Notes

unit 3 lesson 6
ATM - Automated Teller Machine - a means of banking that allows the transfer of money electronically.
•Electronic Funds Transfer - The process by which money is moved from one account to another by computer.
•Automatic Bill Pay - A service that allows an account holder to pay bills by phone or automatic withdrawal.
•Debit Cards - A “check card” that allow purchases for goods by transferring funds from your bank checking account into the store’s account.
•Internet Bill Pay - A service that allows electronic payment of bills through an online company or a bank.
•Online Banking – taxes that are included in the cost of a good or service, like excise taxes on gasoline.
•PIN - Personal Identification Number – a number issued to account holders for security reasons

Advantages
•Quicker and less expensive for banks to complete.
•More secure because they reduce the chance of losing money.
•Create an electronic record of the flow of money.

Types of Electronic Funds Transfers

There are four types of EFTs that we will be discussing. They include ATM, Direct Deposits, Debit Cards, and Automatic Bill Payment.

Automated Teller Machine (ATM)

The ATM is the most popular way to transfer money electronically, and has drastically changed the way we do our banking. An ATM can provide most of the services that a teller can, such as: making deposits, withdrawing cash, transferring money between accounts, checking account balance, and even paying some kinds of bills.

ATM Transactions
•The convenience of ATMs allows you to use them at any time. All you need is a PIN, or personal identification number, and an ATM card, issued by your bank.
•You can deposit money at an ATM by endorsing all checks and placing them in a special envelope that you have to fill out with instructions for the deposit. You can not deposit currency at an ATM.
•You can also withdraw money at an ATM, but these machines only dispense paper money in the form of tens and twenties.

ATM Costs
•Your bank may charge a fee each time you use an ATM, ranging from $.25 to $4.00 per transaction, depending on whether it is.
•your bank's ATM or not.
•It will cost you more to use an ATM other than your bank's ATM.

types of ATM's
Proprietary

The ones your bank owns. It is a rare bank indeed that charges its own customers to use its ATMs, but it's far from unheard of. Approximately 10% of all banks now charge their own customers for using the ATM. The ones that do charge tend to have a fee of around $1.

Non-Proprietary

All the machines that belong to somebody other than your bank. These will charge you about $1 to $1.50 to make your transaction, and they'll post that they're imposing a fee either on the "welcome" screen or else with a sticker on the machine itself. But wait, there's more! Your own bank is probably charging you a similar fee for not using its own network. Find out how much your bank charges for this, but generally expect to be out about $3 between the fee from the ATM you're using and your own bank's fee.

National ATM

The bank is hooked up to a regional or national network, such as Cirrus, Plus, NYCE, Interlink, or others. When you use these out-of-town networks, expect that the fee will be no less than $1.50, and possibly as high as $3. Then add the fee that your bank is charging you.

Advantage of Direct deposit
•Save time and money by not having to go to the bank to deposit your check.
•Funds are typically available and earning interest immediately.
•Many banks will reduce or eliminate monthly fees if you have direct deposit.
•The IRS even lets you have your tax refund directly deposited.

Debit Cards
1.You don't have to carry or write checks.
2.The bank's computer verifies your account balance before completing the transaction, so you can't spend more than you have on deposit.
3.Stores often prefer debit card transactions because they receive payment immediately

Automatic bill payments
Pay by Phone
Many banks offer a system for paying bills you have every month by phone. You may have to pay a fee for this service, but you can authorize payment by phone and the bank will confirm the transaction. As always, it's important to record all transactions in your check register.

Automatic Withdrawals
Bank will pay bills automatically from your account to the company. You must remember to record these transactions, as they will happen automatically on a given day of the month. Typically, the company will send you a reminder of the bill that is to be paid

Is online banking for you?
Yes, if you are already connected to the Internet, maintain several accounts, like to access account information often and at irregular hours, and pay enough bills every month (20) to make it worth your time. It is a big plus if you already use a personal finance program like Quicken or Microsoft Money, because your bank can update your records automatically which will save you a lot of time.

Online only Banks
•convenience of accessing your accounts at anytime, paying bills online for free, and not having to change banks online.
•free services such as free checking, ATM card, unlimited check use.
•because their costs are lower than traditional banks, these banks generally pay higher interest rates or provide more services at lower costs.

Disadvantages of online only banking
•may include high ATM fees since there are no physical ATMs for this bank and you will be forced to use another bank's ATM.
•other than direct deposit, you will have to mail in any deposits.