Module 5B (pp. 12, 22-39)
OTHER FORMS OF PAYMENTS
I. Methods of Purchasing Goods & Services
A. Cash
1. Can’t carry in large amounts
2. Can be lost & can’t be replaced (don’t put in an envelope to mail!)
3. Can be used for everything NATIONWIDE
4. Can be used internationally sporadically
B. Personal Checks
1. Proof of payment
2. Safe to put them in the mail
3. DDA’s may earn interest
4. Stop payment orders if lost or stolen
5. Can be traced using numbers on BACK of cancelled check
But what happens if can’t use personal checks?
What about certain purchases?
What if you don’t have a DDA?
C. Cashier’s Check (aka: Teller’s Check)
1. Take cash to bank & bank writes a check on your behalf, using the bank’s account
2. There’s a cost per check
3. Use when you don’t have or can’t use your personal checking account
4. Used for LARGE amounts (buying a car; down payments)
5. It will never bounce!!
D. Certified Check
1. Use your OWN checking account (& funds)
2. There’s a cost per check
3. Use when you want to make a LARGE purchase (buying a car, down payment on a house)
4. The funds must be guaranteed by the bank (the bank certifies it with a “stamp”)
5. Money is “frozen” in your bank account
6. It will not bounce!
E. Traveler’s Check
1. Fee is a % (1%-2%) of total dollar amount purchased or FREE (if bank there)
2. Come in set increments (denominations of) $20, $50, $100 – don’t write a check for the exact amount of the transaction
3. Have a “register” or log to keep track of serial numbers & denominations – complete at time of purchase (not when spending), before traveling
4. Sign 2 times on FRONT of check: 1. once at the bank (when purchasing them); 2. again when using them at a store
5. Must show photo I.D. when using them
6. Best for travel within the U.S.A – international use is now limited (forgeries & counterfeit)
7. Can be replaced if stolen
8. Keep register of serial numbers SEPARATED from actual checks – if checks get stolen, need serial numbers & denominations to call in to get them replaced!!
9. If checks get stolen, call 800 number of issuing bank—they will overnight replacements!
10. Barclay’s Bank, American Express, CitiCorp, Bank of America – print them!!
F. Money Orders
· Give cash to a company & they write an “order” (like a check) for you
· There is a charge for this, but least expensive
· Great for on-line purchases
· Safe to put in the mail
· Can be traced if lost
· Have serial numbers for identification purposes
· Come in duplicate or triplicate copies
1. Postal Money Orders – purchased at the Post Office; must be under $1,000.00
2. Express Money Orders – purchased at gas stations, Walmart, Costco, Marc’s, & grocery stores; least expensive place to purchase one ($.70); might have $$ limits
3. Bank Money Orders – purchased at a bank; most expensive place to purchase one ($2-$10); no $$ limits
G. Telegraphic Money Order (old-fashioned term)
1. AKA: Wire Transferring or wiring money
2. Most expensive way to make a payment ($25); Transfer $1,000 from USA to Germany cost $65
3. Send a message (via computer or telephone) from one Giant Eagle or bank to another
4. Use only in emergency situations
5. Western Union is the company that does it
H. Bank Draft
1. Checks (now many are electronic) written BETWEEN banks on a national or international level
2. Use when making LARGE purchases with strangers
3. Great for International Business transactions!!
I. Prepaid Cards, pp. 22-23
1. Prepaid Visa or MasterCard – great for gifts & traveling; $4-6 activation fee; can be reloaded
2. Prepaid Retail Store Card – aka: gift card; great for gifts!
3. GPR – General Purpose Reloadable cards
II. Electronic Funds Transfer (EFT) – mostly FREE
1. Money is transferred electronically
2. Can save money on stamps & envelopes
3. ATM transactions
4. Direct deposit – Instant paychecks
5. Pay bills on-line
6. Debit cards (deducted from DDA or savings accts)
7. Mobile banking – using apps, mobile website, or text messages, See p. 34
“Virtual Wallet” – use PIN to pay a bill via your cell phone on an app
“Tap-and-Pay” – get to an app on your phone to tap OR wave your phone at the register to pay the bill”
“Apple Pay” – uses your fingerprint to use an app to pay a bill
8. P2P (Person-to-person payment service) p. 34
· PayPal
· Need cell phone number or email address of recipient
· AKA: “payment portal”
9. Wiring Money – see Letter G above
III. Financial Institutions & Non-Bank Companies
A. Banks – provide other services, other than bank accounts; insured by FDIC (Federal Deposit Insurance Corporation—up to $250,000 per account)
e.g. safe deposit boxes, credit cards
B. Credit Unions
§ Not-for-profit financial institutions
§ Offer most services as banks
§ Better loan rates
§ Belong to a work union – steel workers, plumbers
§ Insured by NCUA (National Credit Union Administration)
§ Go to: www.mycreditUnion.gov to see if its insured
C. Check-Cashing Stores/Businesses – a non-bank business to make big profits
1. Payday Loans – leave a postdated check until your “payday”; they advance you money in a loan form
· They cash your check on the day you get paid
· You walk in to pay in cash, they give you back your postdated check
§ Take a portion of your check (fees) -- $4 per $100 of check you cash
2. Cash your paychecks for a fee
3. Give loans with car titles
Both of these are NOT recommended practices!!!!
e.g. MoneyNow USA, Car Title Loans, Loan Max, Check Into Cash, Check-n-Go
D. Grocery Stores/Retailers
§ DO cash checks, pay utility bills, sell money orders, send wire transfers (Western Union), sell you prepaid gift/debit cards
§ DON’T offer bank accounts, paying you interest; don’t sell you cashier’s checks, certified checks, traveler’s checks
E. Pawnshops
1. “Sell” valuables for less than their full value
2. Give short term “loans” using valuables as collateral (back up) up to 50% of the value
· If you don’t pay back loan + interest + fees, shop keeps the item to sell in the store
3. Should be last option for getting cash!!!
4. You can sell your assets outright (don’t want the item back, you just want the cash)
IV. SERVICES OF FINANCIAL INSTITUTIONS (Banks & Credit Unions)
A. Automatic Deposits/Transfers – between accounts
B. Online Bill Pay
· Saves time & money (on stamps)
· Prevents late fees
· Safer, as not sitting in mailbox
C. Text Message/Email Alerts – balances, etc.
D. Cashier’s checks (not from a “cashier” from a store), money orders, certified checks, wire transferring, traveler’s checks
V. FRAUD & PRECAUTIONS WITH FRAUD
A. Never use Debit card for on-line or telephone purchases – use VISA, MC, AMEX
B. Never carry your original Social Security card with you – not on your driver’s license any more
C. Watch for purse thieves & pickpockets!
D. Protect your PIN! – only use it at an ATM
E. Shred everything that has your personal information on it (great Christmas gift for the family? – a shredder)
“Dumpster diving” – a Spongebob episode?? J
F. Wi-Fi signals are wide open for thieves!
· Don’t log in to on-line banking websites
G. Websites should have “https” to indicate it’s a secure site
H. Age doesn’t matter to thieves!
· Under 18 & senior citizens are most vulnerable with stolen Social Security numbers
· “Pull” your credit report (Mod. 2) as soon as you have a bill in your own name!
I. Skimming – “skim” data from the magnetic strip on credit/debit cards via a skimmer
· Servers in restaurants/Salespeople have their own card reader that they secretly swipe when they are out of your sight
· Device that was attached to an ATM that records your PIN entry (also via hidden cameras)
J. Phishing
1. Scammers “fish” for your personal financial information – will ask you to re-enter your account numbers, passwords, social security numbers, etc.
2. Can happen via email, text messages, or telephone call
3. Do not reply & never answer questions pertaining to your bank accounts, Social Security number, etc. if the person CONTACTED YOU
· If YOU initiated the contact, then it’s okay to do
4. Contact the “represented” company to report that this happened – they will ask you to forward the message to them
5. Hit “reply” to emails, but DON’T reply – look at return email address carefully
6. Can also be a POP UP box that appears on your computer when you are on the Internet—it pulls info from your computer
K. Social Engineering – don’t “friend or follow” people you don’t know; profile created just to friend you & steal from you in the future (house); impersonation
e.g. Twitter, Facebook, Snapchat, Instagram
L. Identity Theft – When someone uses your personal information without your permission to commit fraud or other crimes; one of the FASTEST-GROWING crimes in America!!
· Watch “The Net” & “Identity Theft”!!
· Stolen purses (social security cards, license, etc.)
· Stolen from your mail
· Stolen from recent purchases made at businesses Credit Card Fraud – When someone intentionally uses your credit account to steal money or goods
M. Dumpster Diving – thieves going through trash to find blank applications, social security numbers, account numbers, etc. to steal your identity or your money
· Should always shred! If your household doesn’t own a shredder, buy one as a gift!
N. Scams – fake offer, sale or other gimmick asking you for money
· Bernie Madoff & his ponzi schemes – research him!!
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