

Federal Deposit Insurance Corpora on (FDIC) and the Na onal Credit Union Administra on (NCUA).

As long as you stay within the coverage limits your money is safe from loss due to the or failure of the financial

ins tu on. Not all depository ins tu ons are covered by the FDIC or NCUA, so you should check for coverage before

deposi ng any money.

Services Offered by Depository Ins tu ons

Depository ins tu ons offer a wide variety of financial services to their

customers. The services offered and the terms and condi ons (such as features

and fees) will vary for every service at every depository ins tu on.

Transac on and Savings Tools

Think about how you make purchases at the point of sale. Managing a large

amount of cash (and protec ng it from risks) can be overwhelming and me

consuming. Depository ins tu ons offer services that allow you to use your

money without having to handle cash. These services are known as transac on

and savings tools. They are accounts offered by depository ins tu ons whose

main purpose is to help people manage their money.

Transac on and savings tools may or may not earn interest. Interest is the price paid

for using someone else’s money. If you deposit money in an interest‐earning savings

tool account you will be paid interest during the me the ins tu on holds your funds

and uses it for its own purposes. The depository ins tu on is essen ally “borrowing”

your money. Eventually you’ll see your ini al deposit grow over me as it accrues

interest paid by that ins tu on.

Are you currently earning any interest? If so, on what?

Federal Deposit Insurance Corpora on (FDIC)

The FDIC is a federal government agency that insures

depository ins tu ons that have elected for FDIC

coverage against loss. The standard insurance amount is

$250,000 per depositor, per insured ins tu on, for each

account ownership category.

Na onal Credit Union Administra on (NCUA)

The NCUA provides insurance protec on for credit unions.

The coverage is the same as with the FDIC; each depositor

is insured against loss up to a maximum of $250,000

against loss.

If you want to earn interest on

your deposits look for high

interest rates. When you borrow

money and have to pay interest

look for low interest rates.

2.2.1.F1


The two most common types of transac on and savings tools are checking and savings accounts:

Checking Account

A checking account allows you quick access to funds for transac ons. You’re able to transfer money from one account to another or directly to another person through the use of paper checks, debit cards or withdrawing cash directly from your checking account.

Checking accounts are very popular among consumers because they reduce the need to carry large amounts of cash and are easy to use and manage. Some checking accounts earn interest but most do not.

Checking accounts at credit unions are known as share dra accounts. This type of account also provides an easy method for accessing your money.

Savings Account

A savings account is the most common type of bank account and may be the first type of account you open at your depository ins tu on. Savings accounts are generally for money that you don't intend to use for daily expenses. Your savings account will earn interest on its balance and be stored in a secure loca on. To open a savings account, simply go down to your local bank with proper iden fica on and ask to open an account.

A savings account at a credit union is some mes referred to as a share account and is required for membership.

Special Needs Payment Instruments

Traveler’s checks, cer fied checks, cashier’s checks and

money orders are all special payment instruments that

have a specific func on and are available at most

depository ins tu ons.

Which depository ins tu on services would be the most important to you?

To use any of the services offered by depository ins tu ons, call, visit, email or search the depository ins tu on’s website

to determine what steps are needed to use the service you desire. You may be required to have an account to use their

services. If you are under the age of 18, in most cases, you will need a parent/guardian signature to open an account.

Has opening a checking or savings account posi vely influenced the way you manage your money? If you haven’t opened

up one at this point in your financial life, can you iden fy ways a bank account might influence your money management

habits in the future?

Credit

Credit products allow you to borrow money from the

financial ins tu on in exchange for your promise to repay

those funds in the future. Depository ins tu ons may

provide a variety of credit products such as loans for the

purchase of a house, auto or educa on. Many depository

ins tu ons also offer credit cards to their customers. When

you apply for credit, the financial ins tu on will determine

whether you qualify for the loan based on their assessment

of the likelihood that you will repay as agreed. The

ins tu on will also determine the amount of me you have

to repay, and the price of the loan, in the form of the

interest rate to be charged on the amount of money you

owe. By agreeing to these loan terms you will agree to pay

the depository ins tu on back the money borrowed plus

interest.

Financial Advice

Depository ins tu ons

may also offer

informa on, advice and

assistance regarding a

wide range of financial‐

related topics including

investments and estate

planning.

Safe‐Deposit Box

A safe‐deposit box is a secured

box at a depository ins tu on

that you can use to store

valuable personal items. Many

people use safe‐deposit boxes

to store important paperwork

such as birth cer ficates,

Social Security cards and wills.

Addi onal services offered by many depository ins tu ons include:

2.2.1.F1


Addi onal Features of Depository Ins tu on Services

The services offered by depository ins tu ons may offer certain features such as online banking, mobile banking, debit

cards, ATMs and contactless payment.

Online banking

A depository ins tu on may offer online banking, also known as Internet banking, as a feature of their services.

Online banking allows customers to complete certain transac ons from a secured Internet site by using a

username and password from any place in the world with Internet access. Online banking ac vi es include

accessing account informa on and statements, transferring money between accounts, paying bills and applying for

credit. In addi on to paying bills online, consumers may also be able to set up a recurring bill payment. The payment will

occur automa cally on a specific date each month without the customer having to write a check or ini ate the payment.

However, if you use recurring payment it is your responsibility to make sure that your account has sufficient funds in it to

cover the amount of the automa c payment.

Many depository ins tu ons have developed apps that

allow online banking access from devices such as

smartphones, tablets and other mobile devices. This is a

form of online banking known as mobile banking.

Debit cards

A debit card is electronically connected to the cardholder’s depository ins tu on account. Debit cards allow customers

easy access to money in their savings and checking accounts either at the point of sale or through an automated teller

machine (ATM). As a payment tool, debit cards func on in the same manner as a check, but debit transac ons are faster

and more portable because they are electronic. Debit cards also allow customers to withdraw cash or electronically

access their accounts to transfer funds between accounts or view balances. In most cases, debit cards require using a

personal iden fica on number (PIN) or signature to perform transac ons. The PIN or signature authorizes the user of the

debit card to access the money in the corresponding account.

Automated teller machines (ATMs)

An ATM is a machine that allows individuals to complete certain transac ons from the machine

without human assistance. ATMs are accessed via an ATM card (which is usually also the customers

debit card) plus the PIN that accompanies that card. ATMs allow customers to withdraw and

deposit money into their account(s), as well as make account transfers and view account balances.

The number and loca on of ATM’s varies by depository ins tu on.

Contactless payment

Contactless payment transac ons can be completed with no physical connec on between the payment device and the

physical point of sale (POS) terminal or store clerk. If a depository ins tu on offers contactless payment op ons then you

will receive a debit card, credit card, or some other type of electronic card that allows you to simply “wave” the card in

front of a sensor to make a purchase (some mes you may have to also enter a PIN for the payment to authorize). This

allows for fast payment transac ons, but not all merchants have the technology to support contactless payment.

What is one advantage to online and/or mobile banking?

What features of depository ins tu on services would ma er to you?

2.2.1.F1


Fees

Depository ins tu ons o en charge fees for certain services. Fee levels are important to consider when choosing a

depository ins tu on for your accounts. Examples of fees include:

Minimum balance fees ‐ Some accounts

require a minimum account balance. If you

go below that balance you will be charged a

fee. Before opening an account ask if there

is a minimum balance amount and

determine if you are OK with the minimum

balance amount.

Depository ins tu ons o en charge many other types of fees. Fees can vary greatly across depository ins tu ons.

Researching poten al fees that you may face as an account holder is an important part of choosing a depository

ins tu on. Ask for a list of fees when opening an account. Most fees charged for items and transac ons can be avoided

if you manage your account(s) well.

Choosing a Depository Ins tu on

Now that you know about the many benefits and services a depository ins tu on can offer, you may want to become a

customer. The most important factor when choosing a depository ins tu on is to select one that helps you meet your

financial goals. You may have more than one type of account with a single depository ins tu on or open accounts with

mul ple ins tu ons.

Consider the following factors when choosing a depository ins tu on(s) that helps you reach your financial goals:

Fees charged

Type of depository ins tu on

Loca on

Insurance of deposits

Depository ins tu ons are a valuable tool to help you manage your money in a posi ve manner.

Choose a depository ins tu on that will help you reach your financial goals.

What two factors are most relevant to you when choosing your depository ins tu on?

Products and services offered

Interest rates on loans and deposits

Features offered

Overdra fee – A fee charged if you

withdraw more money from your

account than is available. Some

depository ins tu ons offer overdra

protec on that helps you avoid

overdra fees if you exceed your

account balance.

ATM fees – Your depository

ins tu on may charge you for

using an ATM that belongs to

another depository ins tu on.

INTRODUCTION TO DEPOSITORY INSTITUTIONS - …studypersonalfinance.weebly.com/uploads/1/1/5/1/11519829/... · i. Agree – One of the most important services a depository ... Introduction

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