Banking

By the end of the unit, students can

• compare checking and savings accounts by APY and fees, and decide how much belongs in each
• explain how a credit union differs from a bank, and when each one wins
• tell APY from APR and fixed rates from variable ones, and say where interest rates come from
• explain what FDIC and NCUA insurance cover and what they don’t
• weigh an online bank’s higher rates against what you give up

The lessons

Each ends with a one-question check, and students who pass the unit quiz can go on to three optional stages of harder lessons, for bronze, silver and gold medals.

1. 2.1Checking vs. savings6 min

   Fifty cents a year or two hundred. Same money, same risk, different bank name.

2. 2.2Credit unions6 min

   A bank has shareholders to pay. A credit union has members who own it.

3. 2.3Interest rates7 min

   Interest is rent on money. Everything else is details about how the rent gets calculated.

4. 2.4FDIC insurance6 min

   The insurance works mostly by never needing to be used.

5. 2.5Online banking6 min

   No branches means no rent, and they hand some of that back as interest.

New Jersey Standard 9.1

The grade 12 expectations this unit teaches, quoted from the state’s standard. See the full alignment for every unit.

• 9.1.12.PB.6Covered

  Describe and calculate interest and fees that are applied to various forms of spending, debt and saving.

  In this unit: Interest rates, Checking vs. savings

• 9.1.12.CDM.6Covered

  Compute and assess the accumulating effect of interest paid over time when using a variety of sources of credit (e.g., student loans, credit cards, auto loans, mortgages, etc.).

  In this unit: Interest rates

• 9.1.12.CDM.8Covered

  Compare and compute interest and compound interest and develop an amortization table using business tools.

  In this unit: Interest rates

• 9.1.12.CDM.9Covered

  Summarize the causes and consequences of personal and corporate bankruptcy and evaluate the implications for self and others.

  In this unit: Anatomy of a failure: Silicon Valley Bank (Silver stage)

• 9.1.12.CP.1Partly covered

  Summarize how one’s credit history can affect finances, including loan terms, employment, and qualifying for loans.

  In this unit: How a loan gets its interest rate (Gold stage)

  Loan terms and approval are covered; employment checks are not.

• 9.1.12.EG.6Covered

  Analyze the rights and responsibilities of buyers and sellers under consumer protection laws.

  In this unit: Holds, pending charges, and clearing (Bronze stage), FDIC insurance

• 9.1.12.FI.2Covered

  Explain ways to manage your accounts that maximize benefits and provide you with the utmost protection.

  In this unit: Checking vs. savings, FDIC insurance, Online banking, Sweeps, money funds, and idle cash (Silver stage)

• 9.1.12.FI.3Covered

  Develop a plan that uses the services of various financial institutions to prepare for long term personal and family goals (e.g., college, retirement).

  In this unit: CD math: ladders and early exits (Bronze stage)

• 9.1.12.FI.4Partly covered

  Research benefits and drawbacks of products offered by financial and non-financial companies (e.g., banks, credit unions, check-cashing stores, product warranty insurance).

  In this unit: Credit unions, Online banking

  Check-cashing stores are not covered.

• 9.1.12.RM.4Partly covered

  Determine when and why it may be appropriate for the government to provide insurance coverage rather than private industry.

  In this unit: FDIC insurance, What the FDIC actually does (Silver stage)

Questions for discussion

1. The same savings can earn fifty cents a year at one bank and two hundred dollars at another, with the same risk. Why do so many people leave their savings where it earns almost nothing?
2. An app says your money is “FDIC insured.” What would you want to check before believing that covers you if the app itself goes under?
3. Would you rather keep your money at a big bank, a credit union or an online bank? What would change your answer?