HDF 322 1st Edition Lecture 13 Outline of Last Lecture I Taxes and Financial Planning Outline of Current Lecture II Electronic Funds Transfer III EFT Constraints IV Opportunity Costs of Financial Services V Comparing Financial Institutions VI New Regulations VII Durbin Amendment VIII Money Market Account and Money Market Mutual Funds IX Payment Methods Current Lecture I Electronic Funds Transfer this is very old came out in late 70s this allowed automation digital to go into the banking system ATM machines were quickly adapted to our management of cash we use them and can do various things with an ATM machines but mostly withdrawals pay by phone really adapted by savings and loans direct deposits withdrawals they were very popular employers and federal govt quickly adapted they want anyone to have direct deposit saves money to do this way and some banks give you lower or no fee if you do this POS transfers these now have overtaken credit cards and is most popular type of plasticsdebit cards have really been adapted in last 5 10 years and came about bc of Dodd Frank Act II EFT Constraints These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute theres liabilities with these theres not ability to stop payment once it goes through its done 60 days to report mistake on statements if not they don t have to do anything by law for loss or misuse for the first 2 business days you have only 50 liability if someone uses your card unauthorized within 2 days your liability is max 50 as long as you report it missing if its 3 60 then its liability 500 so if they took out 400 you could be liable for that wont be reimbursed so need some management with debit cards III Opportunity Costs of Financial Services from text about opportunity costs there is opp costs using cash management using as an investment IV Comparing Financial Institutions think about comparing institutions you can do this when considering how to manage cash ON EXAM YOU WILL DO A COMPARISON what is the best return credit unions have best return over commercial banks and credit unions usually have lower fees bc credit unions are owend by policy people who use are members and they get special tax breaks and so people aren t happy with that what to keep costs low bc it can add up want to be able to borrow money V New Regulations new regulations indicate that you can no longer be forced to pay an overdraft service for an ATM or a one time debit card people would go over their account balance and they with hit them with a huge fee so they set a law that you have to OPT IN that means you got notices asking you if you wanted to OPT IN agree to have overdraft fee charged to ATM transaction or debit transaction that went over your balance SAY NO also when you use a plastic card to put a hold on something a motel room they will put a hold on that MONEY or even a double charge so the money is still there but has a hold on it and cant be used VI Durbin Amendment Dodd Frank law went into effect on this act we were saying these fees are too high 2 75 for ATM and all diff fees that were bringing in billions of dollars to banks so what we had was debit fees being assessed were now controlled under Dodd Frank act for every debit transaction its no longer percentage of transaction of retailer charging bank they set an amount that was limited debit account cost is 21 cents per debit Then 3 basis points 03 of the transaction amount is what retailer has to pay this reduced over 9 billion dollars that institutions were getting VII Money Market Account and Money Market Mutual Funds funds used to have higher return and required larger deposit and accounts you could put a check in it with funds you had to write big checks 500 dollars or more with account you could write 3 checks a month and then charged 15 dollars a check after but they could be any size they controlled how many checks you wrote account market controlled size of check you wrote VIII Payment Methods debit cards can be online that s where its connected electronically to your bank 0 so retailer pulls money off at purchase if off line will be a couple of days before you see it on yoru account store valued cards and smart cards more rules to gift cards that are more friendly to consumers