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BANKING SERVICES

Provided by the Utah State Department �of Education and the Citigroup Financial Education Curriculum

These slides are derived from the Citigroup Financial Education Curriculum. For additional background and information, you may find the complete set of lessons at: http://curriculum.financialeducation.citigroup.com.

It is advised that you complete the following steps before you present any activity:

Review the Facilitator’s Guide of the Citigroup Financial Education Curriculum, which can be found on its CD-ROM or at http://curriculum.financialeducation.citigroup.com.

For information regarding online facilitator training, please contact fetraining@citigroup.com.

3. Review the materials thoroughly and be prepared with copies of the presentation or from the lesson. Determine for yourself whether or not you are truly comfortable presenting any activity. If you are not, you should ask for assistance, team teach with a colleague who is comfortable with the material, or teach a different lesson.

4. Each of the activities in this presentation may take up to 50-60 minutes.

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Activity 1………….Why Do You Need A Bank?
Activity 2………The Many Services of a Bank
Activity 3….The ABCs of a Checking Account
Activity 4……….Opening a Checking Account
Activity 5………………….How to Write a Check
Activity 6…..Maintaining a Checking Account
Activity 7……The ABCs of a Savings Account

These slides are derived from the Citigroup Financial Education Curriculum. For additional background and information, you may find the complete set of lessons at: http://curriculum.financialeducation.citigroup.com.

It is advised that you complete the following steps before you present any activity:

Review the Facilitator’s Guide of the Citigroup Financial Education Curriculum, which can be found on its CD-ROM or at http://curriculum.financialeducation.citigroup.com.

For information regarding online facilitator training, please contact fetraining@citigroup.com.

3. Review the materials thoroughly and be prepared with copies of the presentation or from the lesson. Determine for yourself whether or not you are truly comfortable presenting any activity. If you are not, you should ask for assistance, team teach with a colleague who is comfortable with the material, or teach a different lesson.

4. Each of the activities in this presentation may take up to 50-60 minutes.

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Basic Banking Services - Activity 1

Why Do You

Need a Bank?

Overview

Purposes of banks
The differences between banks and

credit unions

Safety of financial institutions
Banks as money management tools
The Earned Income Tax Credit

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Presentation opening

• Welcome the participants.

• Introduce yourself briefly.

• If this is the first meeting with the class or group, do a brief round of introductions by everyone.

• When introducing yourself, print your name where the participants can see and refer to it during the session. For whatever reason, some people may be a little nervous and may not remember your name. Just as you want to use their names, encourage them to call you by your name.

Open the discussion by asking for a show of hands of those who do any type of business with a bank.

• Be sure to remind everyone that the session is not about which bank (brand name) but rather, a bank.

• In some communities and with some age groups, people are cautious about providing personal information in a public gathering. If people don’t raise their hands, move on.

Tell participants that the purpose of this activity is to become aware of:

• Purposes of Banks

• Types of Financial Institutions

• Safety of Financial Institutions

• Privacy of Financial Institutions

• The ways that banks can help you manage your money

• The benefits of an Earned Income Tax Credit refund

Begin with the basic functions of a bank: to accept money in checking and savings accounts and to make loans.

• Encourage the participants to think in very general terms about the very basics of what banks do; specifics will be covered later.

• Stress that banks take in money and distribute money—through various services.

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Slide 1 – Safety of Financial Institutions� Lesson Reference: Basic Banking Services, Activity 1 – Overhead 3

SAFETY OF FINANCIAL INSTITUTIONS

COMMERCIAL BANKS CREDIT UNIONS

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Emphasize that deposits in both banks and credit unions are safe. Both banks and credit unions insure most deposits up to $100,000 per depositor per institution.

Ask participants whether they think one type of financial institution is safer than another.

• Allow for responses, but be sure everyone recognizes that safety is very important to all bank officials. If people do not have confidence in the safety of banks, they will not do business with banks.

• Allow participants to discuss their concerns with safety in banks and related financial institutions. This is a major purpose of this financial education program—to build confidence in banks.

• Option: Consider one of two interactive options to use when discussing safety of financial institutions. If either option is used, remember to use the information as a review opportunity in closing the activity.

1. Private Option: Have each participant write on a slip of paper how confident they feel about financial institutions, on a scale of 1-5.

2. Public Option: Draw a line on the flipchart, board, or blank transparency. Divide into segments labeled 1-5. Label 1 = “least safe” and label 5 = “most safe.” Have participants individually mark the spot that illustrates how confident each one feels about financial institutions.

Use “Slide 1: Safety of Financial Institutions” to illustrate legal and regulatory oversight of financial institutions.

• FDIC: Federal Deposit Insurance Corporation

• NCUA: National Credit Union Administration

One final issue that participants may wonder about is privacy; how secure is the information they share with a bank? If the topic has not already come up, allow for a little discussion, then reassure participants that banks work to keep their information secure. Although policies vary, information is kept confidential. Encourage participants to ask questions about how this is done.

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Slide 2 – EITC� Lesson Reference: Basic Banking Services, Activity 1 – Handout 2

THE EARNED INCOME TAX CREDIT

The Earned Income Tax Credit (EITC) is a federal income tax credit for low-income workers. The credit reduces the amount of tax an individual owes, and may be returned to the taxpayer in the form of a refund. Some states offer additional forms of EITC.

Eligible workers must have an annual income and investment income that falls below a certain level. In tax year 2005, for example, if you are married, have two or more children, and are filing your taxes jointly, your combined annual income must not exceed $37,263. You must have a Social Security Number to receive the EITC.

In tax year 2005, a family with two or more children could receive up to a $4,400 refund through the EITC.*

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Write EITC on the flipchart. Ask whether anyone knows what EITC stands for. If no one responds, explain that the EITC is a tax credit for low-income workers and that many people use their refund to open a bank account.

Display “Slide 2: The Earned Income Tax Credit.” Discuss the eligibility requirements and the different suggestions of how to bank your EITC refund. Have participants list their own ideas for banking an EITC refund.

Ways to bank your EITC refund:

1. Start an emergency savings fund by opening a savings account.

2. Open a checking account so you can avoid paying check cashing fees and paying for money orders.

3. Save for the future by opening a Certificate of Deposit.

*EITC refunds will vary by applicant. For more information, consult a tax preparer or refer to the VITA, IDA, and CFED Resources in the Appendix.

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Basic Banking Services - Activity 2

The Many Services�of a Bank

Overview

Financial services provided by a bank
Bank employees
Services that might be of personal benefit
The impact of state and federal regulations upon the security of a bank

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REMITTANCE OPTIONS

TO SEND AND RECEIVE MONEY

1. Money Transfer Organizations

2. Bank Transfers

3. Hand Delivery

4. Mail

5. Hawala

6. Post Offices

7. Stored Value Cards

Slide 1 – Remittance Options� Lesson Reference: Basic Banking Services, Activity 2 - Overhead 1

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Remind participants that banks now offer a wide variety of services, many of them electronic in nature.

• Ask everyone to brainstorm with you about new types of electronic financial services provided by banks.

• Record the responses on a flipchart, board, or blank transparency.

Inform participants that the next activity will focus on one specific financial service—remittances.

Display “Slide 1: Remittance Options to Send and Receive Money” to elaborate on the various ways people can send and receive money. Explain the importance of understanding the fees involved with the different methods, since costs may vary.

1. Money Transfer Organizations (MTOs)

MTOs, such as Western Union and MoneyGram, are licensed regional or global companies that offer cash transfers across borders. These services are available at agents within the local community, on the phone, or on the Internet.

2. Bank Transfers

Some banks and credit unions offer money transfer services from bank account to bank account and from bank account to cash, typically through a wire transfer or via check. The services are available via the bank branch, ATM, phone, and Internet. The money can be picked up at a local bank branch/agent or via a debit card through ATMs.

3. Hand Delivery

Some immigrants send money home through a courier, friends, or families returning to their home country for hand-delivery of the remittances.

4. Mail

Some immigrants send cash, money orders, or checks via the mail to their families in their home country.

5. Hawala

Hawala is an informal system, where an agent in the host country receives a certain amount and asks an agent in the destination country to give the corresponding amount in the local currency. The two agents will settle the debt through various mechanisms at a later time. This practice is common throughout South Asia.

6. Post Offices

Post offices throughout the world handle money transfers between countries. Countries in which post offices are used for remittance include the U.S., Mexico, many European countries, China, Israel, and Brazil.

7. Stored Value Cards

A stored-value card is a pre-paid account and is generally card-based. (The card can be used to transfer funds for payment, for example, to a merchant at a POS terminal, within the pre-paid balance of the account.)

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BANK OCCUPATIONS

• Tellers

• Platform Bankers

• Mortgage Lenders

• Operations Manager

• Branch Manager

Slide 2 – Bank Occupations� Lesson Reference: Basic Banking Services, Activity 2 – Overhead 2

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As participants learn about the different services that a bank provides, it will also be helpful for them to understand the various jobs functions of employees at bank branches. Help participants learn about the bank employees they may come into contact with by displaying “Slide 2: Bank Occupations.” Review each of the jobs listed on the slide.

Tellers:

The individuals who typically process financial transactions (Examples: deposits, withdrawals, payments) and help customers with service on their accounts. Tellers are also responsible for uncovering additional customer needs and referring customers to the appropriate sales person.

Platform Bankers:

The salespeople who offer financial product and service solutions. The platform banker opens bank accounts (Examples: checking and savings accounts) and credit products such as credit cards, home loans, and credit lines. If they have the proper licenses, they can also offer investment products such as mutual funds, or insurance products. After assessing a customer’s needs, these individuals may bring in additional specialists to help.

Mortgage Lenders:

Sales staff who specialize in helping customers finance their home purchases. Mortgage lenders help customers understand what home mortgage amounts they can afford by pre-qualifying them. They process mortgage applications and assist customers throughout the process of buying a home or refinancing their existing home. Some mortgage lenders specialize in certain segments of the market, such as first-time home buyers or properties in low-to-moderate income neighborhoods.

Operations Manager:

This person is typically responsible for the financial operations of a bank branch. While computers balance accounts, the operations manager reviews reports for any action that needs to take place. Some of their job responsibilities may include reviewing and making decisions on overdraft reports, reviewing teller transaction reports, ensuring that ATMs have money in them, and verifying teller balances at the end of the workday.

Branch Manager:

The person responsible for making sure the branch operates correctly from every level. The branch manager is responsible for hiring staff, ensuring the bank branch runs efficiently, meeting the needs of customers, and serving the needs of the community where the bank is located. Exact responsibilities vary from bank to bank, but the branch manager may also be responsible for bringing new business to the branch.

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Slide 3 - Electronic Bank Services� Lesson Reference: Basic Banking Services, Activity 2 – Overhead 3

ELECTRONIC BANK SERVICES

Online banking is the fastest growing Internet

activity in the U.S.

Types of Services

Bank Cards

Automated Services

Protect Your Passwords!

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Display “Slide 3: Electronic Bank Services.” As before, provide only a brief description of the electronic services. Control any extensive discussion.

Ask everyone to take one minute to think silently of all the advantages that electronic bank services provide today.

• Call time. Ask for responses; record them on the flipchart, board, or blank transparency.

• Responses may vary but should include such items as safety, convenience, and efficiency.

Protect Your Passwords

• Remember that your ATM, bank, or online passwords provide access to your accounts. Protect yourself from theft or fraud by choosing passwords that work for you, but no one else.

• Use unusual passwords. Combine numbers and letters, and avoid passwords that could be guessed easily, such as your birth date or license number.

• Keep passwords secret, even from your small children. If you let them “help you” when you withdraw money from an ATM or use a debit card, keep them from seeing what password you use.

• Never give passwords or other key information to strangers via e-mail.

• Change passwords often.

• Use different passwords for different accounts.

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Slide 4 - Bank Card Types� Lesson Reference: Basic Banking Services, Activity 2 – Overhead 4

BANK CARD TYPES

TYPE

Check Cards or

ATM/Debit Cards

Stored Value Cards

DESCRIPTION

Bank cards that allow for the payment of goods and services to be subtracted directly from a bank deposit account.
Can be used with merchants that take major credit cards—known as point of sale (POS) transactions.

Bank cards with preset, limited value.
Used to pay for goods and services.
Alternative to cash.

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ELECTRONIC BANK SERVICES

• Direct Deposit

• Transfers between Accounts

• Transfers to a Third Party

• Online Banking

• Bank by Phone

• ATM

Slide 5 – Electronic Bank Services� Lesson Reference: Basic Banking Services, Activity 2 – Handout 3

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Review slide terms:

Direct Deposit

• Payments from third party into bank accounts for paychecks, Social Security, etc.

Transfers between Accounts

• Automatic transfer of money from one account to another, such as from a checking account to a savings account.

• Occur on a designated date of month.

Transfers to a Third Party

• Automatic payments of variety of bills directly from a bank account, such as automatically paying rent or monthly auto loan payment.

• Account holder receives confirmation.

Online Banking

• Requires computer and Internet access.

• Security = Username + Password.

• Available in real time.

• Allows customers to complete most regular bank transactions.

• Can be used to pay utility and other bills (bill payment).

Bank by Phone

• Provides electronic account access.

• Keypad or voice-activated.

• Requires a Personal Identification Number (PIN) or password access.

• Includes various options.

• Allows review of regular bank transactions.

• Allows one to speak to a bank customer service representative.

• Can be used to pay bills.

ATM

• Automated Teller Machine

• Allows one to obtain cash and conduct banking transactions.

• Allows regular review of bank transactions.

• Requires a Personal Identification Number (PIN).

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Slide 6 - Regulation of Electronic Banking� Lesson Reference: Basic Banking Services, Activity 2 – Overhead 5

REGULATION OF ELECTRONIC

BANKING SERVICES

Electronic Fund Transfer Act

Protects consumers using any type of electronic

banking from loss and protects their privacy.

Banks must:

Offer consumers a record or receipt for all computer

transactions.

Investigate errors and report to consumer within ten days of error notification.

Customers are responsible to report any errors.

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Ask if anyone has concerns about the various electronic banking services

listed on Slide 3 and would be willing to share those concerns. This

discussion reflects on the main objective of this financial literacy program—

building confidence among individuals about banks. Take the time to listen to participants’ concerns, and try to respond in a positive manner.

• Option: As concerns are expressed, try to have fellow participants

provide peer input.

• When working with adult groups, stress the critical need for having

direct deposits for Social Security or other related checks.

Use “Slide 6: Regulation of Electronic Banking Services” as an

illustration to build confidence in the use of electronic services. Ask the

following questions:

• Were you aware that electronic services had such protection?

• Does such regulation make you more confident about using a bank’s

electronic services?

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Basic Banking Services - Activity 3

The ABCs of a Checking Account

Overview

Purposes of a checking account
Shopping for and comparing checking accounts

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Review the topics for discussion in this activity:

• Purposes of a Checking Account

• Shopping for a Checking Account

Begin the discussion by asking a volunteer to define the term “check.”

Support the responses, but be sure that the definition includes the fact that

A check is a written order telling the bank to pay a certain amount to another person or business.

Ask for a show of hands of those who have a checking account.

Ask participants why they use a checking account.

• Record the responses on a flipchart or blank transparency.

• Responses may vary but should include reasons such as convenience, safety, easy access, etc.

Ask those participants who did not raise their hands why they do not use a checking account.

• Don’t pressure individuals to respond.

• If there are no responses, encourage those who do not use a checking account to listen to the advantages and disadvantages of such a financial tool, and to consider using it in the future.

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Slide 1 - Checking Account Terms� Lesson Reference: Basic Banking Services, Activity 3 – Handout 1

CHECKING ACCOUNT TERMS

Bank Statement
Cancelled Check
Check
Check Register/Ledger
Endorsement
Fee
Interest
Minimum Balance

Outstanding Transactions
Overdraft
Overdraft Protection
Payee
Reconciling a Bank Statement
Transaction Limits

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Use “Slide 1: Checking Account Terms” to cover some basic terms about a checking account.

• Note that this slide can be used with multiple activities throughout this section.

• You may want to address these terms in an order that seems logical to you. You could do this by grouping all fees together, grouping together everything used in reconciling the register, etc.

Bank Statement: Monthly record of all activity within an account, provided by the bank.

Cancelled Check: A check that has been stamped to show that the payee has received the designated amount from the bank and that amount has been deducted from the account holder’s checking account.

Check: A written order to pay a specified sum from funds held in a bank or credit union account.

Check Register/Ledger: A record of all activity that happens within a checking account; maintained by the checking account holder.

Endorsement: A written mark on the back of a check, such as a signature, entitling the payee to either receive or transfer payment.

Fee: Charges for the use of certain bank services. These services vary but could include returning cancelled checks, writing more than a certain number of checks monthly, use of various bank cards, etc.

Interest: Money paid to savers and investors by financial institutions, government, or business entities for the use of their money.

Minimum Balance: Requirement to keep a certain amount of money in the account; otherwise, monthly service charges may result.

Outstanding Transactions: Transactions that do not clear the bank by the date of the bank statement.

Overdraft: Lack of sufficient funds in a checking account to cover the full amount of a check. A bank or credit union will charge an Overdraft Fee — a service charge — to cover expenses involved in returning a check and handling other procedures caused by an overdraft.

Overdraft Protection: Procedure agreed upon by an account holder and a bank in advance to transfer funds from a savings or credit account to a checking account to cover insufficient funds.

Payee: The person or organization to whom a check is made payable.

Reconciling a Bank Statement: Balancing a bank statement with a check register/ledger.

Transaction Limits: Some accounts have a limit on the number of transactions performed during a certain time period. These may include the number of withdrawals, number of teller-assisted activities, etc.

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Slide 2 - Shopping Around� Lesson Reference: Basic Banking Services, Activity 3 - Handout 2

SHOPPING

AROUND

(THINGS TO ASK ABOUT WHEN

OPENING A CHECKING ACCOUNT)

SERVICES

Location of bank

Location of ATMs

Banking hours

Minimum balance required

Minimum transactions or limits

Interest-bearing accounts?

Other

COSTS

Non-primary bank ATM transactions

In-branch transaction fees

Per-check fees

Other checking fees

Overdraft protection

Printing of checks

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Ask if anyone looked for any special type of checking account when they opened their account. Record the responses. Responses will vary.

Help participants determine their banking needs by asking them to think about:

• How many checks they write monthly.

• Their typical checking account balance.

• What is convenient for them in terms of bank and ATM locations, hours, etc.

• What kind of accounts they want (non-interest vs. interest-bearing)

Use “Slide 2: Shopping Around” (Things to Ask About When Opening a Checking Account) to encourage participants to shop around for the checking account that fits their needs.

• Explain to participants the importance of shopping for a checking account. Go over some of the key features (Examples: the location, hours of operation, minimum balance required, etc.) that participants should compare before choosing a checking account. Tell participants to use slide 2 as a tool to help them evaluate the features of different checking accounts.

• Stress the value of key areas, especially if participants were looking for non-financial items such as color or style of checks.

• Remind participants that certain account features will help them save money. Some of the features to help participants save money and avoid bank fees include: 1) utilizing direct deposit to avoid check cashing fees; 2) avoiding non-primary ATM charges; and 3) keeping the minimum monthly account balance to avoid monthly maintenance fees.

• After the discussion, refer to the earlier responses about what participants looked for in a checking account.

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OVERDRAFTS AND BOUNCED CHECKS

Overdrafts and bounced checks occur when you complete a financial transaction (e.g., write a check) for more than what is available in the account. Your financial institution may pay the amount and charge you a fee, known as an “overdraft fee” or a “nonsufficient funds fee.”

Tip: Avoid overdraft or non-sufficient funds fees by making a habit of monitoring the balance in your checking account.

Slide 6 – Overdrafts and Bounced Checks� Lesson Reference: Basic Banking Services, Activity 6 – Overhead 1

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Basic Banking Services - Activity 7

�Savings Accounts

Overview

Purpose of a savings account
Shopping for a savings account
Applying for a savings account
Monthly bank statement checkup

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Slide 1 - Reasons to Save� Lesson Reference: Basic Banking Services, Activity 7 – Overhead 1

REASONS TO SAVE

Emergencies

Future Purchases

Future Investments

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Use “Slide 1: Reasons to Save” to summarize the specific reasons that individuals have just provided.

• Refer to the class list. Ask participants to work with you to classify each of their reasons under one of the slide’s headings.

• Be sure everyone understands that saving means not spending — putting aside some amount of current income for future use.

Move forward by asking participants to help you brainstorm different places

where people keep their savings.

• Record the responses. These may include places such as a box, sock,

bottom of a drawer, etc.

• Remind everyone that when saving, people hope that small amounts will grow to a much larger amount.

• Refer to the previously brainstormed list of places where people save and ask the participants to choose which of the areas represent places where their money will actually grow to a larger amount.

• This should be a simple process of showing individuals that saving in a sock or some other hiding place at home does not allow their money to grow.

Remind everyone that one of the simplest ways to save is to have a savings

account at a local bank or other financial institution.

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Slide 2 - Shopping for a Savings Account� Lesson Reference: Basic Banking Services, Activity 7 – Overhead 2

SHOPPING FOR A

SAVINGS ACCOUNT

Factors to consider:

Safety
Risk
Liquidity
Minimum Account Balance Requirements
Fees and Service Charges
Interest Rate
Returns (Earnings)
Automatic Transfer
Direct Deposit

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OPENING A SAVINGS ACCOUNT

Slide 3 – Opening a Savings Account� Lesson Reference: Basic Banking Services, Activity 7 – Overhead 3

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Consider providing copies of this application handout that can be found in the Citigroup Financial Education Curriculum:

“Basic Banking Services”, p. 74.

Use “Slide 3: Opening a Savings Account” to review with participants the type of application they will probably see when opening a savings account.

• In reviewing the application, stress the need for accuracy and clarity in all information.

• Emphasize that applicants must provide a physical address when their mailing address is a post office box or similar postal receipt area.

• A major emphasis to cover is proper identification. Although acceptable identification may vary slightly among financial institutions, it always includes as least two types of current government-issued identification.

• Such regular identification might include driver’s licenses, military IDs,

passports, green cards, etc. In some states, a Mexican consulate card is an acceptable form of identification to open a bank account.

• Be prepared. Check with the bank to learn what you will need to open an account and when the bank is open.

• Remind participants that just as they would balance their checking accounts, it is similarly important to balance their savings accounts.

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Slide 4 – Bank Statement� Lesson Reference: Basic Banking Services, Activity 7 – Overhead 4

BANK STATEMENT

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