Checking Accounts Open, Manage, and Reconcile

1. What is a checking account?  A checking account is opened at a bank or other financial institution and allows the owner to write checks to pay for goods and services or to get cash.  Banks offer several different types of checking accounts.  Common checking options:  Basic checking account—For someone who primarily wants to use checks to pay bills or everyday expenses. To avoid fees, some banks require a low minimum balance.  Interest-bearing account—Requires a higher balance; interest is usually paid monthly. A minimum deposit is usually required to open this type of account.  Joint checking account—For two or more people who are usually in the same household.

 Write a check to pay for goods and services or to get cash.  CHECK—a written order instructing your bank to pay money to someone or an entity.  Make regular deposits into the account. Checks

To open a checking account  Visit the financial institution of your choice to speak with a customer service agent about opening a checking account.  Bring with you:  Two forms of Identification (including one with a picture)  Social Security Number  Money for your first deposit (cash or check)  Be prepared to fill out information on a signature card that will remain on file at the bank. The bank uses the card to verify the signature on checks that bear your name. Signature cards typically include:  Your name  Current address and length of time at the address  Previous address and length of time at that address  Type of account (single, joint)  Your signature  Once your account is approved, make your first deposit.

2. How do I put money in my account?

Deposit Slip  Deposit slip—A written order instructing your bank to put funds into your account. You can use a deposit slip to put money into your account.  Cash  Checks written to you  Money orders  Endorse or sign any check that had been made payable to you before you deposit it.  Special section  On back of check

Deposit Slip  Deposit slips vary from bank to bank. Here's an example:

To fill out a deposit slip  List the amount of money that you want to deposit.  Most slips have a separate line for cash and checks.  Cash: $30.00  Check: $ (Remember to endorse check)  Enter the subtotal. In this example, $ is the subtotal.  Enter any amount you want back. In this case, 0.  Next enter the Total. In this case, $  Sign the deposit slip if required. Some require signature only with cash back.  You give the deposit slip and money to the bank teller.  Or, you can make deposits using an ATM if you have an ATM card. You'll learn about using an ATM later in this lesson.

Practice  Use the following information to complete the practice deposit slip on your Assignment #1: Checking Accounts | Open, Manage, and Reconcile $35.00 Cash $ Check $20.00 Check And you want $50.00 cash back from the deposit

Online deposit  Many banks allow online deposits online by uploading a picture of the check you wish to deposit.  Mobile deposit is used to describe this type of deposit, which is most commonly made with a mobile device.  A special app may be required.  Check with your bank to see if this is an option.  The bank may charge an additional fee for mobile deposits. Always ask before using.

3. How do I get my money out of my account?

Getting checks for a checking account  When you open a checking account, the bank assigns you a unique account number.  The bank will provide temporary checks until you order permanent ones.  You can order checks from the bank or order from a company.  Plain checks are usually cheaper than those with fancy designs.  Checks with carbon copies are usually more expensive than single checks.  Three sets of numbers will be printed on the bottom of each permanent check: Bank’s routing numberYour account numberCheck number  Your checking account number is important as you make deposits to and withdrawals from your account.  The routing number identifies your bank in the world’s banking world.

Writing a check  Checks are convenient when you don't want to carry around a lot of cash or when you need to pay bills through the mail. Take a few minutes to review the parts of a check:

To write a check  Enter the date at the top of the check.  Write the name of the company or person you are paying in the Pay to the order of line.  At the end of the Pay to the order of line, write the number amount of the check. For example, $25.00 or $  On the dollars line, write the check amount in words. This confirms the number amount. For example, Forty-eight and 28/100.  Write the cents as a fraction.  “Dollars” is already printed on the check so do not write it.  If there is any blank space after you write in the amount, draw a line out to the end (stopping before the word Dollars so no one can add to the amount. For example, Forty-eight and 28/ Dollars.  Write your signature on the line at the lower right corner of your check.  In the Memo or For section in the bottom left corner, write what the check is for. For example, "jeans for John" or “May 2014 rent."

Practice  Using the following information, complete the sample check on your Assignment#1: Checking accounts | Open, Manage, and Reconcile: It is July 23 rd and you have just bought a new computer from Computers R Us. You owe Computers R Us $1,489.37

Online checking  Today many banks allow you to write electronic checks to make purchases or to pay bills.  Check with your bank to see if this is an option for your checking account and if there are any fees associated with this service.

Withdrawal Slip  A withdrawal slip is a written order to your bank instructing it to withdraw funds from your account. Withdrawal slips vary from bank to bank.  Here's an example:

To fill out a withdrawal slip  List the amount of money that you want to withdraw. For example, $  Sign the withdrawal slip.  Take the slip to a teller at your bank. Or, you may withdraw money using an ATM.

Practice  Use the following information to complete the practice withdrawal slip on Assignment #1: Checking Accounts | Open, Manage, and Reconcile: Withdraw $ from your account. Your account number is

4. ATM and Debit Cards  ATM stands for Automated Teller Machine.  An account, an ATM card, and a Personal Identification Number are required.  PIN (usually 4 digits).  PIN and password required for online banking services.  Safeguard PIN and passwords.  ATMs are convenient because they are available 24 hours a day at different locations.  An ATM card looks like a credit card. Because it is linked to your bank account(s), you can use it to get cash, deposit funds, and check account balances at an ATM  A debit card combines the functions of an ATM card and a check. It can be used like a check to make purchases and pay bills.  Most banks issue a combination ATM/debit card.  A credit card linked to your credit card account may be used at an ATM.

5. Balance a checking account  The most basic and important aspect of checking account management is. KEEPING enough money in your account to cover ALL your transactions at the time you make them  Keeping your account in good standing is your responsibility.  You will use a checking account ledger to ensure that you do not overdraw your account.  The checking account ledger is where you record ALL deposits, record ALL withdrawals, and keep a running account balance.  REMEMBER to write down online transactions and debit card transactions.

Practice  Use the following information to complete the practice withdrawal slip on Assignment #1: Checking Accounts | Open, Manage, and Reconcile:  July 23 - Opening deposit $  July 25 - Deposit birthday money $1,  July 30 - Check #101 to Computers R Us $1,  August 2 - Electronic deposit $45.13  August 7 - Deposit $  August 8 - Debit card used for gas at convenience store $47.83  August 9 - ATM withdrawal $25.00

6. Reconcile a checking account  You should check your account ledger against a bank statement on a regular basis. This should be done at least once a month.  Compare your ledger with a bank statement mailed from the bank or by comparing your ledger with your account online.  Write down in your ledger any transactions that are on your statement that you forgot to write down or did not know about.  Some checking accounts have fees associated with them. You must subtract those fees in your ledger.  Write down on the bank reconciliation statement the deposits, debit transactions, and checks in your ledger but that did not print on the statement. These are outstanding transactions.  Using the form that comes with your statement, calculate the adjusted ledger balance and the statement adjusted balance. These two should match.  If there continues to be a difference between your ledger balance and the adjusted bank statement balance, you should contact the bank immediately.