Banking 101 guide Banking can be confusing!

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1 Banking 101 Guide Banking can be confusing! To make it easier, we ve compiled this guide and a list of common banking terms and definitions associated with Higher One and your Higher One checking account.

2 Intro / Chapter One Chapter Two Glossary of Banking Terms

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4 Introduction Welcome to Higher One s Banking 101 Guide. This guide was developed to help students learn about bank accounts and Higher One s exciting checking account choices. The guide is divided into two chapters. Chapter One provides answers to basic questions about bank accounts. This is a great resource for anyone who is new to banking or would simply like to review the basic features and rules associated with having an account. Chapter Two is devoted to specific questions about Higher One checking accounts teaching you how to make the most of your account. So, without further ado, let s get started! Chapter One: Banking Accounts Made Simple What is a bank account? A bank account is a financial account with a bank or other financial institution that allows you to deposit and withdraw money. In other words, it is a place to keep and manage your money safely. There are several types of bank accounts. The most common are: Checking Accounts: A checking account is used to deposit your money including paychecks, cash or refund checks and to pay for short-term expenses such as rent, groceries or insurance. You can take out (withdraw) money from your checking account by using a debit or check card, writing checks or withdrawing cash from an ATM (Automatic Teller Machine). Savings Accounts: The purpose of a savings account is to put money away for longer-term needs or emergencies. Money deposited in a savings account earns interest. Interest is the amount of money you earn calculated as a percentage of the money you have in your account. The bank or financial institution where you have your account pays interest for the privilege of using your money for other purposes such as providing loans to other customers. Interest-bearing Checking Accounts: Some banks offer interest-bearing (or paying) accounts. The amount of interest paid is usually much lower than a traditional savings account and often you are required to keep a certain amount of money (a minimum balance) in the account. Certificate of Deposit (CD) Accounts: A CD is a type of investment account in which you agree to let the bank or financial institution keep your money for a specific period of time. The bank, in turn, agrees to pay you a specific rate of interest on the money you keep in the account. The period of time often varies from 3 months to several years. The longer the timeframe and the greater the amount of money deposited, the higher the rate of interest paid. However, there is usually a penalty if you take your money out before the end of the agreed upon timeframe. Why is having a bank account important? There are several important reasons for having a bank account, including: Safety: Keeping your money in a bank account is safer than keeping cash in your home where it could be stolen, misplaced or lost in a fire. And you don t have to worry about the bank losing your money or not being able to pay it back. That s because the Federal Deposit Insurance Corporation (FDIC) insures bank account deposits up to $250,000 per depositor, per insured depository institution, for each account ownership category. 4 Convenience: It is really easy to pay your bills with a bank account. Today s technology offers lots of choices including debit cards, online bill paying, automatic bill paying, and checks. There also are easy ways to deposit money. For example, you can have your paycheck directly deposited which saves you a trip to the bank and provides you with certainty that your money will be there when you need it.

5 Money Management: Having a bank account establishes a paper trail of all your transactions. Simply put, it helps you know where your money is going. It also provides you a record of payments in case, for example, a company denies receiving a payment. Many financial institutions now offer online banking which makes it fast and easy to check your balances and keep track of your transactions, (although you should always keep your own record of your deposits and withdrawals). It s also easy to set up an automatic schedule for paying your bills on time. This will help you maintain a good credit history and credit score. Long Term Financial Needs: Opening a bank account allows you to establish a relationship with a financial institution that will be beneficial to you in the future if you require things like a loan for a car or a mortgage for your first home. What is the difference between an online bank and other banks? Online banks offer the same services and protections as regular banks (including things like check writing), but they don t have a physical building. That means all your transactions are performed through a secure, web-based portal or website. Online banking allows you to do all your banking quickly and conveniently. How do I get money out of my account? There are a number of ways to withdraw money from your account including: Debit or Check Card Purchases: Most merchants now allow you to make purchases by using a debit card. To avoid possible PIN-related transaction fees, always choose credit and sign for your purchase (see how to use an account for free below). If you don t see CREDIT as an option, simply select CANCEL or hit NO for more options. You also can use a debit card to make online purchases. Be sure the site is secure and that there is a privacy security system indicator in plain view on the site such as this: Also, never enter your PIN online; select credit instead to ensure your protection and avoid possible PIN-related transaction fees. Using a debit card to make purchases has other advantages. It allows you to keep track of your spending and often provides protection against fraudulent purchases. ATM Withdrawal: You can also use your debit card to make cash withdrawals at an ATM. Usually you can withdraw money for free if you use an ATM operated by your bank or in its network. Be sure to check your bank s fee schedule to fully understand what fees you will be charged if you use another bank s ATM (usually it s called a foreign ATM fee. ) In some cases, both your bank and the ATM-owing bank will assess a fee. Online Bill Pay: You can also pay bills online. It s easy to use and very simple to set up. If you don t already have one, you will have to establish an online account and create a username and password. Then you will be asked to provide information about the merchant or vendor you wish to pay, your account number with that merchant, when you want the bill paid and the amount. You can also set up recurring payments. Recurring payments are bills that are paid every month (or other regular time interval) for the same amount such as a car payment. Be careful when using your debit card to set up recurring payment-type purchases such as furniture or other rentals. Make sure you understand the terms of these purchases and have enough money deposited in your account to pay for these bills when they hit or are presented against your account. 5

6 Personal Checks: While declining in usage and popularity, you also can pay bills or withdraw funds by writing a personal check. Most banks charge you for ordering checks to cover the cost of printing and shipping, so be sure to check your bank s fee schedule. Cash Advance: Some banks allow you to use your debit card for cash advances. This is not a recommended strategy, however may be warranted if you require a cash amount quickly that is over your daily ATM limit. There are fees associated with this kind of transaction, usually based on a percentage of the amount of the withdrawal along with a minimum fee. Be sure to check your bank s fee schedule for their current rates. Official Check: Official checks serve the purpose of showing the merchant, vendor or other recipient that you have the funds available to make the purchase. They are issued by the bank and provide a guarantee that the money is available. You might be asked for an official or bank check when you are making a large purchase such as a car. Online banks usually allow you to order official checks through their online banking site. There are usually fees associated with obtaining official checks, so be sure to check your bank s fee schedule. Wire Transfer: You can also request a wire transfer of money to another bank or financial institution. Once again, there are fees associated with making a wire transfer, so please check your bank s fee schedule. How do I get money in my account with an online bank? There are a number of ways to deposit money into your account if you are using an online bank or other financial institution. The most common and easiest way is to have checks directly deposited. For example, if your college or university owes you a Financial Aid refund, you can choose to have it directly deposited into your bank account. It s also a good idea to have your paycheck directly deposited. Some online banks also allow you to deposit checks by using their ATMs, scanning checks using your computer and more recently through mobile applications which allow you to take a picture of the front and back of your check and send it to your bank. You can also mail checks, have money transferred in from another bank account and wire-in funds. Some online banks provide an online way for family and friends to send money to your account. Check out your online bank s website to find out all the ways to deposit money. What is a debit card? A debit card allows you to make purchases without using cash. It also can be used to withdraw cash from ATMs and make deposits into your bank account. Debit cards are not credit cards. When you use a debit card to make a purchase, the funds come right out of your checking account. When you use a credit card, on the other hand, you are borrowing someone else s money to make a purchase and agreeing to pay it back. Money is not physically stored on your debit card. The debit card contains account information so you can access money you have in your own bank account. What is a bank transaction? A bank transaction is basically a change made to your bank account. Whenever you put money into your account or take money out, it is recorded by the bank as a transaction. This is how you and the bank keep track of how much money you have in your account at all times. When the bank deducts funds from your account to pay a check, the check is considered cleared. Your monthly statement from a bank will include all transactions that occurred on your account over the last month. If your bank is online, you also can check your online statement to see recent transactions. If your bank does not offer online access, you can visit the bank or use a telephone banking system if available to check on recent transactions. 6

7 How do I keep track of my transactions? Even though your bank keeps track of transactions made to your account, it is important that you keep your own records. Most often banks will provide you with what is know as a check register where you can record dates, check numbers and amounts of deposits and withdrawals you make. However with online banking and the growing numbers of ways to get money in and out of your account, a traditional check register might not work for you. Why is it important to reconcile my bank account? There are two main reasons for reconciling your bank account: 1. To make sure the bank did not make a mistake in recording your transactions. 2. To make sure you did not make a mistake or forget about a transaction such as an ATM withdrawal or debit card purchase. Your monthly bank statement rarely matches what you have in your check register because of delays in checks and deposits clearing the account, automatic withdrawals you may not have recorded, bank services fees, etc. Although banks process thousands of transactions a day, they can make mistakes such as depositing someone s check in the wrong account. It is important to catch mistakes immediately. You typically only have 60 days to correct an error so it is important that you verify that all transactions listed on your statement are accurate. If you find an error, be sure to contact your bank right away. In addition, reconciling every month gives you a chance to review how much money you have been depositing in your account (especially if you are saving up for something special) and how you are spending your money. You can check your expenditure patterns against your budget plan to see where you may want to make adjustments in your spending habits. What does reconcile my account mean and how do I do it? It means making sure your bank statement is accurate by checking that the transactions listed on the statement agree with your records. Often times there are transactions you have made since the bank account statement date that are still outstanding. This means they haven t cleared or been posted to your account yet. These transactions could include things such as additional deposits, cash withdrawals and debit card purchases. What is a PIN? A PIN or personal identification number is a secret number code that is used to authenticate a user within a system, such as an online bank account. To withdraw funds from an ATM, for example, a user must insert his or her bank card and then enter a PIN to let the bank know that he or she is authorized to withdraw funds. It is important to keep your PIN a secret so that others cannot gain access to your money. Never write the number on your card and never share it with anyone. 7

8 Chapter Two: How to Use Your Higher One Checking Account Can I use my account for free? It s easy to avoid fees when using your Higher One checking account. Here s how: Always SWIPE & SIGN when making purchases: Select credit instead of debit when paying at the cash register with your card. It is a clever way to avoid the PIN Based Transaction Fee. When you SWIPE & SIGN you are also protected against fraudulent purchases with MasterCard s Zero Liability policy. If you don t see CREDIT as an option, simply select CANCEL or hit NO for more options. Use FREE Higher One ATMs: While you can use your card to withdraw cash at any ATM, use free Higher One ATMs at various campus locations whenever possible to avoid Non-Higher One ATM Fees. Frequently MONITOR your account online: Keep track of the funds you have available for spending and avoid insufficient funds fees by accessing your free online statement or signing up for mobile alerts. It is updated in real-time and available 24 hours, 7 days a week. What does MasterCard Zero Liability mean? This means that you are eligible for protection against fraudulent purchases made with your card when you report a card theft promptly. A complete description of this protection benefit can be found here: What are the Terms and Conditions of my account? It s always a good idea to log in to review all the Terms and Conditions associated with your account. What should I do if I think there is a mistake on my statement? If you think your statement or receipt is wrong, contact Higher One via the website, telephone or mail as soon as possible. We must hear from you no later than 60 days after we sent the FIRST statement on which the problem or error appeared or 60 days from when your account history was first made available to you through the website. 1. Tell us your name, card number and account number (if any). 2. Describe the error or the transfer you are unsure about and explain as clearly as you can why you believe it is an error or why you need more information. 3. Tell us the dollar amount of the suspected error. If you tell us orally, we will require that you send us your complaint or question in writing within 10 business days. We will tell you the results of our investigation within 10 business days (or 20 business days for a new account) after we hear from you and will correct any error promptly. If we need more time, however, we may take up to 45 days to investigate your complaint or question. 8 We may take up to 90 days to investigate your complaint or question for errors involving new accounts, point-of-sale (POS) transactions or foreign initiated transactions. If we decide to do this, we will credit your account within 10 business days for the amount you think is an error, so that you will have the use of the money during the time it takes us to complete our investigation. If we ask you to put your complaint or question in writing and we do not receive it within 10 business days, we may not credit your account. If we decide that there was no error, we will send you a written explanation within three (3) business days after we finish our investigation. If we have provisionally credited your account during the investigation and determine that there was no error, you will be required to return any credit of funds you have received from us. You may ask for copies of the documents that we used in our investigation.

9 What are the fees that I might incur when using the account and how do I avoid them? Fees can be easily avoided. For example: Fee for Using a Non-Higher One ATM: Be sure to use a free Higher One ATMs. A list of ATM locations can be found on your banking website. Merchant PIN-Based Transaction Fee: Instead of entering your Personal Indentification Number (PIN) at checkout, choose CREDIT and sign the receipt to avoid the PIN fee. When merchants process a transaction as a PIN-less debit, the PIN fee cannot be avoided. If the merchant prompts you to enter your PIN, you may have to hit CANCEL to change the payment type to CREDIT. Insufficient Funds Fee, Returned Item or Paid Item: This fee is only assessed if you spend more than the available funds in your account. The majority of account holders never pay an insufficient funds fee. To ensure you re among them, sign up for our Mobile Alerts, track your purchases and pay special attention to purchases made with an e-check or paper check, and via ACH. A complete list of fees and how to avoid them can be found at FeeSchedules.do How can I check my most recent transactions? To check your most recent transactions, simply log into your account. Your most recent transactions are listed right on the Account Summary page. You can also see a list by visiting the Recent Account Activity page: How do I know if I am running low on money? You can check your account balance online anytime, anywhere simply by logging in. You also can sign up for Mobile Alerts and Higher One will alert you when your account is running low, and use Higher One s Mobile App to track balances and stay up-to-date right from your smartphone. Lastly, if you are keeping your own check or transaction register up-to-date, you should have a good idea of how much money you have left in your account and whether or not you need to add money to the account. 9

10 What is a merchant hold and how does it affect access to my money? When using your debit card to make a purchase, some merchants may place a hold on your account to ensure funds are available to cover the cost of the purchase. Most debit purchases remain in a pending status for about five (5) business days to provide merchants enough time to capture and debit the respective cardholder accounts. During this period, the funds are held and deducted from your Higher One account balance but have not yet been transferred to the merchant. Contrary to popular belief, this process is not instantaneous, and can take up to five (5) business days for funds to be deposited in the merchant s account. The merchant s hold on the funds is, however, normally released back into your account if not captured within this timeframe. When viewing your online statement, please take into consideration that merchants do not necessarily report transactions to us in the very order they were originally performed. In some instances, transactions may not appear on your online account activity for one or two days. This can create a false impression of your available balance, thus causing you to spend more than you may actually have in your account. This is another important reason to keep a record of your transactions. How can I deposit money directly? There are several different ways to deposit funds into your Higher One checking account. These include: Transfer Money: If you have another bank account, you can easily set up what is known as a Funding Account to allow funds to be transferred into your account via ACH (i.e. electronic check). Friends and Family: You can also register to have family and friends transfer funds into your Higher One account. Instructions on how to proceed with this option can be found in the Family & Friends section of your program s homepage. Wire Transfer: There are no fees associated with inbound domestic wire transfers though in some instances, the fees associated with international wire transfers from foreign banks may be passed onto the Higher One checking account holder. Direct Deposit: Another great way to add money is to have your paycheck directly deposited into your account. EasyDepost SM : Deposit checks anytime to your Higher One checking account with just a computer and a scanner. It s the innovative way to go paperless and get money into your account fast and easy. EasyDeposit Mobile SM : Take a photo of the check you want to deposit and upload it to your Higher One account for instant deposit right from your smartphone! Paper Deposits: Personal checks, government-issued checks and money orders can be directly mailed to Higher One. Cash-in with MoneyPak : Simply purchase a MoneyPak with cash from any participating retailer and redeem your MoneyPak online to transfer the money to your Higher One checking account in record time. Then use it to make purchases or pay bills online. Learn how, at 10

11 How can I pay my bills online? To use our free Online Bill Pay feature, simply: Log into your account (website is provided on the back of your card). Select Online Bill Pay from the drop-down menu under the Transfers & Payment tab. If this is your first time using this feature, there are complete, step-by-step instructions for adding a bill recipient, scheduling a one-time payment, editing existing recipients, scheduling a recurring payment, etc. How do I set up Mobile Alerts? To stay informed about the status of your refund or changes to your account balance you can sign up for Mobile Alerts to your cell phone. Signing up is simple and free: Log into your online profile. Select Profile, click Mobile Alerts from the sub-menu. Next, choose either Learn More for more information, or Set Up Alerts to use the Mobile Alerts feature. Select the Set Up Alerts option. Click the check box and the Accept Terms and Conditions button. Enter your mobile phone number and service carrier in the new page and click the Submit button to complete your entry. Higher One will send a test alert to your mobile phone, containing a Mobile Confirmation Code. You are required to retrieve the confirmation code for entry into a text box via the Mobile Alerts sub-menu. Follow the easy on-screen instructions to complete the set-up. After successfully confirming your mobile phone number, the next step will be to set up your Mobile Alerts preferences. The preferences consist of Higher One Account Balance Alerts and Refund Status Alerts. Mobile Alerts notify you when: Your refund status changes and when it posts to your account. Your balance changes by an amount you specify. Your balance goes below an amount you specify. You ll also be able to use Text 2 Balance to get your balance anytime. Note: Text message fees by your mobile service provider may apply. Where can I find a glossary of Banking Terms? For your convenience, a glossary of common Bank Terms can be found in the Appendix. 11

12 Glossary of Banking Terms General Banking Terms ACH: An abbreviation for Automated Clearing House, an electronic network for financial transactions in the United States. ACH is responsible for processing large volumes of both credit and debit transactions between financial institutions. Its rules and regulations are governed by The Electronic Payments Association and the Federal Reserve. Electronic payments on utilities, loans and other types of bills are all examples of ACH debit transactions. Specific to Higher One, a student who opts to have their refund deposited directly into an existing bank account would constitute an ACH. In accordance with the rules and regulations governing ACH, no financial institution may simply issue an ACH transaction (whether debit or credit) towards an account without prior authorization from the account holder known as the Receiver. Automated Teller Machine (ATM): A machine that allows you to get cash withdrawals, check balances and transfer funds and in some cases make deposits. ATMs are generally accessible 24 hours a day, 7 days a week. Bank Routing Number: Your bank s unique identification number. It is also known as a routing transit number or RTN. Your routing number is the nine numbers preceding your account number at the bottom left of your check. Check: A negotiable instrument instructing a financial institution to pay a specific amount of currency from an account. Bank Statement: A record of all transactions and debit/credit entries in the form of cash, check or transfer. Cashiers Check: An official check issues by a bank. Cashiers checks are usually treated like cash since most banks clear them instantly. CIP (Customer Identification Program): Federal banking regulations require all financial institutions to obtain, verify and record the identity of their account holders. Credit Card: Plastic cards that can be used by the holder to make purchases or obtain cash advances using a line of credit from the card-issuing financial institution. Debit Card: Plastic cards designed to allow you to access funds in your checking account to purchase goods, obtain cash or transfer funds from one account to another. 12 Direct Deposit: A pre-authorized payment such as a paycheck automatically deposited to your checking account.

13 EFT (Electronic Funds Transfer): The computer-based systems used to perform financial transactions electronically. The term EFT is used to describe a number of different concepts including: Cardholder initiated transactions in which a cardholder makes use of a credit or debit card. Electronic payments by businesses. Electronic check clearing. FDIC-Insured: Federally insured deposits protected by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 per depositor, per insured depository institution, for each account ownership category. Fee Schedule: List of fees charged for various banking services including: wire transfers, overdrafts and Non-Higher One ATM activity. Insufficient Funds: Account status when the account holder s available balance is lower than an amount being debited against the account. Personal Identification Number (PIN): A code used by the account holder to authorize a transaction or obtain information regarding his or her account. Stop Payment: Your legal right to give instruction to the bank for stopping payment of a check before it has been presented for payment. Uncollected Funds: Funds deposited or cashed against an account with a check that has not yet cleared. Financial Institutions typically place a temporary hold on uncollected funds, making those funds unavailable for withdrawal until the time period of the hold expires. Wire Transfer: The electronic transfer of funds from one financial institution to another. 13

14 Higher One Specific Terms Transfer Money: The transferring of funds from an outside bank account to your Higher One checking account. Available Balance: The amount of funds available minus any amount on hold. This includes all activity deposits, credits, withdrawals or debits. EasyHelp SM : Higher One checking account online help available through Higher One 24 hours a day, 7 days a week. Funding Account: The bank account used to add money or fund your Higher One checking account. The funding account is directly linked to your Higher One checking account. Online Bill Pay: The ability for an account holder to pay bills online. Note: This feature is set up through your Higher One checking account. OneRewards: Higher One s cash back program that offers cash back from merchants when using your Higher One card to make purchases. Payee/Payer: Payee the party at the receiving end of a payment. Payer the individual or entity making the payment. Pending Transaction: Once your card is swiped at a merchant s card terminal, the transaction total may be held for a certain length of time, allowing the merchant enough time to debit your Higher One checking account. Refund Preference: The selection of how you d like to receive any refund owed to you from your school. Send Money: The transferring of funds from your Higher One checking account or outside bank account to another Higher One checking account. Swipe & Sign: Phrase used to promote signature based transactions with your Higher One checking account. When using your card for purchases, you can authorize a purchase by using your PIN or by selecting CREDIT and signing the receipt. Note: Signing the receipt is safer and backed by MasterCard s Zero Liability Policy. When you don t see credit as an option, simply select CREDIT. MasterCard Zero Liability policy means you are eligible for protection against fraudulent purchases made with your card when you report the theft promptly. 14 Learn more about terms and details of the Zero Liability provided by Higher One at

15 Accounts held at Cole Taylor Bank and WEX Bank, Member FDIC. The Higher OneCard Debit MasterCard is issued by WEX Bank pursuant to license from MasterCard International Incorporated. The card is administered by Higher One, Inc Higher One, Inc. All Rights Reserved. MasterCard is a registered trademark of MasterCard International Incorporated. All other names and logos are owned by their respective owners.