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Published byJerome Bryant Modified over 8 years ago
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10.2 Banking Basics Friday, June 10, 2016
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Checking Accounts Check is the most common negotiable instrument. Drawer = person who writes the check Drawee = bank Payee = person receiving the money
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Checking Accounts Signature card = a record of your signature that the bank keeps to verify your identity. Stale check = older than 6 months. Your bank can refuse to pay it.
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Checking Accounts You are in a contract with the bank when you open a checking account.
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Balancing your checkbook You need to keep a checkbook register (a record of all transactions). Each month you receive a statement from your bank. You should reconcile your checkbook register with your bank statement to make sure the balances match.
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Check 21 Act Allows electronic processing to clear checks quickly and safely. A substitute check is used = a paper copy of both sides of an original check.
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Rules of Check writing Write in ink. Sign your check. Never sign a blank check. If you make a mistake you should write a new check and shred the old one. Write it so it cannot easily be changed.
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Stop Payment You may cancel a check you have written for a fee. You must put the request in writing or it will expire after 14 days.
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Bad Checks Also called: Bounced check Rubber check A check you draw on an account in which there is not enough money to pay out the amount of the check.
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Swiss banking Global law – page 237
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Forgery = fraudulent making or material alteration of a writing. Subject to fines and imprisonment. If the bank pays out for a check that was forged, the bank will eat the expense.
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Types of checks Certified check = checks guaranteed by a bank. Cashier’s checks = checks drawn by a bank upon itself. Bank draft = drawn by a bank against funds the bank has on deposit with another bank.
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Types of checks Money orders = drafts that substitute for checks and may be purchased from places such as banks or post offices (Western Union) Traveler’s checks = you can get them from your bank and the bank guarantees them if they are lost or stolen.
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EFT = Electronic fund transfer = a computerized system for transferring funds electronically rather than by writing checks.
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