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BANKING Checking Accounts, Savings Accounts, Bank Reconciliations Compound Interest Bank Services Re

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Bank Statement Balance $570.50. Add: Outstanding Deposits: 0 ... Of households that have credit card debt, median is $2,200 balance. ... – PowerPoint PPT presentation

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Title: BANKING Checking Accounts, Savings Accounts, Bank Reconciliations Compound Interest Bank Services Re


1
BANKINGChecking Accounts, Savings
Accounts,Bank ReconciliationsCompound
InterestBank ServicesReview
2
Checking Accounts
3
Benefits of Checking Accounts
  • Checking accounts are convenient and safer than
    carrying cash.
  • Canceled checks serve as receipts.
  • Budgeting is facilitated because check records
    are kept.

4
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5
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6
Recording Transactions in a Check Register
andReconciling a Checking Account
7
How to Reconcile a Checking Accountbased on a
Monthly Bank Statement
  • Bank Statement Balance
  • Add Outstanding Deposits
  • Subtract Outstanding Checks
  • Equals Revised Bank Statement Balance
  • Check Register Balance
  • Difference

8
  • Keeping a Check Register
  • Beginning Balance 570.00
  • 1. April 15 Weekly paycheck from Universal
    Studios gets direct deposited 168.00
  • 2. April 16 Buy books from Campus Book Store for
    500.00
  • 3. April 18 18.00 Gas using Debit Card
  • 4. April 20 ATM withdrawal 80.00
  • 5. April 22 paycheck 190.50 directly deposited
  • 6. April 27 paid cell phone bill for 43.85 made
    payable to Verizon
  • 7. April 29 deposit 240.00

9
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11
How to Reconcile a Checking Accountbased on a
Monthly Bank StatementExample
  • Bank Statement Balance
    570.50
  • Add Outstanding Deposits
    0
  • Subtract Outstanding Checks
    (283.85)
  • 2 43.85
  • 3 240.00
    ..
  • Equals Revised Bank Statement Balance
    286.65
  • Check Register Balance
    286.65
  • Difference
    0.00

12
Compounding Interest
13
Compounding Interest Annually
Beginning Interest Ending Year Balance Earned
(5) Balance
1 100.00 5.00 105.00 2 105.00 5.25 110.25 3
110.25 5.51 115.76
14
Compounding Interest Quarterly
Quarterly Compounding Annual Interest Rate
6 Beginning Quarterly Quarterly Interest
Ending Year Balance Interest Q1 Q2 Q3 Q4 Balan
ce
1 100.00 .015 1.50 1.52 1.55 1.57 106.14 2
106.14 .015 1.59 1.62 1.64 1.66 112.65 3 112.65
.015 1.69 1.72 1.74 1.77 119.57
15
Compounding Interest and Making Additional
Deposits
Beginning Interest Ending Year Balance Deposi
ts Earned (5) Balance
1 0.00 100.00 5.00 105.00 2 105.00 100
.00 10.25 215.25 3 215.25 100.00 15.76 333.01 4
331.01 100.00 21.55 452.56
16
Bank Services
17
What is a Certificate of Deposit?
  • CDs are similar to savings accounts in that they
    are insured and thus virtually risk-free they
    are "money in the bank".
  • They are different from savings accounts in that
    the CD has a specific, fixed term (often 3
    months, 6 months, or 1 to 5 years), and, usually,
    a fixed interest rate.
  • It is intended that the CD be held until
    maturity, at which time the money may be
    withdrawn together with the accrued interest.

18
Debit Card vs Credit Card
  • Debit Card
  • - Easier to obtain
  • Uses money you have
  • On-line - immediate electronic transfer of funds
    OR Offline - takes 2-3 days
  • Usage grew 3 times faster than credit card
    2005-2007
  • Credit Card
  • Harder to obtain
  • - Uses money you dont have
  • - Uses a merchant account -
  • ie Visa, MasterCard
  • - Usage is slowing

19
Credit Card Factssource Federal Reserve and
VISA USA
  • Of households that have credit card debt, median
    is 2,200 balance.
  • 40 of credit card holders pay their balance in
    full every month. 60 dont.
  • 1 out of 10 has more than 10 credit cards.
    Average is 4 cards.
  • Typical consumer has access to 19,000 on all
    credit cards combined.
  • 23 increase in 5 years of use of cards that
    accumulate points (for merchandise or airline
    tickets)
  • U.S. VISA transactions conduct more than
    1,000,000,000,000 (1 trillion) in annual volume.

20
Debit Card Factsaarp.org - Managing Money
  • Generally dont have to show ID or sign at
    purchase
  • Faster in checkout than checks or credit cards
  • No interest
  • Lower processing fees to storeowner than credit
    card
  • Less protection than credit card if something
    goes wrong with your purchase
  • Less protection than credit card if card is
    stolen or mis-used

21
How Do I Know My Money is Safe?
22
FDIC Insurance(Federal Deposit Insurance
Corporation)
  • Formed June 16, 1933
  • United States government corporation created by
    the Glass-Steagall Act of 1933.
  • Created because of the number of bank failures
    during the Great Depression.
  • Glass-Steagall Act separated banks into
    commercial and investment banks. Insured
    commercial bank deposits.
  • Provides deposit insurance which guarantees the
    safety of checking and savings deposits in member
    banks, currently up to 100,000 per depositor per
    bank
  • FDIC currently has 4,125 employees

23
FDIC Insurance
  • FDIC Insurance covers
  • Checking Accounts
  • Savings Accounts
  • Certificates of Deposit
  • FDIC Insurance does not cover
  • Stocks
  • Bonds

24
FDIC Lessons
  • Never exceed FDIC insurance limits, as you may
    NEVER be able to get your uninsured money back.
  • New Bail-Out bill raised FDIC insurance limits
    to 250,000.
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