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Benefits Packages at Work
Budgeting and Financial Planning
Inflation and the Time Value of Money
Responsible use of Credit
The Banking Crisis
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Short Banking Video
Banks vs. Credit Union
All credit unions and banks work under federal charters and are insured by one of two agencies. The Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA). Most banks and credit unions are insured by the FDIC.
A Bank or a Credit Union is an institute where you can store your money. They are usually extremely safe, being protected by the FDIC
. They are a
very important resource and are available to every American citizen.
At banks and credit unions, when you have money deposited in your account interest is counted for and you can earn some percentage of your money each year. Your money can earn more money just by sitting in a bank account. The rates change and are different at every bank and credit union, so when you are going to pick an institution to invest your money with, make sure you agree with the interest rates. Banks give you interest because there is a risk that the money they get from you, they might not get back when they lend it to other people.
The first time you make an account at a credit union or bank can be very nerve racking because this means someone else is responsible for your money.
Banks and credit union are very trusted because they are protected by the FDIC or the NCUA, which are federal agencies. If your keeping your money in a draw or safe at home then you should be care of theft, fire or any natural disaster that can wash your whole life savings away in minutes. If your leaving your money at home you can take money whenever you want, which can lead to spending all your money. Banks or credit unions are considered to be the safest place to put your money and can be trusted.
Major and most common banks include:
Bank of America
Local banks can offer better interest rates and more convenience than major banks.
Credit unions are locally owned and democratically run by its members. Their systems vary depending on their asset sizes.
An example of a credit union around the area is
Metro Credit Union
What we would choose
We would choose a Bank over a Credit Union. This is because Banks seem to be much more convenient to get to and there are more in our area.
There are also more banks in different parts of the nation. Such as TD Bank. If a member of TD Bank wanted to withdraw money from their TD Bank savings account they could do so at any TD Bank in the country. This is very convenient and a good thing to remember when going through the process of choosing which account to open and where.
Opening an Account
Opening an account is very simple. It takes no longer than a half an hour and you will have your account set up and ready to use. The credit or debit card will be sent to you in the mail after about 3-5 business days. Some banks give you the credit or debit card right when your account is validated.
TD Bank services are very quick with opening accounts and usually print out your card on the spot and the full registration is complete in less than 20 minutes.
An ATM is what gives you money withdrawals, allows you to deposit money into your account, and you can check your balance on your savings/checking account. Having an ATM card can be very convenient if you need quick cash.
A withdraw is when you take money out of any banking account balance.
A deposit is when you put money into any banking account.
Savings Account vs. Checking Account vs. Certificate of Deposit
A savings account is a banking account in which you earn interest on the money you put into it.
A checking account is a banking account in which you can write checks which take money out of your account as payment. Unlike a savings account, the money you put into it does not earn interest.
With a checking account, you are able to write checks to the order of whomever you want, they can cash the check and this will take money out of your checking account.
A checking account also has overdraft protection
Overdraft Protection is where a person has a line of credit to write checks for more the actual account balance. Instead of getting charged 25$ for bouncing a check, the Overdraft protection comes in and instantly give the owner a loan. The interest rate will be extremely high, but the quicker you pay it off the cheaper it is.
A Certificate of Deposit, or CD, is a an account in which a person can deposit their money for a specific amount of time. The money that the person puts in earns interest.
The difference between a Savings Account and CD is that a CD earns a little more interest and your money is in there for a certain amount of time.
The difference between the two is that a savings account earns interest on your money while a checking account does not earn interest.
What We Would Choose
We would choose to get a savings account because it will make interest on the money
Credit Card vs. Debit Card
A credit card is a card given to you by a financial company giving the card owner a option to borrow funds usually at the point of sale. Credit Cards charge interest which usually starts a month after purchase. The card has a pre-set amount of money that you can spend up to or "borrow". This is determined by the card owners credit report.
A debit card is an electronic card given to you by the bank which allows access to you account through an ATM or you can use it at a store to pay for things.
The difference between a debit card and a credit card is that a credit card is directly connected to your bank account and takes money out of that when you make a purchase, while a credit card lets you spend the money you don't have at a that time. This is called credit and you must be careful with paying off the borrowed money on time to avoid paying escalating fees and interest rates.
What is a Loan?
A loan is an arrangement in which a lender gives money or property to a borrower or repay the money and usually comes along with interest. Usually there is a set time that you have to repay the loan. The loan usually comes with certain percentage of interest on the money you have borrowed.
Some different types of loans that banks give are property loans and auto loans.
Property loans are also know as mortgages.
Review Questions that may help
1.) What are the differences between credit unions and banks? What are some pros and cons of both? Which would you prefer to open an account with and why?
2.) What are the main differences between a credit card and a debit card? What does a credit card allow the cardholder to do? What does a debit card allow the cardholder to do? Which card would you prefer to own? Why?
3.) What are savings and checking accounts? What do these accounts allow you to do? Which would you open now if you could?
4.) How and why do banks charge interest? What is the purpose of interest on loans and on savings accounts? What is the difference between the two?
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