personal financial literacy

Study Guide
Unit 2 – Chapter 5
Banking

Section 5.1 – How to Manage Your Cash

1. What are your cash needs?
Two primary sources of quick cash
Savings account
Borrowing
Daily Cash Needs – lunch movies, gas
Monthly Cash needs - cell phone, student loan, rent

2. What are the different types of financial services?
Savings – time deposits
Savings account or money market accounts
Certificates of Deposit
Payment Services – DEMAND DEPOSITS checking accounts and debit cards most common borrowing short term (credit cards)
Longer terms (loans)
Bank
Operate?
Banks are in business to earn a profit
Banks make borrowing easier
Regulated/
Regulated by Federal Reserve

3. How do electronic banking services work?
Allow certain types of banking to happen 24/7/365
Direct deposits – payroll from employer
Automatic Payments – automatic monthly withdrawals on certain date (YMCA)
ATM
Plastic Payments
Security is the m=number 1 issue for online customers

4. Define – direct deposit
Automatic deposit of NET PAY to an employee’s designated bank account
Checking and Savings
Saves time, money, and effort – safe way to transfer funds

5. Define – automated teller machine (ATM)
Computer Terminal – outside a bank or in retail outlet
Main Services
Cash withdrawals
Check deposits
Transfers
Check Balances
MUST APPLY FOR A CARD

6. Define – debit card
AKA Cash Card
Allows withdrawal of cash from either checking or savings account
May be charged a fee
Requires a PIN- usually 4 digits
2 day grace period if lost or stolen
Could be responsible for $500 in unauthorized use

7. What are plastic payment options?
Point-of –Sale Transactions
Stored-Value card
Prepaid cards disposable
Prepaid cards reloadable
Electronic cash in the future

8. Define – point-of-sale transaction
Pay for a good or service with a debit card

9. What are the trade-offs’ when choosing financial services?
Find a balance – short term needs (spending) vs.