CHECKING ACCOUNTS

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Chapter 9

• CHECKING ACCOUNTS

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• Financial institutions (like banks and credit
  unions) offer a number of services. Can you name
  a service?

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• The first service you will likely want is a
  Checking Account.
• A checking account is also called a ___
• because the money can be withdrawn at any time,
  that is, on demand
• Can you think of some financial requirements that
  go along with checking accounts?

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• Some institutions charge a fee for checking
  service.
• Some institutions require you maintain a minimum
  balance in your checking account.

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• Checks follow a process through the banking
  system.
• Can you expound on this? What do you remember
  about our study of the Federal Reserve and its
  role?
• Once a check has completed its trip through the
  banking system your bank stamps it as Cleared
  and it becomes a Canceled check

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• What are some of the advantages of using a
  checking account rather than cash?
• Convenient way to pay bills
• Safer than using cash
• Has a built-in record keeping system
• You have access to other banking services

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• What are some of your responsibilities when
  maintaining a checking account?
• Keep accurate record of debits and credits
• credits (deposits) and debits (cks written)
• Write cks legibly
• Verify the accuracy of your bank statement
• Keep canceled checks among your records
• Maintain sufficient funds in your account

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• What does truncation mean?
• This is when banks do not return cancelled
  checks.

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• A check written for more than your account
  contains is called a what?
• An OVERDRAFT
• note A bank receiving an overdraft usually
  stamps is as NSF (not sufficient funds) and this
  means the check has bounced

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• If your check bounces, do you think there are
  financial consequences?
• If so, what are they?
• Fine, imprisonment, or both

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• What is it called when you know your checking
  account has insufficient funds but you are
  expecting a deposit any day than will cover the
  check?
• Answer Floating a Check

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• What is a signature authorization form?
• Open your textbooks to page 200. Notice the
  required information on the form.
• Why might Ardys want to include Mothers Maiden
  name on her form?

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• Signature forms provide an official signature to
  verify checks are not forged.
• Including extra info. Like mothers maiden name
  provides extra security when questioned by a
  teller.

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• Can you name some of the parts of a check?

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• Check number
• ABA Number (ids location and district of the
  bank from which the check is drawn)
• Name and address
• Date
• Payee
• Numeric amount
• Written amount
• Signature
• Account and routing numbers (bank ID code and
  your acct )
• Memo

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• What is a deposit slip?
• Look at the example on page 205. Take note of
  where you enter cash deposited and where you
  enter checks deposited.
• What does this phrase mean Less Cash Received?
  Where do you see this phrase on the deposit slip?

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• What is a checkbook register?
• Lets look at page 206 together. Notice where
  this beginning balance is.
• Notice that debits decrease the running balance
  and credits increase it.
• What are some of the codes listed on the register?

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• You will see these codes
• DEP
• WD
• ON
• SC
• What about this code? DC What does this stand
  for?

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• What are your thoughts about debit cards?
• Do you think they are good or bad?
• What are some of the negative points about debit
  cards? Positive points?
• Do you have a debit card?
• Would you give your child a debit card?

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• What is a Bank Statement?
• What type of information does a bank statement
  provide? (see page 207)

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• What is a Reconciliation Statement?
• Why is this important?
• When doing a reconciliation, what number do you
  begin with? (see page 207)?

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• Yes, you begin with the Ending bank balance on
  your statement.
• You then add any deposits the bank does not now
  about and subtract any checks or other debits the
  bank does not know about.
• This should give you a reconciled total than
  balances with your register total.

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TYPES OF ENDORSEMENTS

• WHAT ARE THE 3 TYPES OF ENDORSEMENTS LISTED IN
  YOUR BOOK?
• Blank
• Special
• Restrictive

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BLANK ENDORSEMENT

• WHAT IS A BLANK ENDORSEMENT?
• An endorsement where the signature of the payee
  is written exactly as it appears on the front of
  the check.
• If a payees name is misspelled, how is he/she to
  sign the back of the check?

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• First, sign it misspelled then spelled correctly.
  (see top of page 210)

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SPECIAL ENDORSEMENT

• WHAT IS A SPECIAL ENDORSEMENT? (also called?)
• ENDORSEMENT IN FULL
• Transfers the right to cash the check to someone
  else.
• In this instance, what words are written on the
  back of the check?

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• Pay to the order of (new payees name). Plus,
  the signature of the original payee.
• Whats an advantage of using a Special
  Endorsement?
• Saves time. Avoids having to cash the check
  before paying new payee.

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RESTRICTIVE ENDORSEMENT

• Restricts or limits the use of a check.
• Can you give an example of when you might use a
  restrictive endorsement?
• Mailing checks to your bank that are written to
  you and you sign the back For Deposit Only and
  add your signature and your account .

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TYPES OF CHECKING ACCOUNTS

• JOINT ACCOUNTS
• SPECIAL ACCOUNTS
• STANDARD ACCOUNTS
• INTEREST-BEARING ACCOUNTS
• SHARE ACCOUNTS

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JOINT

• Can be an or or an and account.
• What does this mean?
• IF it is an or account only one of the two
  signature holders has to sign.
• If it is an and account both holders must sign
  a check.
• This type of account is also called a

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• Survivorship Account because
• If one person on the account dies, the other
  holder received all rights to funds in the
  account.

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SPECIAL ACCOUNTS

• When might this type of account be beneficial?
• If you write only a few checks each month. Bank
  charge a small fee for each check written or for
  each ATM transaction made.

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STANDARD ACCOUNTS

• This type of account usually has a set fee but no
  per check fee. However, sometimes you can avoid a
  service fee altogether if you maintain a certain
  balance in your account.
• Many banks offer a package of services with this
  type of account. (free travelers checks, ATM
  card, safe deposit box)

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INTEREST-BEARING ACCOUNT

• What kind of financial requirement usually
  accompanies this type of account?
• A minimum balance like 500.00 or more
• Is this always a good idea? What do you think?

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SHARE ACCOUNTS

• With this type of account, there is usually no or
  low minimum balance requirements and no service
  fee.
• Credit Unions are good examples of institutions
  that offer Share Accounts.

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Credit Unions

• Not-for-Profit organizations established by
  groups of employees in similar occupations who
  pool their money. To use a credit union you must
  be a member of a particular employee group.