If you have seen the movie It’s a Wonderful Life, you may remember that all of the people in the town race down to the bank to withdraw all of their money at one time. So, what happened? Did they all receive the money that was in their accounts? No. Why not? George tries to explain to them that all of their money is not just sitting in that particular bank's vault. The bank actually takes the money you deposit and lends it out to other individuals. How does this all work? How banks function is what this module is all about.
Financial institutions are businesses that offer services such as checking and savings accounts, car loans, credit cards, home mortgages, retirement plans, and investment services. These institutions help people manage, protect, and even increase their money. You may use different types of financial institutions at different points in your life: commercial banks, savings and loan associations, credit unions, and financing companies. Each company can offer different services that benefit you in a unique way. Get ready to learn about the various companies and how they can meet your needs.
In addition to knowing which institutions offer what services, you need to know the services available to you. What bank account is best for you? How do you open an account? What fees are associated with banking services? All of these questions will be answered in this module. You will also learn the importance of reconciling your checkbook to prevent overdrawing your account and catch any errors the bank might make, as well as learn the advantages of online banking.
Pre-Assessment
Take a moment to discover how much you already know about your banking needs. Click the player button to get started.
Key Vocabulary:
To view the definitions for these key vocabulary terms, visit the course glossary.
Automatic Teller Machine (ATM) | Debit card | M1 | Required reserve ratio |
Bad check | Deposit Slip | M2 | Restrictive Endorsement |
Bank | Deposit | National Credit Union Administration(NCUA) | Special Endorsement |
Blank Endorsement | Electronic Funds Transfer (EFT) | Non-sufficient funds (NSF) | Stale Check |
Check | Endorse | Outstanding Checks | Stop payment |
Check Register | Federal Deposit Insurance Corporation (FDIC) | Overdraft Protection | Statement |
Checking account | Federal Reserve | Payee | Withdrawal |
Cleared Check | Forged check | Personal Identification Number (PIN) | |
Credit Union | Interest | Reconciling |