Checking Accounts and Other Banking Services Understanding and Managing

What is the purpose of a checking or savings account? A method of processing checks A tool to manage money A way to receive/send payments A secure place to house money not immediately needed

Purpose of Checking Accounts Check- A written order to a bank to pay the stated amount to the person or business named on it Demand Deposit- Another word for a checking account because the money can be withdrawn at any time

Purpose of Checking Accounts (cont.) Canceled Check- A check that bears the bank’s stamp, indicating that it has been cleared; this means they took the money out of your account Overdraft- A check written for more money than your account contains Floating a Check- When you have insufficient funds in your account, but you write the check anyway hoping your deposit clears before the check is cashed

Who can get an account? At least one of the owners needs to be over the age of 18 Must not have a derogatory previous record Must be able to meet legal requirements of identification

How to open an account Go to a local bank or credit union –Review the available account options –Have valid government issued photo id –Be able to prove citizenship of the United States (valid social security number) If not US be able to prove what country you are from –Opening deposit –Sign agreements to take responsibility for the account

How to make transactions Over the counter withdrawals or deposits Write Checks Debit Card/ATM ACH (automatic payments/deposits)

Checks What’s the purpose of a check? –Documentation; Proof of Payment

Parts of a Check A B E C J G D F H I

A. – Check Number B. – ABA Number C. – Maker’s Pre-Printed Name & Address D. – Date E. – Payee F. – Numeric Amount G. – Written Amount H. – Drawer or Maker I. – Account Number and Routing Number J. – Memo

Writing Checks 1.Always use a pen, preferably with dark ink that does not kip or blot 2.Write legibly. Keep numbers and letters clear and distinct, without any extra space before, between or after them 3.Sign your name exactly as it appears preprinted on the check. If you opened your account under your full name, don’t use a nickname 4.Avoid mistakes. When you make a mistake, void (cancel) the check and write a new one. To cancel a check, write the word void in large letters across the face of the check. Save the voided check for your records 5.Be certain you have deposited adequate funds in your account to cover each

Endorsing Checks A check can not be cashed until it has been endorsed! When two or more people have been named payees, all must endorse the check To endorse a check, the payee named on the face of the check signs the back of the check no more than one and one half inches from the trailing edge (usually indicated)

Endorsing Checks (cont.) Blank Endorsement- The signature of the payee written exactly as his or her name appears on the front of the check (If the name is misspelled, sign the incorrect name with the correct name signed below this) PICTURE

Endorsing Checks (cont.) Special Endorsement- An endorsement that transfers the right to cash the check to someone else. It consists of the words “Pay to the order of (new payee’s name)” and the signature of the original payee PICTURE

Endorsing Checks (cont.) Restrictive endorsement- Limits the use of a check. For example, a check endorsed with the words “For Deposit Only” can only be deposited into the account specified PICTURE

Counter Withdrawals/Deposits Internal documents in person transactions complete description of the transaction legal authorization

Making Deposits 1.Insert the date of the transaction 2.In the “cash” section, write in the amount of currency and coin you are depositing 3.If you are depositing any checks, write the amount of each check, together with the ABA check number in the “checks” section of the slip 4.Total the currency, coin, and check amounts 5.If you wish to receive some cash at the time of your deposit, fill in the desired amount on the “Less Cash Received” line

Making Deposits (cont.) 6.Subtract the cash received from the subtotal, and write the final amount of the deposit on the “Net Deposit” line 7.If you will receive cash, write your signature on the line above the words “Sign here in teller’s presence;” if not leave the signature blank 8.Keep one copy of this deposit slip as proof of the amount of your deposit

Using a Checkbook Register Checkbook Register- A booklet used to record checking account transactions –Immediately record all items. Reconciliation- Matching your checkbook register with the bank statement

Balancing your account Ways to obtain your account history –Monthly Statements –Online Banking –Telephone Banking –ATM Match items in your register with items the bank has on file.

How does a check process?

Check Processing for the 21 st Century Electronic images of the check are sent to the partner bank or the Federal Reserve. –Not required to send physical Check

Debit/ATM Card ATM Card –deposits/withdrawals/transfers/inquiries Debit Card –Make Purchases anywhere Visa is accepted –Also works as an ATM card –Transactions should be deducted from your balance immediately

ACH/Automatic Payments Requirements –Bank routing number –Account number –Account holder authorization Examples –Direct Deposit of paychecks –Payment of bills (cable, insurance, etc.)

Types of Checking Accounts Joint Accounts Special Accounts Standard Accounts Interest-bearing Accounts Share Accounts

Other Banking Services Certified Checks – Guaranteed payment Money Orders Online and Telephone Banking Stop Payment Orders Safe Deposit Boxes Loans and Trusts Financial Services

Things To Consider When Managing an Account Availability of access to deposits Time it takes for debits to process –Withdrawals/Checks/Debit Card/ACH Record transactions immediately Verify bank balance periodically –Adjusting for outstanding items –Base your buying decision on your balanced register, not just the bank’s balance

Budgeting Know when all your bills are due Know when and roughly how much your deposits will be Deduct all payments from balance immediately after deposits are made -Don’t wait until due date Then you will know how much excess money you have Now determine what you are going to do with it

Why must you maintain the account properly? Fees can be charged for overdrafts Items can be returned to the presenter You can be reported to monitoring agencies for poor activity May restrict you in the future from obtaining another account or loan