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Financial Institutions

Pay Day Loans Commercial Bank Credit Union Brokerage Firm

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Pay Day Loans It works like this: You want money today, but payday is a week

or two away. You write a check dated for your payday and

give it to a check-cashing outlet. You get your money, minus a fee (usually

about $15 per $100 borrowed). In two weeks, the check-cashing outlet does

one of two things: Cashes your check. Lets you pay another fee to renew the loan for

another two weeks.

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Victim of Pay Day Loans

One young lady found out how payday loans work when she needed $200 to pay her bills.

A storefront loan office, called "Check Into Cash," let her write a check she couldn't cover and gave her $200 on the spot.

They agreed not to cash it until her next payday -- for a $38 fee.

When payday came, the $16,000-a-year hospital food service worker didn't have $200 to spare.

No problem, the payday lender said, pay another $38 and you're off the hook until next payday. A year later she had paid $1,220 in fees. And she still owed the $200.

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Victim of Pay Day loans

Rhonda Keller* and her two daughters experienced a financial crisis last summer that sent Rhonda looking for help from payday lenders. Rhonda fell into the payday lending debt trap - the terms of the loans she took out required her to either pay them off in less than two weeks or have $90 fees automatically debited from her bank account repeatedly. Those loans, at triple-digit APR, have cost her much more than the exorbitant fees.

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Victim of Pay Day loans

Sandy Hudson’s first payday loan was for $100, with an $18 fee. All she needed was a source of income and a banking account, so she walked into the shop, and walked out 15 minutes later with the loan. Sandy got caught up in the payday lending debt trap, taking out multiple loans to pay the fees on each one as they became due. At one point, she was paying $300 every two weeks for four different loans. Over a six month period, this added up to $3600,

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Commercial Bank

Full-service financial institutions Wide variety of services and products Operate under state and federal laws Usually the largest financial

institutions FDIC insured Examples – Wells Fargo, US Bank, First

Interstate Bank

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Commercial Bank Services

Checking Accounts They are the only

financial institution allowed to offer non-interest paying checking accounts

Savings Accounts Safe-Deposit Boxes Credit cards

Certificate of Deposit (CDs)

Financial Services Investments Loans Mortgages

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Credit Union Non-profit cooperative financial institution,

member owned Members may have a common bond such

as same employer, union, location, etc. Usually charge lower fees and loan rates

and offer higher interest rates May offer free financial counseling NCUA insured Examples – America First Credit Union,

University of Utah Credit Union

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Credit Union Services

Share Draft Accounts (checking)

Share Accounts (savings)

Share Certificate Accounts (CDs)

Safe-Deposit Box

Credit Card Financial

Counseling Investment Loan Mortgage Retirement Plan

Account

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Brokerage Firm

Relatively new to the marketplace Licensed institutions Offer money management plans for

investing Provide financial assistance and advice Monthly statements provided to track

account activity Examples – Fidelity, ING, Merrill Lynch

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Brokerage Firm Services

Investments Bonds Stocks Mutual Funds

Financial Counseling

Real Estate Investment

Retirement Plan Accounts

**Customers can move money between accounts easily

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Benefits & Advantagesto using Financial Institutions

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Benefits of Financial Institutions Convenience

Quick and easy access to moneyDifferent ways to access money

Teller’s window, drive-up window, automated teller machine (ATM), and electronic banking

Cost savingsLess expensive to purchase money

orders and to cash checks Other businesses may charge to cash checks

Having a checking account instead of buying money orders saves money

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Benefits continued Safety

Protection from fire, theft, & loss Security

Money is protected by the federal government in federally insured institutions

Up to $100,000 for each depositorSigns are displayed if institutions are

insured stating: FDIC, NCUA, or Backed by the Full Faith and

Credit of the United States Government Not all are insured – look for the sign and ask!

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Advantages

Using one financial institution may include these advantages:Simplicity – having all accounts at one

place can simplify bankingRelationship – establishing relationships

can be beneficial when applying for loans Lower interest rates on loans may be offered

to loyal customers!

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Shop around for the best service, rates, products, and locations

before choosing a financial

institution!!!

Remember

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BANKING INSTITUTIONS COMPARISON PROJECT

(40 points) Answer the

questions on the assignment sheet by searching the web, visiting the institution, or calling them.

Create a poster with the logo and information from the questionnaire.

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BANKING INSTITUTIONS COMPARISON PROJECT

PAY DAY LOANS Pay Day Loans Cash Store Affordable Loans Check Cash

Advance Money Mart Loans for Less

Mr. Money Quick Loan Utah Money

Store J & N Pawn Loan Max

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BANKING INSTITUTIONS COMPARISON PROJECT

BANKS Bank of American

Fork Barnes Bank Brighton Bank Celtic Bank Chase Bank

Far West Bank Zions Bank Wells Fargo Bank Frontier Bank US Bank

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BANKING INSTITUTIONS COMPARISON PROJECT

CREDIT UNIONS America First C.

U. Cyprus Credit

Union Trans West C. U. University of

Utah C. U.

Utah First C. U. Jordan C. U. Mt. America C. U. Intermountain C.

U. Deseret First C.

U.

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BANKING INSTITUTIONS COMPARISON PROJECT

BROKERAGE FIRMS (Financial Advisers)

AIG Fidelity ING Merrill Lynch Smith Barney Waddell & Reed

Ameriprise Financial

AAA Financial Planners

Lincoln Financial Adv.

Progressive Planning

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The End