Bank at School - Lesson 9              Previous Lesson       Next Lesson
Products Financial Institutions Offer     

Introduction
In the previous lesson, we looked at how credit can help make certain purchases more affordable. Lesson 9 reviews the major services financial institutions offer customers to help them with their financial needs.

Objective
Familiarize students with the variety of services financial institutions offer.
Expand on budget model through the addition of common long-term financial commitments.
 
Lesson Material
Let's suppose you're earning an income. You've made a budget, you've determined what your basic routine expenses are, you've established how much money you wish to save monthly and you've made a list of a few things you'd like to get just for fun. You need a place to keep your money where you can have easy access to it if you need it, and where it will be safe. So you decide to talk to the local financial institution to see what services it can offer you.

People use financial institutions for a variety of purposes. For those who need a safe place to keep their money, financial institutions offer an ideal home. As discussed earlier, financial institutions offer savings accounts and checking accounts. To make it even easier for people to have access to their money, most financial institutions now offer a special card which can be inserted into a machine and used to make deposits or withdrawals from your savings or checking accounts. These machines are called automatic teller machines because they perform many of the same duties a teller in a financial institution performs. Automatic Teller Machines, (or ATMs for short) are extremely convenient. With an ATM card, you can literally bank 24 hours a day.

A financial institution's primary function is to make loans. A financial institution may issue many different kinds of loans. Some of the more common loans include: home loans (generally referred to as a mortgage loan), auto loans, business or commercial loans, loans for school tuition or student loans, and personal loans.

A credit unions' primary function is to serve its members. As not-for-profit financial institutions, credit unions return all "profits" to their members in the form of dividends on savings, lower loan rates and reduced service fees.

When looking for a loan, most people visit several financial institutions to see what interest rate each is charging for a loan. Remember, financial institutions make a profit by loaning people money for a fee. Many times interest rates may differ, so it's wise to shop around first.

Financial institutions serve many types of clients. They serve families, individuals, small companies and large companies, even governments. A family's financial needs may differ from what a large company would need. To respond better to a particular group's needs, a financial institution may specialize in one or more areas. In fact there are financial institutions in Denver, Colorado whose sole customers are kids! Knowing what area a financial institution specializes in can help you find the best financial institution for your needs.

Suggested Activity

• Discuss what kinds of financial institution services you feel you might need now and in the future.
• Bring in a financial institution advertisement to show how financial institutions advertise their services.
• Ask your financial institution representative to provide you with literature from the financial institution showing some of its more basic products.

Glossary
ATM - Automatic Teller Machine - Machine which allows person to make a deposit or withdrawal from their account without having to go to the bank.

ATM Card - Magnetic card used in an ATM machine to make transactions.

Auto Loan - Loan which is issued for the purpose of buying a car.

Commercial Loan - Loan made to a business for the purpose of buying a business or making improvements to an existing one.

Mortgage Loan - Loan which is issued to buy a house.

Student Loan - Loan made to a student for payment of tuition, or cost of living expenses while in school.

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