Banking and Checking Accounts Instructor: xxxx

Objectives Our objectives are to… Explain the importance of having a bank account. Examine the different types of financial institution and bank accounts and the ways to access your account through ATMs and Debit Cards. Develop the necessary skills to set up and manage a bank account. Explore the positive impact of record keeping and the negative impact of overdrafts.

Checking Accounts and Debit Cards Why do I need a Bank account? Advantages: Safer than cash Easily pay bills through the mail No fee to cash a check at your bank ATM access-Check Debit Cards A record of your spending habits - check register and monthly statements Can be an interest earning account Contributes to a good credit history

Checking Accounts and Debit Cards Disadvantages: To avoid fees, may need to maintain a minimum balance There may be a charge for each check written or a monthly service fee You must carefully record every check written, and balance account monthly “Bouncing” checks is illegal Joint checking accounts can be difficult to balance

Choosing a Bank Four types of financial institutions: Commercial Banks Credit Unions Savings and Loan Association Mutual Savings Bank Types of institutional insurance coverage: Bank Insurance Fund (BIF) National Credit Union Share Insurance Fund (NCUSIF) Savings Association Insurance Fund (SAIF)

Choosing an Account Gather Information on varies financial institutions Individual vs Joint Basic checking Account

Unique Banking Needs of the Military Long Distance Banking Acceptance of Out of State Checks by Local Merchants Bank/Checkbook Reconciliation Difficult Tracking Deposits and Expenses Difficult Benefits of Two Checking Accounts: Primary Account for Paying Bills Smaller Secondary Account for Deployed Spouse

Setting up a Checking Account The following items are needed: A photo I.D. A credit card or a secondary form of I.D. Social Security Number Money to deposit Fill out a Signature Card Contract between you and the bank Explains rights and responsibilities Used to verify signature on written checks

Setting Up a Checking Account, cont. Bank gives you “starter checks.” Verify that new checks have correct information When writing a check: Date Pay to the Order of: Amount Box (written in numbers) Amount Line (written in words) Signature

Common Check Writing Mistakes Writing illegibly Writing in pencil Leaving empty spaces Forgetting to write the amount in words Forgetting to sign your name or signing it differently than your signature card To correct mistakes, write VOID across the face of the check and start with a new one!

The Check Register Record transactions immediately Written checks and ATM withdrawals Entries in the register repeat information on the check Keep a running balance Advantages of duplicate checks The Check Register is a record of deposits and withdrawals on your account.

Endorsing Checks Blank Endorsement Special Endorsement Restrictive Endorsement

Making Deposits Keep all deposit receipts Deposited checks take time to clear Deposited In-state checks and Out-of-state checks

Debit Cards and ATMs Debit Card connects you to your account Deducts funds from your account Handy to use Need a PIN Number to access account information A.K.A. “Paperless Checks” Advantages to using a Debit Card

Debit Cards and ATMs, continued Verify and keep your receipts! Remember to credit ATM fees. Using Debit Cards and ATMs overseas Check with bank before leaving Check your card ATM and Debit Card Precautions Take care of your Debit Card and your PIN Keep track of your transactions Laws and Limitations

Keeping Your Account Balanced Legally binding agreement When balancing your checkbook: Compare deposits Compare checks and other withdrawals Subtract any fees or add interest Compare final balances of checkbook and bank statement

When your Transaction Bounces Legal Ramifications: Less than $200 - Class 1 Misdemeanor - 12 months in jail, $2,500 fine, or both Over $200 - Class 6 Felony - 12 months in jail, $2500, or both, or up to 5 years in prison. Military Ramifications: Loss of Security Clearance Loss of Re-enlistment and Retention options Loss of duty assignments or special programs Gain “Other Than Honorable” Discharge Punishment under UCMJ/Five years hard labor

Overdraft Protection What is Overdraft Protection? Must specifically agree to the terms during the set up of your account. Bank will charge a fee. Types of Overdraft: Automatic Funds Transfer Automatic Overdraft Loan A line of credit

Savings Accounts and Investments Investment “Vehicles” based on “time deposits” Emergency Savings Save for Future Goals Standard Savings Accounts

Special Checks and Cash Transfers Money Orders Certified Checks Cashier’s Checks Traveler’s Checks Wire Transfers

Review of Objectives Explained the importance of having a bank account. Examined the different types of financial institution and bank accounts and the ways to access your account through ATMs and Debit Cards. Developed the necessary skills to set up and manage a bank account. Explored the positive impact of record keeping and the negative impact of overdrafts.