Checking Accounts 3 rd Period STEP Ms. Gikas

The Convenience of Checking Check – a written order to pay someone takes money directly out of the persons checking account who wrote the check Keep track of your expenses Keeps your money safe If lost or stolen, you can stop payment Pay bills with and show proof of payment

Where to Open an Account Select a financial institution or bank Consider the following factors when choosing the right bank: Convenience Services Types of accounts offered Fees

Opening a Bank Account Convenience near home or work Store hours Services Checking & Savings ATM machines Drive up banking Bank statement Credit/debit cards Debit – take money directly from checking account Loans Safe-deposit boxes Certified/cashier/traveler checks Money orders Types of Accounts Individual account Only your signature Joint account 1-2 owners can sign on the account Interest paying account Like a savings account Interest is paid to you depending on the amount Fees Costs Money Differs, depending on bank Free checking Pay fee for each check Order checkbooks Huge fee for bounced checks

Opening a Checking Account Find a Bank/Financial Institution & Open a Checking Account  Go in and just ask, “I want to Open a Checking Account”  Fill out an application  You will be asked to sign a signature card Helps them read your signature on checks  Prevents forgery  Need to bring ID and Social Security Card

Making a Deposit Must have money in your checking Must have money in your checking –Needed to write checks Bank teller will ask you to complete a deposit slip Bank teller will ask you to complete a deposit slip Deposit Slip Deposit Slip –Records how much money you are putting into your checking Spaces are provided to list either cash or check Spaces are provided to list either cash or check Deposit money electronically Deposit money electronically –Transfer money  From account to account  Have your job send your checks directly

Deposit Slip 1. Write the date you are making the deposit. 2. If you are depositing currency (paper bills), write the total amount here. 3. If you are depositing coins, write the total amount here. 4. If you are depositing a check, write the bank transit number here, which is the top portion of the two-part number printed in the upper corner of the check. 5. Write the amount of the check here. 6. If you are depositing more checks than can be listed on the front, continue to list them on the back, and write the total amount of the checks on back here. 7. Write the total amount you are depositing here. 8. If you are making a deposit inside a bank with a teller and you want to receive cash back from your deposit, write the amount you want. 9. Write the total amount (less cash back) of your deposit.

Endorsing a Check When depositing a check into your account, it must be endorsed  Endorse – sign your name on the back of its left edge  Signature must be 1 ½ inches of the edge  Endorsed checks can be cashed or deposited  Do not sign until its cashed or deposited  Once check is endorsed, anyone can cash it  If endorsed check is lost, the money is gone

Writing a Check  Checks should be written in ink Prevents others from changing the amount or name  Bank will return checks unpaid with information that’s been erased, crossed out, or changed in any way

Using Check Registers  Most checks come w/ Check Registers  Register – place to record all deposits, check purchases & credits that affect your account Helps keep track of how much money you have in the account Complete every time you write a check or deposit  Check and service fees are subtracted from your balance

Check Register Sample

Using Check Registers Comes with stubs or carbon  Written record of check numbers, dates, amounts & parties to whom checks are written to Used to avoid overdrawing your account checks will bounce if you do not have enough money in your account  Bank will charge a fee against inefficient funds

Using Electronic Checking Electronic Checking – allows to pay bills using the computer or internet Pay bills or view checking account online Bills can be paid automatically

Balancing your Checkbook Monthly/quarterly statement from bank Bank Statement – lists all your deposits, cash withdrawals, check withdrawals, service charges, & interest payments  Lists your beginning & ending balances

1. Bank account details and sort code 2. Balance at the beginning of statement period 3. Date of transaction 4. Type of transaction 5. Amount of transaction 6. Running balance after each transaction 7. Balance at the end of the statement period 8. This denotes a regular payment from your account by Direct Debit 9. This denotes a regular payment from your account to another account by Standing Order 10. This shows where you have taken money out at an ATM at an extra cost of $ This shows where you have taken money out at an ATM at no extra cost

Special Types of Checks  Certified checks – bank guarantees payment Withdrawals it from your checking The bank stamps it as “certified”  Cashier checks – drawn from the bank on its own funds

Special Types of Checks  Money order – pay a certain amount of money to a certain party Can be used to pay bills; similar to personal checks Can be purchases at..  Currency exchange  Banks  US post offices  Western Unions  Traveler’s checks –purchase for vacations If lost or stolen, they can be replaced You pay a $1.00 for every hundred dollars worth of travelers checks

Saving Accounts 3 rd Period STEP Ms. Gikas

Reasons for Saving Money management Save a portion from each paycheck Main Reasons for saving money:  Emergencies  Future loss of income  Travel and recreation  Advanced education  Major purchases such as car or home  Retirement  Financial security

Where to Save  Several options for saving your money  Become familiar with banks that offer saving accounts  Find out how much interest they will pay

W HERE TO S AVE ( CONT.) Decide where you want to deposit your money Commercial banks Department stores of finance. Provide a variety of banking services and financial advice Offer savings accounts Savings and loan associations Loans money to home buyers Pay higher interest rates on savings accounts than commercial banks Credit Unions Non profit banks Owned by and operated for their members People who belong to a trade union, church, company, professional organization

Will your Savings be Safe? Banks that are insured are safe places to keep your money Offers protection Make sure you choose a bank that’s insured 2 agencies are responsible for insuring the banks money Federal Deposit Insurance Corporation (FDIC) – protects deposits, savings, loans for most banks National Credit Union Association (NCUA) – protects deposits on most credit unions

Ways to be Safe Most common ways to save Savings accounts Savings clubs Certificates of deposits US savings bonds

Saving Accounts Open an account at a local bank Statement savings account – type of account where you receive monthly or quarterly statement all statements & withdrawals are recorded Earn Interest Interest – money paid to you for allowing a bank to have & use your money the longer you keep your money in savings, the more interest you earn Interest is paid… Daily Quarterly (4 times a year) Semiannually (twice a year) Annually (once a year)

Savings Accounts Cont. Interest is added to a savings account  Earns interest Both the principle & earned interest continue to earn interest, known as compound interest  Principle – savings account deposit  Compound Interest – interest figured in the principle plus the earned interest of financial account

Opening a Savings Account & Comparing Fees  Open a Savings account Convenience  Select a bank near home  Hours that meet your needs  Check for how interest they will pay choose the highest interest rate  Pick bank that you can have both your checking and savings account  Comparing Fees Some banks require a fee Must maintain a certain balance in your account Be aware the fees your bank may charge

Making a Deposit To put money in your savings, you must fill out a deposit form To put money in your savings, you must fill out a deposit form  Fill them out correctly by following these steps  Write name, date & account number  On currency line, list paper money total  On coin line, list total amount of coins  List each check separately  List amount of cash you want to receive from account  Subtract the amount of cash to be from amount  Present deposit to teller

Savings Deposit Slip

Using Direct Deposit Some employers offer a direct deposit plan Direct Deposit – allows your employer to deposit your paycheck into your account You can deposit your paychecks either in your checking, savings or both Must complete a direct deposit from with your employer Money goes directly in your account

Withdrawing Money from your Savings You can withdraw money out of your savings Follow this steps  Write your name, date, & account number  Write amount of money you wish to withdraw  Sign your name on withdraw form  Present complete withdraw slip to teller with an ID

Savings Club Savings Club – encourages you to form a habit of saving money  Savings plan  You set up an amount of money every week or month  You are given a savings club book with your account number  At the end of your savings period, you receive a check for the amount you saved plus the interest you earned  People use savings clubs for Christmas present or vacations

Certificates of Deposit Certificate of Deposit (CD) – a savings certificate earning a fixed rate of interest that is purchased for a specific amount of money and held for a set period of time  Can be bought at a bank  You decide how much you want to purchase & for how long  CDs are usually sold for $500 or more  Money is held for a set period of time  Interest rates vary

Money Market Accounts  Money Market Account – A type of savings account that is similar to a CD, but has not time period restrictions

U.S. Savings Bonds U.S. savings bond – A certificate of debt issued by the federal government that serves as a safe and profitable way for citizens to save money  way to save because they are issued by the government. If lost or stolen, they can be replaced  Easy way to save and are given at most banks  They earn higher interest rates. The longer they are kept, the more money you make on them  When purchased, they must be kept for 6 months

Mutual Funds & Annuities  Mutual Fund – a long term investment that provides a way to invest in stocks and bonds Gives professional assistance on where to invest your money Money can rise or fall; takings risks/gamble  Annuity – a form of investment that lasts years and provides insurance & savings Similar to life insurance Used for retirement or future financial security