Financial Services _Çô Client Services RFC121 Lecture Notes - Lecture 4: Money Market Fund, Life Insurance, Investment Company
5 Jun 2018
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Chapter 4
The Banking Services of Financial Institutions
Learning Objectives - Chapter 4
Analyze factors that affect selection and use of financial services.
Compare the types of financial institutions.
Compare the costs and benefits of various savings plans.
Identify the factors used to evaluate different savings plans.
Compare the costs and benefits of different types of chequing
accounts.
Learning Objective # 1
Analyze factors that affect selection and use of financial services.
A Strategy for Managing Cash
▪ Cash, cheque, credit card or debit card are the most common payment
choices.
▪ Common mistakes in managing cash include…
▪ Overspending as a result of impulse buying and using credit cards.
▪ Not having enough liquid assets to pay current bills.
▪ Using savings or borrowing to pay for current expenses.
▪ Failing to put unneeded funds in an interest-earning savings account
or investment plan.
Types of Financial Services
▪ Savings
▪ Time deposits in savings and
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investment certificates
▪ Payment services
▪ Automatic payments
▪ Chequing accounts commonly
called demand deposits
▪ Borrowing
▪ For the short- or long-term
▪ Other financial services
▪ Insurance, investment, real estate purchases, tax assistance, and
financial planning are additional services you may use
Electronic Banking Services
▪ Direct deposit of pay cheques and other regular income
▪ Automatic payments
▪ Obtain cash
▪ Check account balances
▪ Transfer funds
▪ Point-of-sale payments
▪ On line banking
Automated Teller Machines
▪ A computer terminal that allows customers to conduct banking
transactions.
▪ To reduce ATM fees you can...
▪ Compare ATM fees before opening an account.
▪ Use your own bank’s ATM when possible.
▪ Purchase monthly service package the includes ATM transactions.
▪ Withdraw larger cash amounts as needed.
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▪ Use personal cheques, traveler’s cheques, credit cards, and pre-paid
cash cards when traveling.
Methods of Payments
▪ Point-of-sale transactions
▪ Debit cards routinely accepted in most retail and restaurants
▪ Personal Identification Number (PIN) required and money
automatically debited, reducing available funds
▪ Credit cards can also be used but charges accumulate
▪ Stored-value cards
▪ Pre-Paid for phone services, transit & library fees
▪ Smart cards have a microchip for prepaid goods and services and for
data, such as your medical history, account balances, insurance
information
Opportunity Costs of Financial Services
▪ Higher rate of return may be obtained at the cost
of lower liquidity
▪ Convenience of a 24-hour ATM must be weighed against service fees
▪ The “no fee” chequing account that requires a $1000 non-interest-bearing
minimum balance means lost interest of nearly $220 at 2 percent
compounded over 10 years.
Financial Services and Economic Conditions
Changing interest rates, rising consumer prices and other economic factors
influence financial services.
When interest rates are rising...
▪ Long-term loans take advantage of current low rates.
▪ Short-term savings take advantage of higher rates when they mature.
When interest rates are falling...
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Document Summary
Analyze factors that affect selection and use of financial services. Time deposits in savings and investment certificates: payment services. Chequing accounts commonly called demand deposits: borrowing, for the short- or long-term, other financial services. Insurance, investment, real estate purchases, tax assistance, and financial planning are additional services you may use. Electronic banking services: direct deposit of pay cheques and other regular income, automatic payments, obtain cash, check account balances, transfer funds, point-of-sale payments, on line banking. Changing interest rates, rising consumer prices and other economic factors influence financial services. When interest rates are rising: long-term loans take advantage of current low rates, short-term savings take advantage of higher rates when they mature. When interest rates are falling: if you refinance loans, use short-term loans, long-term savings lock in earnings at current high rates. Benefits: time and money savings, convenience for transactions and comparing rates, no paper trail for identify thieves.
