Checking Accounts & Banking Services Lesson 1

Bell Ringer Use your book and a partner to discuss the importance of having a checking account, make a list of the importance as well as the times that you have used a checking account or a check.

Purpose of a Checking Account A checking account- a banking service wherein money is deposited into an account Another name for a check is draft Checks can be written to withdraw money from the account as needed.

A checking account is also known as a demand deposit account. It is called a demand deposit because you can demand portions of your deposited funds at will. Only the depositor (you) can write checks on the account.

Canceled checks Canceled checks are those the bank has processed or cleared. After the bank has cleared a check, the amount is deducted from your account and it can be used as proof of purchase.

Responsibilities Write checks carefully and keep an accurate record of checks written and deposits made. You must reconcile your account with our bank statements promptly each month. You must keep canceled checks as proof of purchase or payment and for income tax records.

You should always maintain sufficient funds in your account to cover all written checks. “Insufficient funds”- not enough money is in the account to cover the check A check that cannot be covered by the funds in your account is called an Overdraft. You will be charged a certain amount of money if you overdraw your account.

Floating a Check Floating a check is when you realize your account contains insufficient funds, but you write a check anyway. Floating a check is more difficult in the computer age because processing checks is faster and more efficient. Purposely overdrawing your account is illegal and can result in fine, imprisonment or both.

Opening Your Checking Account To open an account you must fill out a signature card. Provides the bank with important information Official signature to compare with subsequent checks.

Example of a Signature Card Check on dividend I ( ) hereby agree to the bylaws of SKY CENTRAL BANK and all amendments thereto. Signature Social Security Number Individual ( ) Joint ( ) Trust ( ) Other ( ) Your Home Address ZIP Father’s Name Mother’s Name Name of Spouse Occupation Date of Birth

Try it yourself On the blank signature card provided fill out the information as if you were opening a checking account. Note: you do not have to use you’re real social security number.

Example of a Check

Check Number checks are numbered for identification

American Bankers Association Number Top #- location and district of the bank Bottom #- routing the check to the bank

Maker’s Preprinted Name & Address Owner’s name, address & telephone number

Date Fill in the date on which the check is written. Do not postdate checks.

The person or company who is receiving the check Payee The person or company who is receiving the check

The numeric amount of dollars and cents being paid in figure form

Written Amount The amount of dollars and cents written in words. “and” replaces the decimal point.

Drawer or Maker Signature of the person who is writing the check

Account Number Bank identification for sorting and routing Personal checking account number Preprinted Check Number

Memo A line provided so the maker can write the purpose of the check Does not have to be filled out.

Try it Yourself Use the following information: Check Number: 505 Date: Today’s Date Payee: Morehead State University Maker: Sign your name Amount: $100.50 (Numeric and Written) Memo: Financial Literacy Book

Making Deposits To make a deposit into your checking account you must fill out a deposit slip form. Example:

Insert the date of the transaction

Write in the amount of cash

Write the ABA # and Check Amount

Total cash and checks go in the Subtotal Line

If you wish to get cash back fill desired amount in “Less Cash Received Line”

If you get cash back you must sign the deposit slip

Total Amount Deposited

Try it yourself Less Cash Received: $50.00 Sign your name Use the following information: Date: Today’s Date Cash: 25.50 Check: ABA # 2-51 $200 Less Cash Received: $50.00 Sign your name