Here is how the class progressed yesterday, our third day with the Checking unit:

• Agenda slides
  • Question: How Should You Pay a Hotel Bill?
  • Review Overdraft Fee Analysis
  • Reading the Fine Print Activity
  • Managing Your Checking Account simulations

• I opened the class by having students look at a disclosure on the hotel reception desk at the Marriott near Sacramento that I stayed at this weekend. I asked them to answer two questions after reading this:
  • What does this disclosure mean?
    • The hotel is telling the traveller that if they use their debit card, the hotel will place a hold on funds for the cost of the room as well as $51 per day in incidentals. The implication is that if their account does not have sufficient funds to cover BOTH the cost of the hotel room and the incidentals then they may overdraw their account. The hotel is washing their hands of any potential fees that might arise from this practice.
  • Credit or debit? What would they use to pay the hotel bill?
    • Unless students felt comfortable that their checking accounts had sufficient balances to cover this, they would likely choose to use their credit cards.

• Overdraft Fee Analysis recap: Most students completed this activity during last class but I gave them a few minutes to complete and/or discuss with their teammates. Each group of three students had a different bank to analyze.
  • Key points during review
    • Students needed to order the transactions from highest to lowest since many banks do this in order to maximize overdraft fees.
    • The overdraft fees charged varied by bank which students quickly grasped.
    • The amount that the account was overdrawn needs to be repaid (with interest) in addition to the overdraft fees.
•   I was inspired at this point to ask for a volunteer as I wanted to see how this overdraft decision gets made in practice. I played a bank representative and the student, well, played a student.
  • Student volunteer asked to open a checking account
  • I immediately went into sales mode, telling the student about all the advantages of choosing overdraft protection. I aggressive tried to get her to say “yes” for overdraft protection. She didn’t take the bait however and walked out without signing up for it.
    • I told students that they should expect this pressure at the bank branch. In fact, a major bank was recently sued for pressuring salespeople to sign customers up for services like overdraft protection.
• Next, students reviewed a major bank’s checking account disclosures and answered the following questions to test their knowledge (here , here, here, here and here)
  • They seemed to grasp this concept of overdraft as they applied the terms of the checking account agreement to real-life situations.
• For the last 30 minutes, students got an opportunity to practice common checking account transactions using a series of simulations that we had curated (contact me if you want the direct links), such as:
  • Reading an Account Statement
  • Using an ATM
  • Paying with a Debit Card
  • Writing a check
  • Depositing a check
  • Paying bills
  • Balancing a Checking account

On the way out the door, I asked students what they learned during class today and was surprised how many noted that they didn’t have any experience with bank accounts and appreciated the chance to practice those skills.

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.