Money Management: Using Bank Services

Unit 4: Money Management

Lesson 3: Using Bank Services

OBJECTIVES

Identify three banks near you where you could bank.
Differentiate between a savings account and a checking account.
Learn how to open an account.
Learn about making deposits.
Learn how to write checks.
Learn how to use a debit card.

MATERIALS NEEDED
Deposit Slips

SUPPLEMENTAL RESOURCES
Using Credit – A computer-based learning tutorial for $49.95 by Jostens Learning (1800 247-1380).

Writing Checks – A computer-based learning tutorial for $49.95 by Jostens Learning(1800 247-1380).

Money Management – A $13.95 book by Educational Design, Inc. (1800 221-9372).

Checking & Savings Accounts: What They Are and How to Use Them – A $6.95 book by JIST Works, Inc. (1800 648-5478).

You Can Bank on It! Understanding, Selecting, and Using Basic Financial Services – A $6.95 book by JIST Works, Inc. (1800 648-5478).

Deluxe Banking – A $139.95 banking kit that provides checks, deposit slips, a check register, etc. and "role-play" scenarios for making real-life transactions. This product is sold by PCI Educational Publishing (1800 594-4263).

Money Tray – A $39.95 set of realistic money (100 of each bill and coin) from PCI Educational Publishing (1800 594-4263).

INSTRUCTIONAL FORMAT
This lesson will provide the student basic information about using bank services. The supplemental resources provide information on bank services in much greater detail. There will be some skill practice in this lesson, but skills such as filling out deposit and withdrawal slips can be taught by bank personnel. Some people will be able to learn the skills in the classroom and transfer those skills to the "real world." Some students will need an introduction to the material in the classroom and training and assistance at the bank and while making purchases.

Identify banks in the area. There are three basic types of banks. If the students want more information, use the information below to provide the basics. More advanced information can be found in the supplemental resources.
- Commercial Banks – Most common bank. Commercial banks provide a wide variety of services including savings and checking accounts, and loans. Commercial banks are governed by a board of directors and regulated by state or federal government.
- Savings and Loan Association – This type of bank used to provide mainly home loans using the money from the customer's savings accounts. Currently, S & L banks can provide all of the services as a commercial bank except that all checking accounts offered must pay interest. An advantage of using an S & L is that their interest rates on savings accounts are usually higher.
- Credit Union – A credit union is a bank that is formed by a group of people who work for the same company, are in the same field, or have something else in common. For example, most cities have credit unions for teachers. One problem with credit unions is that if you do not belong to that particular group, you cannot bank there. However, if you can join the union and open up a savings account with a minimum balance ($5-$50, in general), there are many advantages. The bank is owned by the members, so profits are divided among the members. Interest rates on the savings accounts tend to be higher than commercial banks. Credit unions offer checking accounts in conjunction with the savings account. Loans are given at a lower rate of interest than commercial banks.
Discuss the two most common services used by bank customers: savings accounts and checking accounts. When discussing the different types of accounts, you will probably have to modify the amount of information depending on the student's comprehension level. More specific information can be found in the supplemental resources.
- Savings accounts – A good way to stay out of financial problems is to save money for things you want to buy and have extra money on hand for emergencies. One way to keep that money safe and even get more money is to put the money away in a savings account at a bank. Putting the money into the bank is safe because up to $100,000 of the money is insured. The bank pays people to keep their money in savings accounts. The amount the person gets paid depends on the interest rate and how much money they have in their account. The amount of the money in the savings account increases as it accumulates interest and as the person deposits more money into the account. When you need money you can go to the bank and withdraw as much of the money as you want (unless the bank has a minimum balance requirement). Money can also be transferred into the person's checking account.
- Checking accounts – Checking accounts are different from savings accounts in two basic ways. First, checking accounts generally do not earn interest. Second, when a person wants to buy something, he writes a check instead of withdrawing money and paying with cash. The advantage of having a checking account is that a person does not have to carry a lot of cash to make purchases or pay bills. If you lose your checkbook, you call the bank to let them know and your money is safe. If you lose a big wad of money, your only hope is that an honest person finds it. Because money is taken directly from your checking account when you write a check, it is important to be able to keep track of your balance. Your balance is how much money you have left in your account. If your balance is $50 and you write a check for $75, you have just "bounced" a check. In addition to depositing enough money into the account to cover the check, you will have to pay a fee of $15-$25 for trying to spend more than you have. Writing a check without enough money in your account is illegal. Banks charge the fee for the inconvenience, but if you do not make efforts to deposit enough money to cover your checks and stop bouncing checks, businesses can report you to law enforcement.
- Most people keep a savings and checking account at the same bank. If your checking account is low and you need groceries or some other necessity, you can transfer money from your savings account into your checking account until you get paid and can deposit your pay check into your checking account.
The first step in using a bank is going to the bank and opening up an account. In general, you need to bring a few things. First, you need to bring money or a check made out to you that you can deposit. Second, you will need your Social Security number or possibly your Social Security card. The last item you need is a formal picture identification. Be prepared to fill out forms. They will want to know your address, phone number, and possibly some current employment information. They may ask for your mother's maiden name for security purposes. Your signature will also be required.
Once an account is set up, then it is the person's responsibility to keep up with how much money is in each account. The balance of a savings account increases with deposits and interest earned and decreases when a withdrawal is made. The balance of a checking account increases with deposits and decreases as checks are written. When making deposits, a bank usually has a form or a slip that the customer fills out to indicate how much money is being deposited. Some banks have the person present a bank card that has the person's account number on it as well. Show the students what a deposit slip looks like and review what to fill out on the slip. If a student needs further instruction, it is suggested that he review the procedure at the bank either with the trainer or bank personnel.
Practice using savings and checking accounts. This part of the lesson may take an hour or longer. Trainers should set aside at least two training sessions to cover this material. It is suggested that a program purchase Deluxe Banking and the Money Tray by PCI in order to provide realistic equipment. Blank checks, fake money, deposit slips, an account ledger, and game cards have been provided, but the trainer will need to make copies and cut out the materials as needed.

Begin by giving each student $100. The students will deposit $75 in their checking account and $25 in their savings account. Instruct them to document appropriately on their ledger. Then, each student draws a card. The cards have various purchases that the student can make. Some are necessary such as groceries, gas, utility bills, etc. Other items are not necessary such as music tapes, movies, trips out to eat, etc. If the a "necessity item" is drawn, the student must pay for it. If a non-necessity item is drawn, the student decides whether she wants the item. However, students can keep the card and save money to purchase it. After each student draws a card (one round) he or she gets paid another $100 (Pay Day!). Please note the two "Lose your Job" cards. It is up to the student to decide how he or she will deposit the money. The game will continue like this for at least five rounds. The students will keep track of all of their transactions. Each student will require different levels of instruction. However, the student should have basic reading, writing, and math skills to participate in this training exercise. If a student does not, he should receive training in these basic areas.

A similar exercise is available on computer by Jostens. Using Credit will provide the same decision making practice with regard to a bank account and a credit card, but it will not provide practice on writing checks or keeping a ledger. Jostens has another computer program for check writing skills. The lesson on "Paying Bills" will provide additional instruction on writing checks.
Discuss the use of a debit card. Inform the class that a debit card can be used the same as a credit card (review the lesson on credit in this unit if necessary). When a person goes to pay for something, he will need to be prepared to use a personal identification number (PIN) as when he withdraws money at an automatic teller machine (ATM) or signs a receipt as when he uses a credit card. A person will use his PIN number when he swipes his card in a machine at a gas pump, checkout line at the grocery store, etc. and indicates he is using a debit card. The main difference between a debit card and a credit card is that the transaction comes directly out of a person's checking account just as when he writes a check, which is why a debit card is sometimes called a check card. Remind students that if they lose their debit card, they need to notify their bank as soon as possible.
Balancing an account requires good math skills. The back of a bank's monthly statement contains instructions on how to balance an account. Those instructions cannot be improved upon, so if a student is having a hard time balancing an account, he or she should get assistance from a trainer or bank personnel when they get the first monthly statement.

SIGNS OF GENERALIZATION
Students use the list to access help when needed. If they need additional help or assistance in other areas, they are able to find information and call the correct people.

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