DO NOW **What does it mean to have a “checking account?” Do you… 2.) have a debit card? (If so, what happens if you withdraw more money than you have in your account?) **What does it mean to have a “checking account?”

Checking Accounts and Banking Services 9 Checking Accounts and Banking Services 9.1 Checking Accounts

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. 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. Also known as a demand deposit, because the money may be withdrawn at any time— that is, “on demand.” Chapter 9

Debit Cards If you have a checking account, you may be eligible for a debit card. A debit card is a plastic card that deducts money from a checking account almost immediately to pay for purchases. Chapter 9

Checking Account Basics (continued) Steps: 1.) You deposit money into a checking account. The bank holds this money in your account. 2.) Your write a check. (This notifies the bank to take money out of your account and give it to the recipient -payee). IE- PSEG 3.) When the payee (PSEG) cashes the check it is cleared. 4.) The bank then stamps the check and takes the money out of your account. 5.) This means that a check has been cancelled as proof of payment. Chapter 9

Checking Account Basics Because it is 2015, banks no longer send paper checks back to other banks for processing. To make processing faster, they exchange check information electronically by transmitting an image of the check, called a substitute check. Chapter 9

Checking Account Basics (continued) You must maintain enough money in your account to cover all checks. 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). When this occurs, the check has bounced. Your bank will charge you a fee for each NSF check processed. Chapter 9

Checks….. (continued) Floating a check is writing a check and hoping to deposit money to cover it before the check clears. Often these checks are post-dated. Floating a check is very risky because today’s electronic systems allow checks to process very quickly- DO NOT DO THIS!!!! Chapter 9

Parts of a Check Check Number Name and Address of Maker Date ABA Number Payee Numeric Amount Written Amount Memo Signature Account and Routing Numbers Chapter 9

Using your checking account -Write legibly -Sign your name as it matches other documents and the back of your debit card. -When you make a mistake- VOID the check. -Check your account regularly to make sure you have sufficient funds.

Because it is 2015, we can… Direct Deposit Pay bills online (Bill Pay) PIN (personal identification number) allows you to do this. Convenience of ATMs (Automated Teller Machines) OR Go to the bank and fill out a deposit slip and/or withdraw slip fill out your personal checkbook register.

Using Your Checking Account Using a checkbook register A checkbook register is a booklet used to record checking account transactions. Chapter 9

Endorsing Checks A check generally cannot be cashed until it is endorsed. To endorse a check, the payee signs the top part of the back of the check in ink. There are three major types of endorsements. Blank endorsement -John Smith Special endorsement -Pay to the order of John Smith Restrictive endorsement -For deposit only, Chase Bank, Acct # 32849475, John Smith Chapter 9

Let’s practice! 1. Write out a check to a partner and exchange. 2. Endorse the check you were given. After endorsement: Fill out the following: 1. What is the check number 2. Where can the routing number be found? 3. Who is maker? 4. Why did you write the check (memo)?

HW Read 195-196 on checking accounts. Define the following: Joint accounts Special accounts Standard accounts Interest-bearing accounts Share accounts

What does it mean when a check is cleared? Closure What are benefits of a checking account? What does it mean to void a check? What happens it you don’t have enough $ in your checking account when a payee cashes the check? What does it mean when a check is cleared? What is another name for a checking account?

Closure What does post-date mean? What is a checkbook registry?

Agenda 9.2 Do Now: Complete the worksheet on bank terms using 9.2 (199-203). Activity: Checking Account Closure HW: Study Guide (30 pt quiz next class)

Opening a Checking Account Signature authorization form Initial deposit Recap from HW: What are some types of accounts? Chapter 9

Types of Checking Accounts Joint accounts Special accounts Standard accounts Interest-bearing accounts Share accounts Chapter 9

Banking Services A full-service bank is one that offers every possible kind of service, from savings and checking accounts to credit cards, safe deposit boxes, loans, and ATMs. Other services commonly offered are online banking, telephone banking, certified checks, cashier’s checks, money orders, and debit cards. Most banks offer FDIC (Federal Deposit Insurance Corporation) insurance, which protects the deposits of customers against loss up to $250,000 per account. 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. 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. There is a charge for purchasing a money order. You also can purchase money orders through the post office and local merchants. Chapter 9

Bank Credit Cards You can apply to a full-service bank for a bank credit card, such as a Visa or MasterCard. If you meet the requirements and are issued a card, you can use it instead of cash at any business that accepts credit cards. Banks offering national credit cards usually charge both an annual fee for use of the card and interest on the unpaid account balance. Chapter 9

Overdraft Protection Overdraft protection allows you to cover checks or withdrawals up to a specified amount, usually between $100 and $1,000, depending on the typical balance in your account. With overdraft protection, your checks will be covered even if you have insufficient funds in your checking account. Chapter 9

Automated Teller Machines An Automated Teller Machine is often called an ATM. To use ATMs, you must Have a card that is electronically coded Know your personal identification number (PIN) Getting cash is a common ATM transaction. Using a debit card you can withdraw cash from your checking or savings account. Using a Visa or MasterCard, you can receive a cash advance electronically. Chapter 9

Online and Telephone Banking Online and telephone banking services give you the ability to access your accounts from a computer or telephone anytime, day or night. Services include: Transferring money from one account to another Paying bills by authorizing the bank to disburse money Getting account balances Seeing which checks have cleared and which deposits have been entered Chapter 9

Online and Telephone Banking (continued) Most banks also allow and encourage electronic transfers of money. An electronic funds transfer (EFT) uses a computer-based system that enables you to move money from one account to another without writing a check or exchanging cash. Chapter 9

Stop Payment Orders A stop-payment order is a request that the bank not honor a specific check. The usual reason for stopping payment is that the check has been lost or stolen. Most banks charge a fee for stopping payment on a check. Chapter 9

Safe Deposit Boxes Financial institutions offer customers a safe deposit box to store valuable items or documents. They charge a yearly fee based on the size of the box. Keeping important documents and other items in a safe deposit box ensures that the items won’t be stolen, lost, or destroyed. Chapter 9

Safe Deposit Boxes (continued) Examples of items commonly kept in a safe deposit box include Birth, marriage, and death certificates Deeds and mortgage papers Stocks and bonds Jewelry Coin collections Chapter 9

Loans and Trusts Financial institutions also make loans to 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. 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. Financial institutions typically have a person on their staff who is a notary public. This person provides notary services for account holders, usually without charge. For noncustomers, however, there is typically a small fee. Chapter 9

Financial Services Purchasing or selling savings bonds Investment brokerage services Chapter 9

Bank Fees Banks charge fees to their customers to help cover their operating costs. The best way to avoid fees is to choose the right kind of account. Shop around and find the account that is right for you. Be aware of the rules of your account, so that you don’t violate them and be required to pay high fees. 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 Chapter 9

Homework: Read Ch. 10 and 20, take notes, define terms. Find an advertisement in a specific topic assigned to you. The ad should be no more than 3 minutes. Start study guide for next test.