Chapter 9 CHECKING ACCOUNTS

Financial institutions (like banks and credit unions) offer a number of services. Can you name a service?

The first service you will likely want is a Checking Account. A checking account is also called a ___ because the money can be withdrawn at any time, that is, “on demand” Can you think of some financial requirements that go along with checking accounts?

Some institutions charge a fee for checking service. Some institutions require you maintain a minimum balance in your checking account.

Checks follow a process through the banking system. Can you expound on this? What do you remember about our study of the Federal Reserve and its role? Once a check has completed its trip through the banking system your bank stamps it as “Cleared” and it becomes a “Canceled check”

What are some of the advantages of using a checking account rather than cash? - Convenient way to pay bills - Safer than using cash - Has a built-in record keeping system - You have access to other banking services

What are some of your responsibilities when maintaining a checking account? - Keep accurate record of debits and credits credits (deposits) and debits (cks written) - Write cks legibly - Verify the accuracy of your bank statement - Keep canceled checks among your records - Maintain sufficient funds in your account

What does “truncation” mean? This is when banks do not return cancelled checks.

A check written for more than your account contains is called a what? An OVERDRAFT note – A bank receiving an overdraft usually stamps is as NSF (not sufficient funds) and this means the check has “bounced”

If your check bounces, do you think there are financial consequences? If so, what are they? Fine, imprisonment, or both

What is it called when you know your checking account has insufficient funds but you are expecting a deposit any day than will cover the check? Answer – “Floating a Check”

What is a signature authorization form? Open your textbooks to page 200. Notice the required information on the form. Why might Ardys want to include Mother’s Maiden name on her form?

Signature forms provide an official signature to verify checks are not forged. Including extra info. Like mother’s maiden name provides extra security when questioned by a teller.

Can you name some of the parts of a check?

Check number ABA Number ( id’s location and district of the bank from which the check is drawn) Name and address Date Payee Numeric amount Written amount Signature Account and routing numbers ( bank ID code and your acct #) Memo

What is a deposit slip? Look at the example on page 205. Take note of where you enter cash deposited and where you enter checks deposited. What does this phrase mean “Less Cash Received”? Where do you see this phrase on the deposit slip?

What is a checkbook register? Lets look at page 206 together. Notice where this beginning balance is. Notice that debits decrease the running balance and credits increase it. What are some of the codes listed on the register?

You will see these codes DEP WD ON SC What about this code? DC What does this stand for?

What are your thoughts about debit cards? Do you think they are good or bad? What are some of the negative points about debit cards? Positive points? Do you have a debit card? Would you give your child a debit card?

What is a Bank Statement? What type of information does a bank statement provide? (see page 207)

What is a Reconciliation Statement? Why is this important? When doing a reconciliation, what number do you begin with? (see page 207)?

Yes, you begin with the Ending bank balance on your statement. You then add any deposits the bank does not now about and subtract any checks or other debits the bank does not know about. This should give you a reconciled total than balances with your register total.

TYPES OF ENDORSEMENTS WHAT ARE THE 3 TYPES OF ENDORSEMENTS LISTED IN YOUR BOOK? Blank Special Restrictive

BLANK ENDORSEMENT WHAT IS A BLANK ENDORSEMENT? An endorsement where the signature of the payee is written exactly as it appears on the front of the check. If a payee’s name is misspelled, how is he/she to sign the back of the check?

First, sign it misspelled then spelled correctly. (see top of page 210)

SPECIAL ENDORSEMENT WHAT IS A SPECIAL ENDORSEMENT? (also called?) ENDORSEMENT IN FULL Transfers the right to cash the check to someone else. In this instance, what words are written on the back of the check?

“ Pay to the order of (new payee’s name). Plus, the signature of the original payee. What’s an advantage of using a Special Endorsement? Saves time. Avoids having to cash the check before paying new payee.

RESTRICTIVE ENDORSEMENT Restricts or limits the use of a check. Can you give an example of when you might use a restrictive endorsement? Mailing checks to your bank that are written to you and you sign the back “For Deposit Only ” and add your signature and your account #.

TYPES OF CHECKING ACCOUNTS JOINT ACCOUNTS SPECIAL ACCOUNTS STANDARD ACCOUNTS INTEREST-BEARING ACCOUNTS SHARE ACCOUNTS

JOINT Can be an “or” or an “and” account. What does this mean? IF it is an “or” account only one of the two signature holders has to sign. If it is an “and” account both holders must sign a check. This type of account is also called a…

Survivorship Account because… If one person on the account dies, the other holder received all rights to funds in the account.

SPECIAL ACCOUNTS When might this type of account be beneficial? If you write only a few checks each month. Bank charge a small fee for each check written or for each ATM transaction made.

STANDARD ACCOUNTS This type of account usually has a set fee but no per check fee. However, sometimes you can avoid a service fee altogether if you maintain a certain balance in your account. Many banks offer a package of services with this type of account. (free travelers checks, ATM card, safe deposit box)

INTEREST-BEARING ACCOUNT What kind of financial requirement usually accompanies this type of account? A minimum balance like $ or more Is this always a good idea? What do you think?

SHARE ACCOUNTS With this type of account, there is usually no or low minimum balance requirements and no service fee. Credit Unions are good examples of institutions that offer Share Accounts.

Credit Unions Not-for-Profit organizations established by groups of employees in similar occupations who pool their money. To use a credit union you must be a member of a particular employee group.