How much do you know about the most common form of bank account? Checking Accounts 101 How much do you know about the most common form of bank account?

What’s the point? It is a demand account – allowing you to withdraw money at any time Convenient way to pay bills Safer than using cash Built-in record keeping system that can be used to track expenses and create budgets Provides access to other banking services Instant loans, online banking, 24-hour access through ATMs

Responsibilities of maintaining a checking account Accurate record keeping is essential Truncation – banks not returning cancelled checks Do not bounce checks Illegal and costly Americans pay over $10 billion in overdraft fees per year Be careful of playing the float Betting that a deposit will clear the bank before a check is presented for payment Computers have virtually closed the window

Who’s in Charge? Banks regulators enforce banking laws Banking laws are written on the state and federal level Charters are licenses to operate a bank Charters can be issued by the state or federal banking authorities The type of bank charter determines which government agency has regulatory authority

Health and Safety Concerns Legislation passed during the Great Depression in response to bank runs The Federal Deposit Insurance Company covers the standard deposit insurance amount is $250,000 per depositor, per insured bank, for each account ownership category. Bank regulators regularly audit banks to ensure financial health The Federal Reserve can act as the Lender of Last Resort to financial institutions in times of crisis.

The Federal Reserve System The Central Bank of the United States Comprised of 12 independent banks Regulates bank holding companies and certain state chartered banks Serves as repository for bank reserves Regulates the economy by setting interest rates (discount rate) and controlling the money supply

Opening a checking account Application Fill out and sign a signature card Provides the bank with your official signature Initial deposit Joint accounts are those accounts with two or more signatories who have access to the account Security and code words

Parts of a check

How to write a check Always use pen Write legibly Sign your name exactly as it appears preprinted on the check and on the signature card Avoid mistakes If you make a mistake void (cancel) the check and write a new one To cancel a check, write the word VOID across the face of the check Make sure you have enough money in the bank to cover the check

Other checking activities Online banking Register with your bank’s website, establish a PIN to gain account access Set up a list of payees Don’t forget to record each transaction Deposits Complete a deposit slip Retain receipt as proof of the transaction

Keeping track of your account Record checking transactions in a checkbook register OR use a financial management program such as Microsoft Money or Quicken Record each check written, deposit made and any electronic transactions Compare your register balance with your monthly bank statement Don’t forget to record bank fees

Endorsements Required to cash a check All payees must sign Endorsements must be in ink Endorse checks within 1 ½ inches from the trailing edge of the check Usually marked on the back of the check

Types of Endorsements Blank – the signature of the payee written exactly as his or her name appears on the front of the check Correcting for any mistakes Once endorsed, anyone can cash it Special – transfers the right to cash the check to someone else Pay to the order of.... Restrictive – limits the use of the check

Types of Checking Accounts Joint account Survivorship Special accounts Limited use, fee for use Standard accounts Interest-bearing accounts Share accounts Credit unions

Other Banking Services Savings accounts Credit cards Safe deposits boxes Loans and trusts Other financial services Online and telephone banking ATM/Debit cards Debit cards are ATM cards with additional POS features

Other Banking Services (cont’d) Guaranteed payment checks Certified check: a personal check that the bank guarantees (certifies) to be good Cashier’s check (or bank draft) is a check written by the bank on its own funds Money orders Stop payment orders – a request that the bank not cash a specific check

It’s not free (Bank fees) How do banks earn money? Interest on loans > interest on deposits Charge fees to cover costs Non customer fees Maintenance fee Per check fees Minimum balance fees ATM fees NSF fees Service fees for online bill payment, cancelled checks, use of a teller