4.02 E STUDENTS WILL UNDERSTAND THE PURPOSES OF SPECIAL CHECKS STUDENTS WILL UNDERSTAND STOP PAYMENT ORDERS AND VOID CHECKS. Other Forms of Payment

How do Consumers Pay for Goods and Services? Cash Payroll Card Credit – loans, credit cards Checks- commercial banks Share drafts – credit unions Do you know of other forms of payment?

Other Common Payment Services Travelers check  Requires 1 st signature when check purchased  Requires 2 nd signature when issued as payment for goods or services Go to link below and read about traveler’s checks and how they work.

Traveler’s Checks Traveler’s Checks – Draft drawn by a well-known financial institution on itself or its agent, used when traveling Used to protect traveling money Go to website for more information Link: american express website Using traveler’s checks 1. Prepay for traveler’s checks at bank 2. Complete first authorized signature 3. Show proof of identification to acceptor 4. Complete 2 nd authorized signature Benefits: Can be refunded if they’re lost or stolen, 24/7. Aren’t tied to your bank account or any personal information = personal identity safety! No withdrawal fees Cash in your checks for local currency wherever you are Accepted at thousands of locations worldwide Never expire

Traveler’s Check 2 nd signature: Countersignature- in presence of person cashing 1 st signature: immediately upon receipt

Certified Check A certified check is written by a bank for you from your bank account to give to someone. The bank “CERTIFIES” the funds are on reserve “frozen” at the bank to pay the check from your account. For more information go to website: om/supertips/what-is-a- certified-check.html om/supertips/what-is-a- certified-check.html

Certified Check Questions Who issues a certified check? Financial institutions Give two examples of when you might need a certified check*?  To provide a down payment when buying a car buying a car  To pay your landlord's required security deposit  Replacement of a bounced check How do you get a certified check? Go in person to your bank Have the cashier prepare the check for you, with the payee's name on the check and your signature Banking institution will reserve that amount of money in your account as untouchable (frozen) thus guaranteeing the certified check will not bounce. It's as good as cash but safer to mail or carry around, especially if the amount is large.

Why does a creditor require a certified check, cashier’s check or money order? In situations where a creditor doesn't know or trust a borrower's (or payee's) creditworthiness.  To provide payment when buying a car  To pay landlord's required security deposit  To replace a bounced check Since the check issuer cannot put a stop payment, the payee knows that the cash is guaranteed. A cashier's check is guaranteed with funds from the bank, is signed by the bank, and is not from your own personal account. Certified check is your personal check that the bank has guaranteed to be “good” by freezing enough funds in your account to cover the check Do issuers charge a fee for these items? If you don't have a bank account: Most banks will allow you to get a cashier's check in exchange for cash, plus the processing fee. If you have a bank account/credit union account: You may or may not be charged a fee dependent on your account type and status You may get a cashiers check or certified check without a fee depending on the type of accounts you have with the bank

Sample Certified Check Certification stamp by bank that the money is “GOOD” -cannot stop payment, cannot bounce

Why use a Cashier’s (Teller’s) Check? Cashier/teller is employee of the bank. Cashier’s check is issued by the bank In situations where a creditor doesn't know or trust a borrower's (or payee's) creditworthiness.  To provide payment when buying a car  To pay landlord's required security deposit  To replace a bounced check Since the check issuer cannot put a stop payment *, the payee knows that the cash is guaranteed. * stop payment info on next slide A cashier's check is guaranteed with funds from the bank, is signed by the bank, and is not from your own personal account. Cashier check is issued by a bank because you have prepaid. The bank has guaranteed to be “good” by having the funds prepaid to them before issuing the check.

What is a Stop Payment? a notice made by a depositor/drawer to his or her bank directing the bank to refuse payment on a specific check drawn. Stop payment can be made on UNCLEARED checks or share drafts Why use a stop payment order?  Lost  Changed mind and someone else has the check in their hands Why is it important to NOT be able to stop payment on some checks?  Acceptor requires guarantee of check being good

Cashier’s Check Sample Cashier’s Check – A check the bank draws on itself

Common Payment Services Money Order Payment order for a pre-specified $ amount Funds are prepaid for the amount shown on it More trusted method of payment than a personal check Used to pay or transfer funds for the purchaser Types of Money Orders:  Postal money order  Express money order  Telegraphic money order For more information go to website link: Money order link: Money order

How does it affect check register? Stop Payment Order Void Check If check has been listed on register and amount deducted from total…  Add the check amount back to balance since check will not be cancelled by the bank  net affect = 0 Stop Payment Order Void Check If check has NOT been listed on register or amount deducted from total…  net affect = 0

The US Postal Money Order is a PREPAID draft. Cannot bounce! Cannot stop payment! Safe to mail (like a check) since PAY TO …is completed.

Money Order  Alternative to sending cash by mail if you do not have checking account  How do they work?  You pay $, get receipt  Money order issued to payee at your request for $ amount requested  Payee endorses money order and cashes/deposits at bank like a check  Safe to mail  Cannot “bounce” like check  Cost = usually less than $3.00