Transcript Credit Union

Personal Finance Unit: Banks, Credit, and Credit Unions
 It’s really about understanding how much
money you have, where it goes, and then
planning how to best allocate those funds.
EOC study guide
Personal Finance #3
If they are Federal
Deposit
Insurance Corporation (FDIC)
members
• Since the start of FDIC
insurance on January 1,
1934, no depositor has lost a
single cent of insured funds
as a result of a failure
• Depositors are insured for
up to $250,000
 FDIC Shuts Down Syringa Bank in Boise
How does FDIC work?
• Commercial Bank
▫ Provides transactional savings, money market
accounts
▫ Like all businesses, their goal is to maximize
corporate profits.
• Credit Union
not-for-profit and
customers are members
▫ Financial institution that is
 Big banks
 ATMs are typically plentiful and branches are open
on the weekend
 Most offer a wealth of mobile and online tools
 Credit unions
 Meant to serve local communities, often not
available outside the area
 Branded ATMs are practically nonexistent, most
offer to reimburse customers for ATM fees if
customers have to go out of network
 Big banks
 Notorious for levying major fees against customers—
from overdrafts to monthly maintenance fees
 According to MoneyRates.com the average monthly
maintenance fee is $12.26
 Typical charge for out-of-network ATMs is $2.60
 Credit unions
 Fewer fees across the board, for the most part
 Overdraft fees are $20-$30, but usually only required to keep
$30 in an account
 70% offer free checking (39% of banks do)
 Many charge a $2-$5 maintenance fee
 Big banks
 Interest-yielding bank accounts are rare now
 Credit unions
 70% do not pay interest on checking accounts
 those that do pay 0.17%
 Big banks
 In 2012 they scored a 77 on the American
Customer Satisfaction Index
 Credit unions
 Scored an 82 on the American Customer
Satisfaction Index in 2012
ARE YOU A GOOD RISK?
Financial institutions care about
your character!!!
 It matters what kind of "financial citizen" you
have been
 How do they know? By looking at your credit
history
 What is a credit score?
WHAT DO THEY CARE ABOUT MOST?
Factors that impact personal credit:
1. Payment history—have you paid your bills on
time
2. Amounts owed—charge no more than 25% of
your limit
3. Length of credit history—have you ben reliable
for years?
 3 important credit score factors
 Unexpected things that
lower your credit score
Principal—
Interest—
a sum of money lent
or invested on which
interest is paid.
money paid
regularly at a
particular rate for
the use of money lent
$150,000
Month
January
February
March
April
May
June
July
August
September
October
November
December
Balanced Payment
Owed
$1,000
$20
Interest portion of
payment
Portion applied to
principle (payment -
(.17/12 x balance)
interest portion)
New
Balance