Unit 3: Financial Institutions & Banking Systems

Part 1: Financial Institutions

Dollars & Sense

Name that Financial

Name that Financial

Name That Financial

Name That Financial

Name That Financial

ObjectivesDescribe the differences and similarities

between banks and credit unionsAnalyze financial institutions in order to

choose the best fit for your situation

Types of Financial InstitutionsSection 1

Financial Services and Institutions

Deposit Institutions

Commercial Banks

Savings and Loan Associations (S&L)

Mutual Savings Banks

Credit Unions

commercial banka for-profit institution that offers a full range of financial services, including checking, savings, and lending

savings and loan association (S&L)a financial institutional that traditionally specialized in savings accounts and mortgage loans, but now offers many of the same services as commercial banks credit uniona nonprofit financial institution that is owned by its members and organized for their benefit

Banks & Credit UnionsBanks Credit UnionsFor-profit companies

owned by shareholdersNot-for-profit institutions

owned and controlled by their own customers, who are known as members

Managed by a member and volunteer board of directors, who are elected by other members

Managed by a paid board of directors elected by the bank’s shareholders

Banks & Credit UnionsBanks Credit UnionsOwned by shareholders;

customers do not have ownership or voting privileges unless they also own stock in the bank

Profits benefit a small group of stockholders

Owned by each credit union member, who has equal ownership and one vote, regardless of how much money a member has on deposit

Profits are returned to members in the form of lower fees and loan rates and higher interest on deposits

Banks & Credit UnionsBanks Credit UnionsAccounts are federally

insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC)

Accounts are federally insured up to $250,000 by the National Credit Union Administration (NCUA)

Who do they serve?Banks Credit UnionsOffer their services to

everyone; anyone can become a customer

To become a member of a credit union, you must meet certain common bond requirementsLive in a certain areaAttend a certain schoolWork at a specific placeAffiliated with a certain

organization (church, community)

Comparing Financial InstitutionsSection 1

Financial Services and Institutions

Where can you get the highest rate of interest on your savings?

Where can you obtain a checking account with low (or no) fees?

Will you be able to borrow money from the institution—with a credit card or another type of loan—when you need it?

Do you need an institution that offers free financial advice?

Is the institution FDIC- or SAIF-insured?

Does the institution have convenient locations?

Does it have online banking services?

Does it have any special banking services that you might need?

Which is Better?Depends on your situationDepends on your employerDepends on your beliefsDepends on what your family has done

traditionally

YOU DECIDE!Complete the Decision Point: Banks Versus

Credit Unions Worksheet after reading the article about the pros and cons of banks and credit unions.

Email the completed worksheet to Mr. Farrar