Day 5 of the 24 Hour Personal Finance Course: Checking Account Case Study

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Feb 11, 2016
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Behavioral Finance, Savings, Checking Accounts, Teaching Strategies, Case Study, Tips for Teachers

Closing out our checking unit yesterday, the students completed the NGPF case study, Bank On This. Here is how the 90 minute class proceeded:

  • Two Google slides to prep the class
    • Case study prep: how students should think about reading, analyzing, answering questions and discussing a case study
    • Time allocations
      • Work independently to read and answer questions in case (30 minutes, which was about right; those who finished early had a checking account reconciliation activity that wasn’t completed last class)
      • Small group discussion (15 minutes)
      • Whole class discussion (30 minutes)
  • Students work independently completing the case study “Bank On This.”
    • Observations from walking around class
      • Exhibit 1: Chart of three checking account options solicited the most questions:
        • Is interest good or bad for a checking account?
        • What are wire transfer fees?
        • What fees are waived if you have more than the minimum balance?
        • What does “in network” mean in regards to Chance’s ATMs?
        • Many students struggled with figuring out which factors should matter when given the 8 criteria listed
          • Key insight: have to provide tools to think through decisions like this and using evidence to make their points
          • When picking banks (question #6), many students provided superficial responses:
            • “..because it has what she needs.”
            • “…has lots of ATM locations.”
            • “…because it has the lowest amount of fees that she may have to pay.” The bank chosen was the high fee bank!
            • “…because it has what she wants.”
    • Engagement level was high as many of these students do not have checking accounts today and will be picking one soon.
  • Small group discussion (15 minutes): Students discuss the case with two other students with the focus on the bank they chose for Janet and the reasons why. Once they had each discussed this, they went back through the case to review answers to the other challenging questions.
    • Had to let groups know that the goal was not to have consensus but to have students challenge each other’s assumptions and rationales.
    • Pushed on students to use the data in Exhibit 1 in order to form their opinion and not provide generalized answer to explain their checking account choice.
  • Large group discussion (30 minutes):
    • Kick-off: Called on one student to set the context for the case:
      • What role are they playing?
      • What is the problem that they were trying to solve?
      • What is Janet looking for? What are her needs that we need to be sure are addressed?
    • The Build-Up: Progression of questions that I asked (using case as guide but careful to keep conversation flowing instead of asking question by question):
      • Are Janet’s needs likely to be met by a standard savings account?
      • What do you think Janet might be leaving out that she should consider?
      • What savings goal would you help Janet set?
        • Fixed percentage of her pay or $ amount were most frequent answers
        • Forced students to give a specific %age or dollar amount and then explain why
        • Calculated as a group what such a savings goal would be over one year and the three years before she started college and whether they thought this would be sufficient
        • One student noted that she should save almost all of it since she was spending on wants vs. needs.
        • Next time: What might Janet ask her parents that would help her set a more concrete goal?
      • Most students understood the advantages of having both a savings and checking account and dividing up the cash that Janet received between the two.
    • The Data: Focused a good 10 minutes on Exhibit 1:
      • Lots of factors in this table. Which ones do you think matter most to Janet?
        • A student honed on ATM fees and ATM locations since this could be a factor when she goes away to college.
        • Another student brought up Overdraft Fees with another student weighing in that they didn’t think those fees should matter since Janet shouldn’t opt in to overdraft protection.
        • When a student said interest rates were “so much higher” at Chance Bank, I asked them..
          • How much they thought Janet would have in the account (about $1,000 they responded).
          • How much interest they would earn with each of these accounts in interest (from $0.50 to $5.00 per YEAR assuming $1,000 balance).
          • Do they still think that interest rate should be an important factor?
          • Do you think monthly fees (0-$5 per month) is more/less significant than interest rates?
      • Takeaway: Table like this really helps students understand these terms in context and tighten up their learning.
    • The Parents: No one had brought up the parental influences, so I thought I better before we got to the decision.
      • What role do you think that Janet’s parents are playing in this decision? Should that matter?
      • What should Janet ask her parents that might help in this decision?
        • A nudge to try and initiate the conversation about college (What will I be responsible for?)
      • Besides having accounts at the same bank, how might her parents be able to transfer money to Janet? What might be the disadvantage of that approach (primarily time)?
    • The Decision:
      • Which bank would you recommend for Janet?
        • Almost all students chose Chance Bank and had good data to support their decision
        • One (courageous) student chose Tinker Bank and cited the ease of money transfers between Janet and her parents.
      • Should she choose overdraft protection?
        • Almost all students said “No.”
        • Last class we had an Overdraft Activity and students saw first-hand how the fees for overdraft accumulate quickly.
      • The discussion then turned to “What can she do to protect herself from overdrawing her account?”
        • When a student answered that she could set up text alerts, I asked students who had checking accounts if they had text alerts and if so what limits did they set on those alerts.
        • Another student suggested setting limits on how much she could take out of ATM at one time.
  • The Takeaways:
    • Called on several students to summarize a key takeaway from the case to close out the class

What one thing would I change for next time I do this case?

  • Find more ways to incorporate student’s personal stories about their checking accounts into the discussion.  I did this late in the discussion and should have found more opportunities.

 

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.