OPENING A CHECKING ACCOUNT

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OPENING A CHECKING ACCOUNT
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Vocabulary

• Fee charged by a bank for handling a checking
  account
• Service charge
• A minimum amount that an account balance must not
  fall below during one month
• Minimum monthly balance

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• An average balance of an account for a month
• Average monthly balance
• The interest rate big users of money must pay
  when they borrow money
• Money market
• A withdrawal made from an account at a credit
  union rate
• Sharedraft

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• Members of a credit union
• Shareholders
• The banks official record of your signature
• Signature card
• Two or more people owning a checking account
• Joint account

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• A form which lists all items you are depositing
  (currency, coins, or checks)
• Deposit slip
• Paper money - 1, 5, 10, 20, etc
• Currency
• Change - pennies, nickels, dimes, quarters
• Coin

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• The number in the upper right corner of each
  check which ids the city, bank and federal
  reserve number that the checking account is from
  
• 6-235 .
• 520
• American bankers association bank number
• Written evidence you have received payment or
  transferred your right of receiving payment
• Endorsement

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• Only the persons name the check is made out to
• Blank endorsement
• Includes the person the check is made out to
  the person the check is being transferred to
• Special endorsement
• Limits the use of the check
• Restrictive endorsement

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• An extension of a check which stays in the check
  book with lines to record the previous balance,
  deposits, check amount, new balance
• Check stub
• A book the size of the checks with lines to
  record the same information as the check stub
• Check register

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ADVANTAGES OF CHECKING ACCOUNTS

• 1. Convenience Saving Time Money
• paying bills by mail
• use the EFT system to pay bills

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• 2. Safety
• you only need a small amount of cash on hand
• you dont have to send cash through the mail
• your deposit is covered up to 100,000 if you
  bank at an FDIC insured bank

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• 3. Proof of payment
• Once a check is cashed it is legal proof of
  payment
• 4. Record of Finances
• provides a record of all cash coming in and going
  out of the account

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TYPES OF CHECKING ACCOUNTS

• Comparison shopping for a bank allows you to
  choose the one that best suits your needs
• Avoids unnecessary bank expenses

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Two types of Checking Accounts

• 1. Regular Checking
• Usually charges a service charge if a minimum
  balance is not kept in the checking account
• May not charge the fee if a high balance is kept
  in a savings account

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• 2. Interest Checking Account
• (NOW accounts)
• Interest is paid by the bank to individuals who
  maintain a minimum balance
• the interest rate is tied to the money market
  rate
• (Super NOW accounts)
• Requires a minimum balance usually over 1500

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• Other Types of Checking Accounts
• Used when writing a few checks a month
• Requires no or low minimum monthly balance
• Small charge for writing checks (.10-.20 each)
• May be a small set monthly fee
• Checking accounts for students
• usually all services are free except printing of
  checks

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OPENING A CHECKING ACCOUNT

• 1. Fill out a signature card
• prevents unauthorized use of your account
• in a joint account all owners must sign the
  signature card
• business signature cards show the business name
  and individuals authorized to write checks

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• 2. Make the first deposit
• fill out the deposit slip
• this shows your name, account number, date, all
  items being deposited

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• Fill out a signature card
• prevents unauthorized use of your account
• in a joint account, all owners must sign the
  signature card
• business signature cards show the business name
  and individuals authorized to write checks

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• 4. Make the first deposit
• fill out the deposit slip
• shows your name, account number, date, all
  items being deposited
• Identify each check listed by the American Bank
  Association bank ID

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• American Bank Association bank ID located in
  the upper right corner of the check
• first part of the number above the line is the
  city/state location of the bank
• second part above the line is the assigned to
  the individual bank
• the number below the line is the Federal Reserve
  number used in sorting checks

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Endorsing Checks

• Purpose of endorsements
• allow recipient of check to cash, deposit or
  transfer it to someone
• legal evidence the receiver cashed or transferred
  the check
• the endorser will pay the check in case the next
  owner cannot collect the money

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• Kinds of Endorsements
• Blank
• Only the endorsers name anyone can use the
  check
• Special
• Allows the endorser to assign the check over to
  someone else
• Restrictive
• limits the use of the check to the purpose in the
  endorsement (Deposit Only)

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Recording the Deposit

• The amount of the deposit needs to be written on
  the current check stub or in a check register
  IMMEDIATELY