Name: ______________________________________________ Date: __________________________________

Banking Services

Banks are institutions that offer many financial services to the public. The belief
of having a banking system began in the ancient times with a barter system.
Merchants would give grain loans to traders and farmers. Banking slowly
evolved over time to accepting deposits and exchanging currencies. The public
was allowed to store wealth with bankers, and then the bankers were allowed to
run a barter system with the resources stored. Modern banking has evolved to
lending, and the use of interest rates has changed the public's ability to store
wealth. Technology has modernized banking to the extent that financial
transactions can be carried out with the push of a button, a simple phone call, or
a visit to the nearest automated teller machine (ATM). As the banking system
modernizes, consumers need to be aware of all of the financial services offered
by banks to ensure that they are able to keep up with the ever-changing
economy.

OBJECTIVES

 Become familiar with the different services a bank offers.

 Choose the services from a bank that best fit an individual's situation.

VOCABULARY

ATM fees costs incurred from making banking transactions on a special computer terminal

financial institution that provides businesses and individuals with basic financial services
bank
like loans, savings, and currency exchanges

similar to a credit card, allows the customer to make financial transactions with a card,
debit card
but the money is deducted from the bank account directly and not charged as a credit

direct deposit the electronic transfer of payment from a payer to a payee

interest money paid at a regular rate and interval for the use of money borrowed

a line of credit offered to bank customers to cover their overdrafts when the customer
overdraft protection
has insufficient funds

1. An employer sending a paycheck via an electronic transfer uses what form of banking service?

a. ATMs

b. debit cards

c. direct deposit

d. Social Security

e. unemployment benefits
 BANKING SERVICES

Ancient Egyptians banked grain so there would be a reserve available

if it were needed for some unforeseen reason. In contrast, we are
more likely to use an ATM or transfer funds electronically; but the
reasons we will need and use a bank can be classified into three
categories:

1. safety

2. secure a return

3. convenience

From time to time, the news will have a report about someone who has kept a large sum of money hidden around their
house. In reading or listening to the news, however, it is more likely that the story will emphasize that a valuable sum or
object was stolen. Banks provide a safe alternative to hiding any money you will not need for immediate expenses. Most
banks are members of the FDIC (Federal Deposit Insurance Corporation). Accounts at FDIC member banks are insured by
the federal government up to a certain amount. Banks can also store jewelry, other small valuables, or important
documents in safe deposit boxes.

Banks will also pay you a fee to keep your money. This fee is called interest. In addition to banks, there are several types
of institutions that handle money. Credit unions, community banks, money-center banks, and brokerage houses all
provide financial services. It is important to consider carefully the differences between these types of organizations.

Banks offer their services for a fee. Thus, it is very important to know your needs. Someone planning a major purchase
like a car or house may make a different choice from the person seeking convenience. Someone who wants a debit card,
to deduct money directly from a checking account, or some other electronic banking feature like direct deposit, to
receive their wages electronically rather than by a check, may choose differently from the person who wants an insured
account only.

Essentially, you must decide what services you need and are willing to pay to have. Know what charges go with each
service, such paying ATM fees when you take out money from an ATM that does not belong to your banking network.
Know what banking safeguards are offered by the bank, like overdraft protection (for when you try to buy something
with insufficient funds) and identity theft protection. Don't assume all banks are alike. Compare interest rates. Pay a visit
to two or three branch offices. The visit will help you determine whether the staff will be friendly and helpful if you have
a problem. Ask friends where they bank. Selecting a provider for your financial services is an important decision in
managing your money.

Did you know?

There are numerous fees associated with banking. For example, you may be charged extra to withdraw money from an
ATM from a bank other than your own. Many banks also charge loan fees and yearly fees. Banks offer many attractive
services, but beware of the costs. Select the bank that properly explains the costs of banking there and is the best fit
based on what you want. For example, a bank that has a high interest rate, but no ATMs might not be the best option
because its ATM fees might be too high. Study the fees based off of the chances of accruing them.
2. Match the banking service with its description.

1. ATM fee cost of using an ATM to make banking transactions

2. debit card similar to a credit card, but the money is deducted from the account
directly

3. online banking a line of credit offered to bank customers to cover their overdrafts

4. checking account the ability to make banking transactions via the Internet

overdraft a deposit account that allows a customer to withdraw and deposit

5.
protection wealth from the bank

3. Which financial transaction represents money paid to a customer for keeping her money in a savings account and
not withdrawing that money for a certain time period?

a. loan b. interest

c. ATM fee d. overdraft fee

CHOOSING THE BANK SERVICE THAT BEST FITS YOUR SITUATION

The banking industry has become increasingly competitive. When studying competition between banks, consumers
need to know that a good deal can always be beat by a better deal. Can you identify what the best option in each
scenario might be?

Say you want to put $10,000 into a checking account, but your bank offers multiple types of checking accounts. If you
plan to leave your money in the bank for more than one year, what account would be the best option?

The best option might be to take a checking account with no yearly fees and the highest interest possible. If you do not
maintain a certain balance in your checking account, the yearly fees can more expensive than the interest you earn. The
higher interest means that the returns are higher on your investment. So, it is best to take the checking account with no
yearly fees and the highest interest rate possible. The other protections and account services need to be studied to
determine what the best option would be.

Now, if your bank charges fees associated with online banking, and it is getting too costly for you, what service would
you look for in a new bank?

Free online banking is when a customer does not have to pay fees for electronic banking. This would be the best option
if you were looking for a new bank. If everything else remained the same, since your complaint was the cost of the
online banking, free online banking would be the most important aspect when determining a new bank.

Imagine that every three months, your account has a negative balance because your spending habits are poor. What
banking service would you look for if you were looking for a new bank?
Overdraft protection allows your account to have a negative balance for a specific fee. If your new bank did not offer this
service, you could accumulate debt from your bad spending habits because certain payments might be blocked.

4. If Steve can’t decide what bank to take a loan from, what banking service would make a bank a better option than
the others?

a. 0% financing b. online banking

c. fee-free checking d. overdraft protection

5. If John wants to start a new bank account with only $3,000, what type of bank account should he get if he is only
willing to leave $1,000 in the bank at all times?

a. no yearly fee, 2% interest with a $1,000 minimum balance

b. no yearly fee, 4% interest with a $1,000 minimum balance

c. $50 yearly fee, 2% interest with a $1,000 minimum balance

d. $50 yearly fee, 4% interest with a $3,000 minimum balance

LET'S REVIEW!

 Banks provide financial services to customers such as loans, online banking, ATMs, checking accounts, and
overdraft protection. All financial services are not suited for all customers. Customers have to study the different
offers from banks to determine the option that is best for them in every situation.

 Technology has changed the banking industry. Online banking and ATMs have allowed customers to make
financial transactions and check their account balances from practically anywhere. This has given customers a
better ability to manage their money.

 Banks charge fees and interest when they lend money to customers, but they also pay interest when they hold
deposits for customers. The rates of interest and the fee requirements are important to understand when taking
a loan or starting an account.

6. A bank does not offer which of the following services?

a. ATMs b. debit cards

c. Social Security d. online banking

7. What information is important to know when deciding on a bank? Select all that apply.

yearly fees

interest rates

Social Security

overdraft protection

unemployment benefits