Chapter © 2010 South-Western, Cengage Learning Checking Accounts and Banking Services Checking Accounts Banking Services and Fees 9

© 2010 South-Western, Cengage Learning SLIDE 2 Chapter 9 Lesson 9.1 Checking Accounts GOALS Describe the purpose of a checking account and the forms associated with it. Explain how to use a checking account. Discuss the types of checking accounts.

© 2010 South-Western, Cengage Learning SLIDE 3 Chapter 9 Checking Account Basics A checking account allows you to write checks to make payments. A check is a written order to a bank to pay the amount stated to the person or business named on it. A checking account is also called a demand deposit, because the money may be withdrawn at any time—that is, “on demand.”

© 2010 South-Western, Cengage Learning SLIDE 4 Chapter 9 Checking Account Basics A canceled check is a check that has cleared your account. Many banks no longer send paper checks to other banks for processing. To make processing faster and more efficient, they exchange check information electronically by transmitting an image of the check, called a substitute check. (continued)

© 2010 South-Western, Cengage Learning SLIDE 5 Chapter 9 Checking Account Basics A check written for more money than your account contains is called an overdraft. A bank that does not honor a check usually stamps the check with the words “not sufficient funds” (NSF) and returns the check to the payee’s bank. When this occurs, the check has bounced. Your bank will charge you a fee for each NSF check processed. (continued)

© 2010 South-Western, Cengage Learning SLIDE 6 Chapter 9 Checking Account Basics Floating a check is writing a check and hoping to deposit money to cover it before the check clears. Floating a check is illegal in most states. (continued)

© 2010 South-Western, Cengage Learning SLIDE 7 Chapter 9 Checking Account Advantages Convenience Safety Built-in record keeping system Access to bank services

© 2010 South-Western, Cengage Learning SLIDE 8 Chapter 9 Opening a Checking Account Signature authorization form Initial deposit

© 2010 South-Western, Cengage Learning Using Your Checking Account Using a checkbook register A checkbook register is a booklet used to record checking account transactions. The process of matching your checkbook register with the bank statement is known as bank reconciliation. SLIDE 9 Chapter 9

© 2010 South-Western, Cengage Learning SLIDE 10 Chapter 9 Endorsing Checks A check generally cannot be cashed until it is endorsed. There are three major types of endorsements. Blank endorsement Special endorsement Restrictive endorsement

© 2010 South-Western, Cengage Learning SLIDE 11 Chapter 9 Types of Checking Accounts Joint accounts are opened by two or more people. Also known as a survivorship account because any person who signs on the account has the right to the entire amount deposited.

© 2010 South-Western, Cengage Learning Types of Checking Accounts Standard accounts usually has a small or no monthly service fee and no per- check fee. SLIDE 12 Chapter 9

© 2010 South-Western, Cengage Learning Types of Checking Accounts Interest-bearing accounts is a type of checking account which earns interest as long as a minimum balance obtained, such as $500. SLIDE 13 Chapter 9

© 2010 South-Western, Cengage Learning Types of Checking Accounts Share accounts are mostly offered by credit unions. These are checking accounts with low or no average daily balance requirements and generally no service fees. SLIDE 14 Chapter 9

© 2010 South-Western, Cengage Learning SLIDE 15 Chapter 9 Lesson 9.2 Banking Services and Fees GOALS Describe banking services available at most financial institutions. List and explain fees charged by financial institutions for their services.

© 2010 South-Western, Cengage Learning SLIDE 16 Chapter 9 Banking Services Full-service Bank offers: Savings & Checking Accounts Credit cards Safe deposit boxes Loans ATMs Other services commonly offered online banking, telephone banking, certified checks, cashier’s checks, money orders, and debit cards. FDIC (Federal Deposit Insurance Corporation) up to $250,000 per account.

© 2010 South-Western, Cengage Learning SLIDE 17 Chapter 9 Guaranteed-payment Checks A certified check is a personal check that the bank guarantees or certifies to be good. A cashier’s check, also called a bank draft, is a check written by a bank on its own funds. Traveler’s checks are check forms in specific denominations that are used instead of cash while traveling.

© 2010 South-Western, Cengage Learning SLIDE 18 Chapter 9 Money Orders Banks sell money orders to people who do not wish to use cash or do not have a checking account. A money order is like a check, except that it can never bounce. Can purchase money orders through the post office and local merchants.

© 2010 South-Western, Cengage Learning SLIDE 19 Chapter 9 Debit and Credit Cards A debit card is a card that deducts money from a checking account almost immediately to pay for purchases. A credit card issued by a bank usually charge both an annual fee for use of the card and interest on the unpaid account balance.

© 2010 South-Western, Cengage Learning ATMs & Online Banking ATMs – Automated Teller Machines Receive and deposit cash, make payments to account Fees may be attached to transactions Online & Telephone Banking Transferring money (EFT – electronic funds transfer) paying bills, checking balances, reconciling register SLIDE 20 Chapter 9

© 2010 South-Western, Cengage Learning SLIDE 21 Chapter 9 Stop Payment Orders A stop-payment order is a request that the bank not honor a specific check. Most banks charge a fee for stopping payment on a check.

© 2010 South-Western, Cengage Learning SLIDE 22 Chapter 9 Safe Deposit Boxes They charge a yearly fee based on the size of the box. Examples of items commonly kept in a safe deposit box include Birth, marriage, and death certificates Deeds & mortgage papers Stocks and bonds Jewelry Coin collections

© 2010 South-Western, Cengage Learning SLIDE 23 Chapter 9 Loans and Trusts finance the purchase of cars, homes, home improvements, vacations, and other items. Banks can also provide advice for estate planning and trusts. Banks can act as trustees of estates for minors and others. A trustee is a person or an institution that manages property for the benefit of someone else under a special agreement.

© 2010 South-Western, Cengage Learning SLIDE 24 Chapter 9 Notary Public A notary public verifies a person’s identity, witnesses the person’s signature on a legal document, and then “notarizes” the signature as valid. This person provides notary services for account holders, usually without charge.

© 2010 South-Western, Cengage Learning SLIDE 25 Chapter 9 Financial Services Purchasing or selling savings bonds Investment brokerage services

© 2010 South-Western, Cengage Learning SLIDE 26 Chapter 9 Examples of Bank Fees Loan fees Trustee fees Check cashing fees Per-check fees Monthly service fees Overdraft fees NSF check charges ATM transaction fees Safe deposit box fees Teller service fees Minimum balance fees Fees for guaranteed- payment checks Notary service fees Online bill payment fees Fees to return canceled checks Banks charge fees to their customers to help cover their operating costs.