Checking Accounts

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Video Resources: Avoid Those Checking Account Fees

It’s often the first financial product that a young person will use. Maybe they start with a savings account but eventually they graduate and pair their savings account with a checking account. In that process of setting up this new account, the customer will be asked (or they should be) whether they would like “overdraft protection.” The term sounds innocuous and better yet lures them in after all who doesn’t want to be protected. Have your students watch one or more of these videos (hat tip to NGPF’s Jessica for curating these videos from December 2016) and odds are they will choose to “just say no” when it comes to overdraft protection.

This Pew Charitable Trust video from December 2015 interviews people “on the street” to get their thoughts on overdraft fees and policies. Also highlights the blind spots that consumers have when it comes to the “fine print” of checking account agreements. A great overview and only 3 minutes long! Pair this video with the NGPF Fine Print: Reading the Fine Print of Your Checking Account and you will have savvy students when it comes to checking fees!

Key questions for your students:

By |February 20th, 2017|Checking Accounts, Debit Cards, Research, Video Resource|

Question: In What Year Was The First A.T.M. Installed (And Other Fun Facts About Banking)?

Answer: 1969.

Good opener to this 1,000 word article (about 5 minutes reading time) on the history of banking from NerdWallet. Here are a few interesting points (some of which I even remember!):

By |February 13th, 2017|Article, Checking Accounts, Current Events, Question of the Day|

Question: What Is the Number One Reason Millennials Switch Checking Accounts?

Answer: No-fee ATMs

From Credit Union Times:

By |February 5th, 2017|Checking Accounts, Debit Cards, Question of the Day|

Question: How Do Banks Make Money Off Free Checking Accounts?

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Answer: Checking accounts provide banks with a cheap source of funds (they pay almost no interest on them) that they then loan out at much higher interest rates. So, for example, say I deposit $1,000 into a checking account paying 0% interest and the bank lends that $1,000 to a credit card customer paying 15%, the bank earns $150 in interest from the credit card customer and pays me bupkis:)

From Motley Fool’s analysis of a bank, Bank of Marin, that has increased their percentage of checking accounts that are FREE:

By |January 25th, 2017|Checking Accounts, Current Events|

Videos: What Was Considered Good Financial Advice In the 1940s and 50s?

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Put this in the category of “not so current events.” Something about my impending birthday has me getting nostalgic for the “good ole days.” I stumbled across this trove of videos from the 1940s which would have been the financial advice that my teenage Mom would have been given. Here are some of the highlights that I thought you would enjoy (with questions):

  • Keeping a Budget: Your Thrift Habits (it’s 10 minutes long, but the first five minutes will give you plenty to discuss):
    • How was Ralph able to buy his camera?
    • What was the budget method that worked for Ralph (full disclosure: this was how I kept track of my newspaper route revenues)?  How did he track his progress toward saving for his camera?
    • Is it easy to make a budget work? Why or why not?
    • What are Jack’s sources of income?
    • What are Jack’s regular expenses? irregular expenses?
    • Why did Jack find it difficult to save?
    • What would be on your list of “Watch these expenses?”
    • Identify an item that you would like to save for and break it down to how much you need to save per week.
By |January 23rd, 2017|Budgeting, Checking Accounts, Investing, Savings, Stocks, Video Resource|

NGPF Product Launch: NGPF Releases Revamped Savings Unit

I am so proud of the NGPF team (Jessica, Sonia, Laura, Ren, Sid and Niko) that has worked feverishly to deliver a revamped Saving Unit that we released tonight. Why do we continue to revamp our lessons? The short answer can be found in our culture of continuous improvement as we are always looking for ways to make our lessons stronger (your feedback is critical in this process). Here is the longer answer: 

Let Them Tell Stories Too…

download (3)As educators, we know the power of storytelling in the personal finance classroom. What better way to bring an abstract or dry topic like compound interest to life than to explain how $10,000 you invested in your IRA in your 20s was now worth $30,000 today due to gains in the stock market compounded over many years. There is even research that shows that student recall concepts better when told as a story as compared to a lecture (from Bryant and Harris):

The use of storytelling allows lecturers to engage students in a dynamic and enthusiastic way while encouraging students to develop a higher order of thinking and recollection. Storytelling allows the lecturer to show their interest in the material and in the students. Lectures can utilize the art of storytelling to communicate expertise and transfer information. This paper empirically examines the effectiveness of storytelling as a means of increasing student intrigue and recollection. We find that students recall a statistically significant 6.5% more of the storytelling lecture than those students who were exposed to the text book lecture.

Yet the focus when we talk about stories is usually on the teacher and yet…students have their stories and advice to share also. I was reminded of that today at Eastside College Prep., where we are beginning our 6-week course with the senior class. The discussion was about savings and why it can be so difficult to save. A student shared how she had a weak spot for her “hobbies” which she described in further detail with one word: shoes. I dug a bit deeper to understand more about her habits and she proceeded to say something along the lines of this:

Question: How Much Do Banks Earn From Overdraft Charges?

Answer: Billions!

Happy New Year! Welcome back to school. I know that banking tends to be a unit that many of you teach early in the semester so this data should prove particularly timely. I have posted on this topic several times but have some new data to report about the three largest U.S. banks and their fees from overdraft charges (from Financial Times, subscription required):

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This quarterly data on the three largest banks shows how fees tend to grow over the course of the year as evidenced by the quarterly data from 2015. So, back to the question about how much they are charging for overdrafts…Let’s make the math easy and say $400mm per quarter or $1.6 billion a year for each of the three banks totaling $4.8 billion for the three of them combined. Some other nuggets from the FT article: