Checking Accounts

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Chapter 9

• Checking Accounts

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Check, Checking Acct., Demand Deposit

• Check-is a written order to a bank to pay
  someone.
• Checking Account- allows depositors to write
  checks.
• Demand Deposit- money withdrawn at anytime,
  checking account.

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Checks Life Cycle

• Payee cashes check
• Bank with check send it to your bank
• Your bank withdraws money to sends to other bank
• Your bank stamps check saying it has cleared
• Cancelled check- check that bears banks stamp

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Checking account offers several advantages

• Convenient to pay bills
• Checks are safer than cash
• Built in record keeping
• Access to other bank servicesATM

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Responsibilities of Checking Account

• Write checks carefully and keep accurate record
• Verify the accuracy of the bank
• Keep cancelled checks for records

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Overdraft

• Overdraft- is a check written for more money than
  your account contains
• Charged a fee or receive fine

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Floating Checks

• Floating check- is writing a check hoping it
  wont be cashed until a deposit occurs

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Opening a Checking Account

• Fill out a form, sign signature card, deposit
  money

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Parts of a Check

• Check number
• ABA number-location and district of bank
• Makers name and address
• Date
• Payee
• Numeric Amount
• Written Amount
• Signature
• Account and routing number
• Memo

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Using your checking account

• Writing checks do the following
• Use pen, dark one
• Write legibly
• Sign your name like signature card
• Avoid mistakes-if you do, write VOID on check
• Be sure you have money in your account

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Paying Bills Online

• Must register on their web-site
• Establish password
• Set up list of payees
• Banks may charge

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Make Deposits

• Complete a deposit slip each time of deposit
• Properly endorse the check(s)

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Checkbook Register

• Checkbook register- is a booklet used to record
  checking account transactions
• Guidelines for use
• Record current balance at the top
• Record each transaction as soon as it happens
• Write check number and transaction type
• Write date of transaction
• Enter name and/or description of check
• If writing a check then place amount in debit
  column
• If you have a fee write it in fee column, then
  add it to the amount of check
• When deposit money place in credit column and add
  to balance
• At end of the month when check statement comes
  place a check mark in front of check.

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Reconciliation

• Reconciliation- is a process of watching your
  checkbook register with the bank statement
• Occurs once a month
• If balances dont match double check your
  addition and subtraction
• Complete as soon as possible so you can contact
  the bank if problems occur

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Endorsing Checks

• Must be done before cashing
• Everyone listed on the check must endorse
• Must be done in ink

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Blank Endorsement

• Signature of just payee

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Special Endorsement

• Or endorsement in full, an endorsement that
  transfers the right to cash the check to someone
  else.

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Restrictive Endorsement

• Restricts or limits the use of a check safer than
  a blank endorsement

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Types of Checking Accounts

• Joint Accounts
• Special Accounts
• Standard Accounts
• Interest-Bearing Accounts
• Share Accounts

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Joint Accounts

• Opened by 2 or more people
• Survivorship account- any person who signs on the
  account has the right to the entire amount
  deposited
• Or account-1 signature
• And account-both signature

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Special Accounts

• Small activity checking account
• Pay fees for service used

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Standard Accounts

• Set monthly service fee, can avoid by meeting
  minimum standards
• Give package services

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Interest-Bearing Accounts

• interest-bearing accounts- are checking accounts
  in which you can earn money having money over
  minimum
• Average-daily balance method triggers a fee or
  service charge if you dont meet minimum balance
• Keeping money in these accounts can cost you
  money in interest lost, because you could have
  inverted else where.

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Share Accounts

• Share accounts- are checking accounts with low or
  no average daily balance requirement and no
  service fees
• Credit Unions offer these

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Chapter 9-2

• Other Banking Services

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Other Banking Services

• Online Banking
• Certified Checks
• Money Orders
• Debit Cards
• Telephone Banking
• Cashiers Checks

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TIP

• Most banks offer FDIC insurance-protects deposits
  up to 100,000 per amount
• Federal
• Deposit
• Insurance
• Corporation

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Certified Checks

• Personal check that a bank guarantees to be good
• Most banks charge a fee for doing this
• Immediately deduct money and stamp it certified

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Cashiers Check

• Or bank draft, check written by a bank on its own
  funds
• You pay for the check, the teller fills it out
  and an officer of the bank signs it
• May need to owe if your credit is in question
• May also be used if you want to remain anonymous
• May be charged a fee for this

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Money Order

• Like a check, but can never bounce
• For people who dont have a checking account or
  dont want to use cash
• May obtain these at post offices or retail stores
• May be charged a fee

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Debit Cards

• Allow for immediate deduction from checking
  account
• When merchant presents card, receipt to bank
  money is withdrawn
• Bank may charge a fee
• May be used for cash at ATMs

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Bank Credit Cards

• Must apply for to get full service
• Banks offer national credit cards such as VISA or
  MasterCard's.
• Usually charge fees and interest

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Automated Teller Machines-ATM

• EFT Electronic Funds Transfer
• Can make cash withdrawals or check deposits or
  pay loans.
• Must know PIN in order use

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Online Telephone Banking

• Give you access to your accounts from computer or
  phone
• Allow you to transfer money, pay bills, see
  balances, cleared checks
• Access 24 hours

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Stop Payment

• Request to not cash a specific check
• Usually due to lost or stolen check
• Most banks charge a fee
• Good for 6 months

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Safe Deposit Boxes

• Place to store particularly valuable items
• Yearly fee to have one
• Common items placed are birth certificates,
  stocks/bonds, deeds, mortgages, jewelry, coin
  collection

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Loans and Trusts

• Loans can be for cars, homes, vacations, home
  improvements, etc..
• Banks can provide advice for estate planning and
  trusts
• Trustee-a person or an institution that manages
  property for the benefit of someone else.

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Financial Services

• Larger banks offer financial services such as
  purchasing or selling savings bonds and
  investment services.
• Generally no fee to buy or sell bonds.

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Bank Fees

• Banks charge fees to help cover operating costs.
• Non-costumers pay fees for cashing checks or
  possibly get refused
• Non-costumers pay fees for services that
  depositors normally dont.
• Best way to avoid fees is to sign up for an
  account that fits your needs
• Shop around when looking for banks
• Be aware of rules of your accounts