Lesson 2
The Bank
02
Definitions
1. Read the following paragraphs. Then, based on what you think the words mean from the paragraph, match the terms on the left with the correct definitions on the right in the table below the paragraph.
Once the Abboud family got to the United States and Mr. Abboud started working, they needed a safe place to keep their money. At first, they just kept their money at home, but eventually they got a bank account with a bank in their area. They also considered getting an account with a credit union, but the requirements for opening an account were harder to meet.
Having a bank account, specifically a checking account, makes it easier to pay their rent because they can write a check every month. Last week, Mrs. Abboud went to the bank and the teller helped her open a savings account, so now they have a checking account and a savings account. The savings account has some bank fees, but it also earns interest over time. The Abboud’s can withdraw the money in their bank accounts at an ATM when they need cash and the bank is closed.
ATM (Automated Teller Machine)
Bank
Bank Account
Bank Fee (sometimes just called“Fee”)
Check
Checking Account
Credit Union
Interest
a. A written document instructing a bank to pay money from the writer’s
account.
b. The money a bank takes out of your account to pay for services and
penalties.
c. A type of bank account that allows
you to deposit money, keep it safe,
withdraw funds, and earn interest.
d. The main contact people at the bank
who are usually at the counter.
e. A record of money deposited into a
financial institution for investment and/or safe keeping.
f. An electronic banking machine that
allows customers to complete basic
transactions, like deposits and
withdrawals, without the aid of a
branch representative or teller.
f. An electronic banking machine that
allows customers to complete basic
transactions, like deposits and
withdrawals, without the aid of a
branch representative or teller.
h. A nonprofit-making money
cooperative whose members can
borrow from pooled deposits at low
interest rates. Fees may be lower, but
the requirements for having an
account may be harder.
Teller
i. A type of bank account that allows
withdrawals and deposits, including
the ability to write checks.
Savings Account
j. Extra money deposited in your
account that the bank pays you for
keeping your money in that bank.
Banks vs Credit Unions
Banks are for-profit institutions. Anyone can open a bank account if they have the minimum requirements. Credit Unions are not-for-profit banks. Credit Unions are cooperative organizations for individuals who have a common bond, such as place of employment or residence. Credit unions
offer many of the same services banks offer. Profits made by the Credit Union are paid out to members at the end of the year. Credit Unions are also insured by the U.S. government. Community credit unions allow anyone who lives in a certain state, city, or community to join (depends on the credit union). Otherwise, credit unions are usually only open to people working for a certain employer, attending a certain school, or something similar (e.g. Los Angeles Credit Union and Banking is a Credit Union that can be used by any student, staff, or faculty member at the
University of Southern California).
Choosing a Bank to Open an Account
When you are choosing a bank or a credit union to open a checking or savings account with, there are a number of questions you should ask to help you make a decision. Before we give the questions, there are a few more definitions you need to know:
​
Account verification — Before opening an account, most banks will review your history of using checking accounts. Some banks will run a credit report.
​
Balance — Amount of money you have in your bank account and available for use.
​
Transaction — Anytime you take money out of your account or put money into your account.
​
Withdrawal — Process of taking money from your bank accounts.
​
Deposit — Money you add to your bank account.
​
Overdraft — An overdraft occurs when money is withdrawn from a bank account and the available balance goes below zero. In this situation the account is said to be "overdrawn"
​
Debit Card—A debit card is a payment card that deducts money directly from a consumer’s checking account to pay for a purchase. Debit cards are necessary to use an ATM, and they’re usually necessary to make transactions in a bank.
​
Personal Identification Number (PIN)— Every debit card is associated with a PIN (personal identification number) number, which is a password to be able to use the debit card. It’s usually a combination of 4 numbers, like 5971. You should try not to have an easy to guess PIN
number, like 1111.
Now that you have the definitions, here are some questions to ask before opening an account:
-
Do they offer free checking/savings?
-
Do I need a minimum deposit to open an
account? -
What forms of identification are required
to open an account? -
Is there a minimum balance to keep the
account? -
Are there fees for not having a minimum
account balance? -
Are there fees for not depositing a
minimum amount of money each month? -
How many checks can I write per month?
-
How many withdrawals can I make per
month? -
Can I remit money back home
through this bank? -
Does an ATM or Debit Card come with
the bank accounts? -
Is the bank insured?
-
Does this bank have online banking?
-
Are there overdraft fees?
-
Are there branches close to where I live
or work? -
Are there ATMs close to where I live or
work? -
Are there fees for bounced
checks/overdraft charges? -
When are they open? Do they close
before I get off work? -
Do they speak another language besides
English? -
Will I be charged to use the ATM
machine? -
Does the account pay interest?
-
Is there a limit on the number of transfers
per month I can make between accounts? -
Is there a limit on how much money I can
withdraw at once from a teller or the ATM?
Below are two charts with information comparing two banks and one credit union. Read about the banks, and afterwards answer the following questions.
Name
Type
Requirements to open an account
Fees
Easy Bank
Bank
ID: address, ITIN or SS, and foreign passport or US license Checking/ Savings: must have a minimum initial deposit of $40 to open a checking or savings account
-
No overdraft fee
-
No balance fees
-
No fees for transfers
between two Easy Bank accounts -
7% fee for international
transfers to foreign bank accounts.
American
National Bank
ID: address, ITIN or SS, and foreign passport or US license Checking/ Savings: must have a minimum initial deposit of $25 to open a checking or savings account
-
$10 fee if you don’t deposit at least $800 per month into your checking account.
-
$10 fee if you make more than 5 monthly transfers between savings account and checking account.
-
$10 fee if your savings account has a balance less than $20.
-
$15 overdraft fee
-
$5 annual savings account fee.
-
5% fee for international transfers
Bank
NYC Community
Credit Union
Credit
Union
ID: must have a New York City home address, have ITIN or SS, and foreign passport or US license Checking/Savings: $10 minimum deposit to open a checking or savings account
-
No low-balance fee for checking or savings, but the account must always have $20 (example: if you have $25 in your checking account you can only spend $5 of it)
-
$3 fee if you don’t deposit at least $500 each month in your checking account.
-
$15 overdraft fee
-
$10 annual savings account fee
-
5% fee for international transfers to foreign bank accounts
Bank
Locations and Hours
Interest Rates
Withdrawals and Deposits
Easy Bank
Branches: Nationwie, open 9am-5pm M-F ATMs: Nationwide, but not very common to find
Savings: 0.25% in interest monthly on savings account balance
-
Can only withdraw $500 at a time from an ATM, $800 at a time in-person at branch
-
You can buy 200 blank checks for $20, you get 5 free checks
American National Bank
Branches: Nationwie, open 9am-5pm M-F ATMs: Nationwide,common
Savings: 0.75% interest monthly on savings account balance
-
Can only withdraw $500 at a time from an ATM, $800 at a time in-person at a branch
-
You can buy 200 blank checks for $20, 5 free checks
Note: Any ATM is either associated with a bank or is an independent ATM. If the ATM is associated with a bank, there are typically no fees for withdrawing or depositing money using that ATM. You can deposit cash or checks. At an independent ATM (for example, most ATMs in gas stations) you can withdraw money from your checking or savings account, typically with a fee ranging from $1.50 to $4, but you cannot deposit money.
The Abboud Family
The Abboud family needs to choose a bank. Here is some additional information about the
Abbouds:
-
The Abboud’s total monthly income is $1200.
-
The Abboud parents both work 9am-5pm M-F.
-
The Abboud parents both get paid weekly and with cash, not a check, so they need to be able to deposit cash easily and frequently.
-
They are budgeting to put $20 in savings monthly, so they want a savings account.
-
They currently have $40 for an initial deposit in a savings account and $40 for an
initial deposit in a checking account. -
They live in New York City, and almost never leave New York.
-
They can pay their rent with cash or a check.
-
The Abboud’s main goals are avoiding fees and being approved for a checking and savings account with a bank that is convenient for them to access.
2. Do you think the Abboud family should get a checking and savings account with Easy Bank, American National Bank, or NYC Community Credit Union? Why did you choose your answer?
The Estevar Family
The Estevar family needs to choose a bank. Here is some additional information about the
Estevars:
-
The Estevar’s monthly income is $3000.
-
They send $100 each month to their family in Honduras, so international transfer
fees matter to them. -
The Estevar parents both work 9am-5pm M-F, but they would have time to stop at a branch once a week at lunch time if they needed to. They both get paid electronically, so they don’t need to go to a bank to deposit cash or paychecks from work.
-
They are putting at least $300 in savings monthly, so they definitely need a
savings account. -
They have $100 to make an initial deposit for a savings account and $100 to make an initial deposit for a checking account.
-
They pay their rent with checks, so they will need to buy checks.
-
They live in Los Angeles.
-
The Estevar’s main goals are avoiding fees when possible and having a savings
account that helps them reach their long-term goal of buying a house.
3. Do you think the Estevar family should get a checking and savings account with Easy Bank, American National Bank, or NYC Community Credit Union? Why did you choose your answer?
Flores Garcia
Flores needs to choose a bank. Here is some additional information about Flores:
-
Recall that Flores has two jobs, one at a grocery store and one babysitting. Her monthly income varies, but she makes at least $1120 each month. Of that $1120, $880 is from the grocery store and $240 is from babysitting.
-
The money she makes from the grocery store is automatically deposited into her
bank account every week, and the $240 from babysitting is given to her in cash. -
She doesn’t start work until 10am on weekdays, so she would be able to go to a branch before work to deposit cash if she needed to. She has little use for ATMs because she can plan on going into a branch on weekdays.
-
Flores does not need to send money to family overseas.
-
Flores has $40 to make an initial savings account deposit, and $40 to make an
initial checking account deposit. -
Flores can pay her rent online, so she doesn’t need checks or cash to pay rent.
-
Sometimes Flores gets her babysitting money on different days of the month, so
sometimes her account balance is low even though she has money coming soon. -
Flores lives in Chicago.
-
​Her main goals are choosing a bank that will be flexible with fees if her account
balance is low and convenience.
​1. Should Flores open a bank account with Easy Bank, American National Bank, or NYC
Community Credit Union? Why did you choose your answer?
Banks in Your Area
On your own, decide which things about banks are the most important for you. You can use the list of questions or the chart from the previous exercise to give you ideas of what to look for.
5. While you’re at a computer, compare the benefits of three different banks that have
branches in your area. Which makes the most sense for you? Do you meet the requirements for opening an account?
Bank
Type
Requirement to open an account
Fees
Bank
Locations and
Hours
Interest Rates
Withdrawals and Deposits
Use the blank table to fill in any additional areas of concern you have (example: is the bank insured? Do they speak any languages besides English?)
Bank
What to do/avoid before you get a bank account
When you first get to the United States, there will be a period of time before you can get a bank account. You may be getting all of your documents in order, or simply finding ahome. During that time, you might need to cash a check (for example, a paycheck). There are several ways to do this:
1. Cash the check at the issuing bank for free. Every check that’s written must be
written from a checking account, even if the person who is receiving the check
does not have a checking account. For example, look at the following example
check:
In this example, “Hale Charter Academy” is getting the check (more examples of checks in the next lesson), and the check is issued by “Big Bank”. So this check can be cashed at any Big Bank location. You may need ID to show that you’re the person the check is written for, but you
can bring your foreign passport.
You may need ID to show that you’re the person the check is written for, but you can bring your foreign passport.
2. Cash the check at a retailer that cashes checks. The best known example is at any Walmart Money Center. Walmart Money Centers cannot cash personal
checks from one person to another, but they can cash paychecks, checks from
the government, cashier’s checks, government checks, MoneyGram money
orders, and other types of pre-printed checks. For checks with value less than
$1000, the fee to cash a check is $4. For checks between $1000-$5000, the fee
to cash a check is $8. Walmart Money Center does not cash checks with value
greater than $5000.
​3. Some prepaid debit cards will allow you to deposit the balance of the check
directly to the prepaid card. For example, Walmart Money Center can give you
a MoneyCard, which is a card that you can load money onto with cash or a
check deposited at a Walmart Money Center.
4. Check-Cashing Stores will allow you to cash checks, but they have very high
fees and charge you high interest rates. You should avoid these if possible!
Check-cashing store
Answer Key
-
a- Check
b- Bank Fees
c- Savings Account
d- Teller
e- Bank Account
f- ATM
g- Bank
i- Checking Account
j- Interest -
The NYC Community Credit Union is the best choice for the Abboud family. Easy
Bank has branches in NYC, but the branches are only open while the parents are
at work, and Easy Bank ATMs are hard to find. Because of these two things, it
would be difficult for the Abbouds to find ways to deposit their money with Easy
Bank, which they need to do frequently because they get paid with cash weekly.
Therefore, Easy Bank is not a good choice for the Abboud family.
Other than the annual savings account fee, NYC Community Credit Union has
lower fees than American National Bank and has a lower minimum initial deposit
for both savings and checking accounts. There is a minimum balance of $10
required in both accounts, but there’s no low balance fee. Since the Abbouds live
in New York City and never leave New York, it’s okay that NYC Community Credit
Union is only in New York. The lower fees, no balance fee at all, and
requirements to open an account make NYC Community Credit Union a better
choice than American National Bank for the Abboud family. -
The Estevar family should go with American National Bank or Easy Bank, with
American National Bank probably being a slightly better option. They don’t live in
New York City, so they don’t meet the requirements to open an account with NYC
Community Credit Union. American National Bank has a higher savings account
interest rate than Easy Bank, and American National Bank has a lower fee for
international transfers to foreign bank accounts than Easy Bank. American
National Bank does have more low balance and minimum deposit fees, but
because the Estevars have been in the USA long enough to be financially stable
they likely will not be penalized with any of the fees. There is a $5 annual savings
account fee, but checks also cost $5 less at American National Bank. For these
reasons, American National Bank is probably the best option for the Estevars.
That being said, they could also have their banking needs met with Easy Bank,
but they would have higher international transfer fees and checks are more
expensive. The Estevars meet the minimum initial deposit requirements for both
checking and savings accounts at both banks. -
Flores should open an account with Easy Bank. Flores lives in Chicago, not New
York, so she doesn’t meet the requirements to open an account with NYC
Community Credit Union. Since Flores doesn’t really need ATMs and can go into a
branch before work on weekdays, Easy Bank and American National Bank are
equally convenient. Because Flores sometimes has a low account balance
depending on when she gets paid for babysitting, Easy Bank’s fees are the best for
her. The fact that Easy Bank has no overdraft fees will also help if she overdrafts before getting her babysitting money. She doesn’t use checks to pay
the rent, so the fact that checks are more expensive with Easy Bank is not a big
drawback. Because of the low fees for account balance and the fact that Flores
does not really need ATM services, international transfer services, or checks too
frequently, Flores should go with Easy Bank.