Chapter 9 Checking Accounts and Other Banking Services Other Banking Services and Fees

Lesson 9.1 Checking Accounts Describe the purpose of a checking account. Discuss how to prepare a signature authorization form, checks, check endorsements, deposit slips, a checkbook register, and a bank reconciliation. Be able to distinguish between different types of checking accounts.

Checking Account Check Demand deposit Canceled check A written order to a bank to pay stated amount to payee Demand deposit Another name for checking account Canceled check Stamped by bank showing it has “cleared” (See P237 for entire process)

Checking Account Why open a checking account? Convenient and safer than carrying cash Cancelled checks serve as receipts or proof of payment Check records help in determining family budgets

Checking Account How to open checking account Prepare a signature card Two pieces of ID are usually needed Must have a minimum deposit

Checking Account Overdraft Floating a check A check written for more money than you have in your account Another word for a check “bouncing” You will be charged at least $20 for NSF (non-sufficient funds) Floating a check When you knowingly write a check without enough money You are hoping a deposit will “hit” before the check is cashed

Parts of a Check July 1, 20-- Food Mart 36.12 Thirty-six and 12/100 071000741 08 40 856 0581 581 ARDYS JOHNSON Phone: 555-0100 4250 West 18th Avenue Chicago, IL 60601-2190 SKY CENTRAL BANK Chicago, Illinois PAY TO THE ORDER OF DOLLARS For Classroom Use Only MEMO DATE 2-74 710 July 1, 20-- Food Mart 36.12 $ Thirty-six and 12/100 groceries Ardys Johnson

Using Your Checking Account Writing checks Always use a pen with dark ink Write legibly Sign name EXACTLY as it appears on check If you make a mistake do not correct, just write VOID across check Save “voided” check for your records Make sure you have enough money in your account to cover check

Using Your Checking Account Making deposits On “deposit slip” Date of transaction Amount of cash List checks individually Total amount depositing Any cash you are receiving back Must sign deposit slip if receiving $$ Net deposit Keep a copy for your records

Using Your Checking Account Checkbook register Booklet used to record all checking account transactions Record balance from last page to the next page on top right box As soon as you do a transaction (ATM, deposit, check) record it Always check for credits (+) or debits (-) Double check math – always update balance Be sure to include any service fees

Reconciling Your Checking Account Provided on back of bank statement Sent once a month Includes withdrawals, deposits, service charges and interest earned Reconcile Just means to check your records with the bank’s records

Reconciling Your Checking Account Steps to reconcile Start with ending balance from the bank Add any deposits that you have recorded, but the bank hasn’t recorded Subtract any checks or withdrawals that you have recorded but not the bank Get new balance Should be the same! Check for any errors.

Reconciling Your Checking Account Write ending balance from bank statement. Add credits or deposits not on statement. Total lines 1 and 2. Write total checks outstanding. Subtract line 4 from line 3. (Should agree with checkbook balance) 1279.38 100.00 1379.38 139.90 1239.48

Endorsing Checks Blank endorsement Joint endorsement Paid to you and you sign it Joint endorsement Check is made out to 2 people, both must sign Special endorsement – “Pay to the order of” Signing over the check to someone else to cash Restrictive endorsement – “For deposit only” Use when depositing in ATMs or mailing deposits Misspelled name Sign with incorrect spelling first, the sign correct spelling below

Types of Checking Accounts Joint accounts Opened to two or more people Survivorship account – someone dies, then the account is left to surviving person. Avoids “inheritance tax” Anyone on account has the right to all the money in account Special accounts Available for people that do not write that many checks each month Usually a flat rate, plus a fee per check

Types of Checking Accounts Standard accounts Usually set fee per month, but no per-check fee Maintain a minimum balance – no fee Interest-bearing accounts Earn a larger % of interest on balance Higher minimum balance requirements Share accounts Credit unions Usually lower minimum balances or no minimum balance Little or no service fee

Lesson 9.2 Other Banking Services and Fees Describe various banking services other than checking accounts available to consumers. Identify services for which banks commonly charge a fee.

Other Banking Services Guaranteed-payment checks Certified Check Write the check and the bank will automatically deduct from checking account and stamp “certified” The payee knows that the check is good Banks charge around $2.50 per check to certify Use if you are buying a house, car, etc. Cashier’s Check (or bank draft) Give the bank money and they write a check from their funds Similar to a certified check, but your identity is not revealed

Other Banking Services Money orders Similar to other guaranteed-payment checks Can purchase at banks, post offices and local businesses Fee depending on the size of the money order

Other Banking Services Debit cards Usually have the VISA or MasterCard logo. Use at ATMs to get out money Use at retail stores to make purchases Money is immediately taken out of your checking account May be a minimum purchase amount, just like credit cards

Other Banking Services Credit cards Usually have the VISA or MasterCard logo Charged interest for any unpaid account balance Try to always pay off at end of month! Choose one that does not have an annual fee Automated teller machines (ATM) Make withdrawals/deposits to checking and savings accounts Make payments on loans and bills Must have a PIN number to access – keep secure! Best to only use ATMs at banks

Other Banking Services Online/Telephone banking Get up-to-date account balances Check anytime – day or night Stop payment orders Notifies bank not to cash a check or checks Banks charge a fee of $10 or more Use stop payment if checks are lost or stolen

Other Banking Services Safe deposit boxes Metal box or safe Yearly rental fees from $25 - $100 Store valuable items you do not want stolen or damaged in case of house fire Jewelry, birth, marriage, death certificates, deeds, etc.

Other Banking Services Loans and trusts Make car, home or home improvements loans Can be “trustee” to a minor or person that needs money/property managed Financial services Some large banks provide brokerage services for buying/selling stocks and bonds

Bank Fees Examples of bank fees Loan fee Trustee fee MYPF Chapter 09 12-Sept-2001 Bank Fees Examples of bank fees Loan fee Trustee fee Check cashing fee for non-customers Per-check fee Maintenance fee Check printing fee ATM transaction fee

Other terms… FDIC (Federal Deposit Insurance Company) MYPF Chapter 09 12-Sept-2001 Other terms… FDIC (Federal Deposit Insurance Company) Banks insure your deposits up to $100,000 per account in case of bankruptcy, robbery, etc. Does not insure any amount over $100,000 Banks oversees do