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Banking Basics

CBD College Financial Literacy

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We will explore…

Banks versus Credit Unions
How to Choose a Financial Institution
How to Open an Account
How to Manage your Account Costs
How to Grow More Interest on your Savings

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Why have a checking/savings account?

To keep your money safe!
Your account will be insured.
Account statements provide proof that you paid bills and help you keep track of your spending.
Money in a savings account earns interest over time.
Less expensive than check-cashing services and money orders.

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Banks Versus Credit Unions

Banks:

Banks are financial institutions that take deposits, engage in lending and operate for a profit.
Banks offer checking and savings accounts to the public.
Banks pay Taxes
Banks have more branches/online banking resources

Credit Unions:

Credit unions are non-profit financial institutions owned and controlled by their members.
Credit unions offer checking and savings accounts to members only.
May have more competitive interest rates.
May have lower fees.

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How to choose a Financial Institution

Ask yourself…

What benefits does the financial institution offer?
What are the financial institution’s fees and policies?
What kind of accessibility do they offer?
What is important to you?

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Account A	Account B	Account C
Monthly Fee: $10 or waived if: Direct deposit over $500 $1,500 minimum daily balance $5000 in checking and savings	Monthly fee: $0	Monthly fee: $0
Minimum Balance: $0	Minimum Balance: $50 to open and $0 after	Minimum Balance: $0
Interest %: 0% on checking, .01% on savings	Interest %: 0% on checking and .05% on saving	Interest %: .25%
ATM fee: $0 at their ATMs and $2 at others	ATM fee: $0 at theirs or many partners, $3 others	ATM fee: $0
Locations: Practically on every corner	Locations: Not convenient for you	Locations: Online only
Mobile Banking: All the bells and whistles	Mobile Banking: Basic, no photo deposit	Mobile Banking: All bells and whistles

Get organized, and compare your options!

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What will you need to open an account?

Photo identification
Another form of identification like a credit card
Proof of address
Your SSN or ITIN
At least the minimum balance of money required for the account.

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Checking Versus Savings Accounts

Checking Accounts:

Manages your daily spending
Can withdrawal via check, debit, or ATM
Sometimes accrues interest

Savings Accounts:

For your savings; like emergency fund or short term goals
Always accrues interest
Limited withdrawals

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Checking Accounts

Let you deposit/withdraw money and write checks to pay for purchases and bills.
Debit Card: Allows you to withdraw cash, make deposits at ATMs, and make purchases.
PIN: Your Personal Identification Number required to utilize your debit card.

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Types of Checking Accounts

Free Checking

No monthly fees
No minimum balance requirements

Student Checking

No/low minimum balance requirements

Joint Accounts

Allow joint owners to have equal access to the account

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Overdraft Protection

Bouncing a Check or Over-drafting: Making a purchase that exceeds what you have in your account.

You could owe an overdraft fee to the bank/business
This can hurt your credit with the bank

Overdraft Protection: Banks will honor your check or debit card purchase even if it exceeds your account balance.

You may still be charged a fee for the overdraft by your bank.

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Savings Accounts

Your money earns interest which grows your savings over time.
Annual Percentage Rate (APR) is the amount your money would earn if left deposited in your savings account for 1 year.
Savings accounts usually carry an APR of 1-2%.

Example: $1000.00 would earn $10.00 in a year.

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Types of Interest

Simple Interest: Determined by initial deposit only.
Compound Interest: You will earn interest on your initial deposit as well as the interest you earn.

Compound interest grows your money faster!

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Certificates of Deposit

Offer a guaranteed interest rate for a specified amount of time.

You choose the amount of time you will leave your money deposited (months/years).
The longer the term the higher the interest accrual rate.

If you withdraw your money early you will owe a penalty.

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Questions? Contact us!

CBD College Financial Aid Office

Email: fa@cbd.edu

Phone:213-427-2200