Project Pro$per Inc.

Presents

Financial Institutions 101

Banks & Credit Unions, Check Cashing, P2P Banking

Participant Guide

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Based on Wells Fargo’s Hands on Banking ®

The Hands on Banking® program is a free public service provided by Wells Fargo. You may also access the program anytime at

www.handsonbanking.org & www.elfuturoentusmanos.org

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Table of Contents Institutions ............................................................................................................................................................ 2

The basics: ........................................................................................................................................................... 2

Banks and Credit Unions ................................................................................................................................ 2

Credit Unions ..................................................................................................................................................... 3

FDIC/NCUA ......................................................................................................................................................... 4

Web Based/Online Banking .......................................................................................................................... 8

Frequently Asked Questions (FAQs) ........................................................................................................ 8

Peer to Peer Banking ........................................................................................................................................ 9

Types of P2P services .................................................................................................................................... 9

Check Cashing Services .................................................................................................................................... 11

The Facts ........................................................................................................................................................... 12

Glossary ................................................................................................................................................................. 13

Post Test ................................................................................................................................................................ 16

For more information about our small No-interest loan program for immigrants

and refugees you can reach us at:

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727-538-4179

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Join Our Facebook Group- Project Prosper: Money Talks

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I. INSTITUTIONS

A. The Basics

1. Financial institutions, including banks and credit unions, offer products and services to

help you manage your money.

2. Millions of Americans use financial institutions.

3. Financial Institutions come in all sizes and are in many locations, from a branch in a

grocery store to a larger bank in a big city downtown.

4. These institutions offer safe, secure, convenient services so you can save money and

build a better financial future.

B. Types of Financial Institutions: There are two main types of financial institutions that offer many financial services like checking and savings accounts, loans and investment opportunities:

Banks and Credit Unions

II. BANKS AND CREDIT UNIONS

A. Financial Institution Activity:

List 5 Banks List 5 Credit Unions

B. How are Banks and Credit Unions Similar?

Both are governed by federal and state laws and regulations

Both have the ability to make loans, cash pay checks, accept deposits, and provide other financial services.

C. How are Banks and Credit Unions different?

1. Banks

Owned by private companies

Account holders are called “Customers”

To open an account you may only need the required Minimum Deposit.

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2. Credit Unions

These are nonprofit organizations. Meaning, they provide a service to the community. Account holders are called “members”. You will be a member because account holders

share ownership of the credit union. o For example, savings accounts are called “Share” accounts.

To open an account one must be found eligible to join a credit union. o Credit unions have specific eligibility requirements that differ from institution to

institution. o You must visit their website or call to learn of the requirements. o If you are eligible for membership, you may still need to provide a minimum

deposit. Eligibility Examples

Grow Financial *Employee of an approved Select Employee Group

*Immediate family member of an existing member

*Resident of the same household of an existing member

* Active & Retired Military

* MacDill Air Force Base Civilian Personnel

Suncoast Credit Union *Family member of an existing member

*Live in one of the approved counties (Pinellas, Hillsborough and

Pasco are among the list).

GTE Financial *Family member of an existing member *Live in one of the approved zip codes listed on website *Through your employer or business *Join CU an educational financial club for a one-time $10 membership fee.

Banks and Credit Union Comparison Chart

Type of Financial Institution Banks Credit Unions

Governed by Federal and State

regulations

Make loans, pay checks, accept

deposits, and provide other financial

services

Ownership For profit business owned

by shareholders and

investors

Nonprofit business owned

by members (customers)

Deposits insured by FDIC NCUA

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D. Why should I use a Financial Institution?

Today, there are many options when it comes to taking care of your money. Using a Financial

Institution is the most reliable choice and can help create stability and security for you and your

family.

E. Benefits of Using a Financial Institution

1. Safety

a. It’s risky to keep your money in cash. o It could be lost, stolen, or destroyed.

b. Financial institutions keep your money safe both

physically and electronically.

2. Convenience

a. If you need cash, you can easily access your funds virtually almost anywhere.

o ATM Machines

o Checks or debit cards

o Account access on mobile devices

3. Save Money

a. Using a bank or credit union will help you save money so there will be no need to use check cashing stores that charge high fees.

b. While saving money, you earn interest on the money have in your savings account. c. When you have cash you tend to spend more frequently than if you have to write a

check or use your debit card.

4. Financial Future

a. You'll have access to financial professionals to help you,

o Knowledgeable advice of bankers is a valuable resource to help you build a better financial future.

b. By having a financial institution, you are beginning to establish a financial history. This history can prove and/or disprove to potential lenders and creditors that you can be trusted.

5. Security a. Most banks and credit unions are insured by the Federal Deposit Insurance

Corporation (FDIC) or National Credit Union Administration (NCUA) up to

$250,000.

o FDIC insures bank deposit accounts (i.e. checking, savings, money market

deposit accounts, and certificates of deposit (CD's)) per depositor.

o NCUA insures all members single ownership accounts. These accounts

include regular shares, share drafts (similar to checking), money market

accounts, and share certificates.

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b. Financial Institutions should display the below logos throughout the bank.

When in doubt ask the customer service representative.

F. How do I Choose the Best Financial Institution for me and my family?

Choosing an institution can be a tough choice, as with any decision you have to make. Being new to a country, one may decide to use a financial institution that his/or her community or family uses. This may feel like the safest choice, but it is not always the best choice for you. Here are some key things you should consider when looking for a bank or credit union.

1. Security – a. As we have already mentioned, make sure your bank or credit union is protected

by the FDIC or NCUA. If they are not, then it is advisable that you find one that is protected.

2. Convenient Locations- a. Many financial institutions have multiple locations locally, nationally, and even

globally. b. Various locations are known as branches or stores. c. It is advisable that if you travel a lot, make sure your institution

offers branches in multiple locations. Especially the locations where you plan to do most of your traveling.

d. If for some reason, you anticipate the need to travel to your

home country it may be a good decision that you use a financial institution that will allow you access to your money.

3. Fees- a. When looking for a checking or savings account, many institutions will offer

these services for free. If this is important to you, research monthly fees for basic transactions, minimum balances, and ATM usage.

b. Not all institutions charge the same. You must do your research.

4. Minimum Balance Requirements- a. Some institutions require that you keep a minimum amount of money in your

checking or savings account before they begin charging fees.

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b. Make sure the minimum balance is something that you are comfortable with maintaining monthly.

5. Transaction Ease and Access- a. In today’s world, convenience is everything. Here are some financial services

that an institution may offer to make your funds accessible.

Method Definition Deposit Withdrawal

In Person You can physically go to branch to deposit

or withdraw money with a bank teller. Yes Yes

Direct Deposits Employers and government agencies will

automatically deposit your paycheck

and/or benefits into your accounts.

Yes No

Electronic Funds

Transfer (EFT)

When your money is transferred

electronically by computer from one

account to another account.

Yes Yes

Automatic Clearing

House (ACH)

When funds are transferred electronically

by computer from one financial

institution to another. Most Direct

Deposits will be labeled ACH deposits.

Yes No

Automatic Teller

Machines (ATM)

These are machines found at banks, credit

unions and throughout your community

that allow withdrawals and deposits using

an ATM/debit card and secret number

called a PIN (Personal Identification

Number).

Yes Yes

Online Bill Pay Allows you to pay your bills through your

bank account by scheduling the dates you

want to send your payment.

No Yes

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International

Remittance

1. Also called global remittance, is a type of

EFT that allows you to quickly and easily

transfer funds to family members who

live outside of the United States from

your account.

Yes Yes

Mobile Deposits

2. Through your institution’s website, you can take a picture of the front and back of your check and click submit. You may need to use an Android, Apple, or windows phone.

Yes No

b. Though you may not use these services today, you may want or need to in the future.

6. Interest Rates- a. Rates are important when earning interest from saving account products. b. Rates are important when considering applying for a loan or credit as well.

7. Customer service- a. This is very important when you have to speak with someone about your

finances. b. It may be very important for you that the institution has access to someone who

can speak your native language. i. If there is not a physical person you can speak with at a branch, most

institutions have access to translators via the phone. ii. It is your responsibility to make sure of that this is a service they provide.

We have given you the proper tools to begin searching for your financial institution. As you search, use the chart below to take notes as you contact potential institutions.

G. Take Home Activity- Finding your financial institution

Financial

Institutions

1. 2. 3.

Secured by FDIC or

NCUA?

Convenient branch

Locations?

How much are fees?

Is there a required

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minimum balance?

Do they offer easy

access to your funds?

What are the

interest rates?

Were they friendly? Can they speak your native language?

III. WEB-BASED FINANCIAL INSTITUTIONS (ONLINE BANKS)- Online banks operate solely over the internet. They keep their operating costs low by not operating in a physical location. These savings are then ultimately given to their customers by offering higher interest rates and lower fees. Examples of web-based institutions:

Capital One Bank Bank of Internet USA Ally Bank Alliant Credit Union

A. Frequently Asked Questions

1. How safe is my money?

a. Online banks are financial institutions which are protected by the FDIC or NCUA.

The examples listed above are all federally insured institutions.

2. How can I access my funds?

a. Online banks use credit and debts cards which can be used like cash at the point

of service.

b. An affiliated ATM is an ATM location which is partnered with the online bank to

offer banking functions free of charge.

c. Online Credit Unions (Alliant)- You can also use shared-branch locations.

When you visit a bank or other financial institution, follow these tips and techniques:

1. If you don’t know who to talk to, just ask. 2. Don’t sign anything you don’t understand. 3. Ask questions until you have the answers you need. 4. If you need to speak to someone in your native language, always ask! 4. Ask for written information to take home and review.

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i. Shared Branch Locations-

3. How do I make a deposit if no physical locations are available?

a. Deposits can be made through the banks mobile app, on your mobile device, by

taking a picture of the check and clicking submit.

b. At an affiliated ATM with deposit features.

c. At a shared-branch location, or from an affiliated (often sur-charge free) ATM.

4. Are interest rates higher with online banks?

a. Typically, yes. But, rates can depend on term and amount kept in savings

account.

Example Rates are based on savings account with less than $50,000

Institution Interest on Savings account Annual Percentage Yield (APY)

Bank of America 0.01% 0.01%

Wells Fargo 0.01% 0.01%

Ally 1.05% 1.05%

Bank of Internet USA 0.61% up to 1.5%

Capitol One 1.0% 1.0%

Suncoast Credit Union 0.15% 0.15 -0.50% Alliant 1.045% 1.05%

IV. PEER TO PEER (P2P)BANKING A. The basics Peer to Peer banking or P2P banking is a service that links financial accounts to transfer money directly from your personal checking or credit card account into the account of another person. Transactions are often done by the use of a mobile device.

B. Types of P2P Services Various financial institutions have their own p2p banking services built into the functions of their on line banking. Third party services are also available and can be used through access to individual bank accounts. Here are the most common third party P2P providers.

PayPal – is a popular online service often used by retailers, small business

owners, and individuals. Invoices for products or services are sent to a

customer’s email account where they can pay by using a debit or credit card.

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The funds then go into the PayPal account to be

transferred or used from there. Business owners can

also accept payment for goods and services by using a

PayPal credit card reader. The reader is attached to a

mobile device and money will deposited into the

PayPal account by swiping a credit or debit card.

Venmo – is a recent and increasingly popular app for

smart phone users. Venmo accounts are linked to

personal banking account so that money can be

readily shared with friends and family members.

Venmo is primarily used as a social tool to help pay

expenses of everyday things like meals, tickets, and

transportation costs shared between acquaintances.

Split a check at lunch? Your friend may ask you to

“Venmo” them, meaning transfer the funds to their

bank account using the Venmo app.

Facebook – now offers money transfers through their messenger app. This

means you can send or receive requests for money from a friend on Facebook.

When you receive a request, you can either decline or pay by entering your

debit/credit card information and transferring the money into the requester’s

checking account.

C. Reasons to use P2P services Many people choose p2p services to send money to friends and family, purchase goods and services. If you own a small business, you can use P2P services to accept payment for merchandise and/or services performed.

Advantages Disadvantages

Funds are processed quickly Easy to use with personal

checking accounts You can request or send money

for any reason Compatible with all checking

accounts Some P2Ps services are free

User must be familiar with current technology (including use of mobile devices and internet).

Must have internet access Lack of accessible customer

support

Personal information is vulnerable to online criminal attacks (hackers)

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D. P2P security risks Even though these services are quick and easy to use, they are not totally risk free. At the click of a button, one can accidentally send money to the wrong person; passwords and user ids can be hacked or changed without proper notification. Customer support of P2P services is not as accessible or helpful as with traditional institutions. To help keep costs low, these services may not have a support line to call or a representative to speak with should a problem occur. Many offer email contact only.

E. How do I know my money is safe?

P2P services are not insured themselves through the FDIC or NCUA, but instead store their

funds through traditional intuitions which have those protections.

The following statement is from PayPal’s website:

“As of June 30, 2008, your PayPal U.S. Dollar balances are held at the following institutions: Bank of

America, N.A., Citibank, N.A., HSBC Bank USA, N.A., RBS Citizens Bank, N.A. and Wells Fargo Bank, N.A.”

V. CHECK CASHING SERVICES

A. The Basics

Check cashing services offer customers a way of receiving cash for their checks (personal checks, pay checks, cashier’s checks, tax refunds, etc.) in exchange for a fee. Check cashing services are offered through a business seeking to make profit from those who wish to use the convenience of their services.

Check Cashing Service Providers

Amscot Walmart ACE Cash Express

Check ‘n Go Advance America Check Cashing USA

As with any online service, be careful. Take your time with the transaction.

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B. The Facts

1. Check Cashing businesses are not financial institutions. They are stores which sell

financial products and services.

2. These businesses do not help consumers establish financial history.

3. Consumers are charged fees per check cashing transaction. These fees depend on the

amount and type of check being cashed. This can range from a few dollars to a

percentage of the check amount.

Check Cashing fee examples

Service Provider Fee amount

Bank of America Free for account holders

Wells Fargo Free for account holders

Amscot $3.00 - %2

Wal-mart $3.00 (up to $1,000)

C. Pay Day Loans

Payday loans are another popular product of check cashing businesses. These short term, high

interest rate loans are also known as “deferred deposit check loans,” “cash advances”, or

“payday advances”. These loans are designed for and target consumers with poor credit and/or

no credit history.

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Glossary Account

A banking service allowing a customer's money to be handled and tracked. Common bank accounts are savings and checking accounts.

Balance

The exact amount of money contained in a deposit account according to your financial institution. This figure may be different than the amount shown in your available balance because of checks you have written or recent deposits that have not yet been processed by the financial institution.

Bank

A financial institution that handles money, including keeping it for saving or commercial purposes, and exchanging, investing, and supplying it for loans.

Credit Union

A non-profit financial institution that is owned by its members.

Deposit

To put money into your account.

Direct Deposit

A deposit made directly into your account by the payer without the use of a check or deposit slip. Typical direct deposits include Social Security payments and automatic payroll deposits.

Electronic Funds Transfer (EFT)

Allows you to have funds electronically transferred into your account(s) such as deposit of your payroll check, tax refund or social security check.

Eligibility Requirements

Conditions and qualifications an applicant must fulfill. Most Credit Unions have these.

Federal Deposit Insurance Corporation (FDIC)

An independent agency of the United States government that protects customers from the loss of their deposits if an FDIC insured financial institution fails. The basic insurance amount is $250,000 per depositor per insured financial institution.

Financial institution

Companies such as banks, credit unions, and savings institutions that provide a wide range of money management products and services, such as checking and savings accounts, loans and credit cards, to consumers.

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Global remittance

A form of Electronic Funds Transfer which allows you to send money to families and friends outside of the United States from your accounts.

Interest

The amount of money you earned from a bank on amounts you have deposited in a savings account borrower. It is also the amount of money you pay to a lender if you have a loan or credit cards.

Minimum Balance

The least amount of money that a banking institution requires account holders to have in their accounts each day in order to waive maintenance fees.

Minimum Deposit

The smallest amount of money one must initially deposit into a new checking or savings account. Required to cover the baseline costs associated with setting up a new account and maintaining it thereafter.

Mobile Banking

Allows individuals to access their financial accounts through a web browser on their mobile device such as cellular phone.

National Credit Union Administration (NCUA)

An independent federal agency that charters and supervises federal credit unions and insures savings in federal and most state-chartered credit unions for up to $250,000 per depositor per credit union.

Share Account

A savings account at a credit union

Transaction

An agreement between a buyer and seller to exchange an asset for payment. In accounting, a transaction is any event recorded in the written financial records, also called the accounting books.

Withdrawal

To take money out of an account.

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Financial Institutions 101 Post Course Survey

Please answer the following questions. When finished remove this paper and

hand it to our instructor. Thank you for attending our class!

1. What is a Financial Institution?

College/University Check Cashing Stores (Amscot) Banks and Credit Unions I don’t know

2. How is your money protected in financial institutions?

Liability Insurance

FDIC/NCUA

It's not protected

I don't Know

School Name______________________________________________________________