Opening a Checking Account

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Chapter 26

• Opening a Checking Account

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Advantages of Checking Account

• Convenience spend money through paper (checks)
  or the EFT systems.
• Safety from physically being damaged, or from
  careless spending
• Proof of Payment once the check is cashed, it
  is a legal proof of payment
• Record of Finances the bank will provide a
  record of finances, demonstrating how necessary
  it is to keep track of all deposits and credits

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Types of Checking Accounts

• Regular Checking Accounts best when planning on
  writing a lot of checks.
• There is not a service charge on most regular
  checking accounts.
• Minimum balance stated amount that the account
  must not fall below.
• Average monthly balance the sum of the daily
  balance divided by the number of days in the
  month. This average needs to stay above a certain
  point, in order to avoid a service charge.

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Additional Charge

• Service Charge a fee a bank charges for
  handling a checking account.

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Types of Checking Accounts

• Interest Checking Accounts These accounts make
  it possible for a checking account to earn
  interest on the amount kept in the bank.
• However, if this is the account that you want,
  there is normally a minimum balance or minimum
  average monthly balance of at least 500.

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Money Market Rate

• The interest rate that big users of money, such
  as governments and large corporations, pay when
  they borrow money.
• As this rate changes, so does the rate the banks
  pay holders of certain accounts.

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Other Types of Checking Accounts

• Credit Union provide checking accounts for its
  members.
• Members are called Shareholders when they have
  money on deposit.
• Their checks are called Sharedrafts.
• With these accounts, interest rates may vary and
  the number of sharedrafts per month may be
  limited.

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Opening a Checking Account

• Signature Card The official card which the
  depositor signs, and the bank keeps, in order to
  use it as an official signature.
• Joint Account when two people and more have an
  account together.
• Deposit Slip a form on which you list all items
  you are depositing currency, coins, and checks.

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Endorsing Checks for Making Deposits

• Endorsement
• is written evidence that you received payment or
  that you transferred your right of receiving
  payment to someone else.

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Purposes of Endorsements

• 1 Endorsements allow the recipient of the check
  to cash, deposit, or transfer it to someone else.
• 2 Endorsements serve as legal evidence that the
  receiver cashed or transferred the check to
  someone else.

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Purposes of Endorsements

• 3 Endorsements mean that the endorser will pay
  the check in case the next owner of the check
  cannot collect the money.

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Placement of Endorsement

• The bank has a stamp that they must put on the
  back of the check
• The signature of the endorser must sign in the
  designated area of the check
• If the check is not signed in the right spot, it
  is not legible, or incomplete, the check may be
  returned.

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Types of Endorsements

• Blank Endorsement
• consists of only the endorsers name.
• makes a check payable to anyone who has the
  check.
• Special Endorsement
• includes the name of the person to whom the check
  has been transferred.

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More types of Endorsements

• Restrictive Endorsements
• limits the use of the check to the purpose given
  in the endorsement.
• For deposit only the check may only be
  deposited in your account.

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Recording the Deposit

• Deposits can be made
• At the bank
• At an ATM
• Or sent through the mail

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Recording the Deposit

• Checkbooks contain forms on which a depositor
  writes a record of deposits made and checks
  written.
• Check Stub
• Attached to each check
• Check Register
• Booklet designed to record and keep track of
  funds in a checking account.

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