1. Chapter 9 Checking Accounts and Other Banking Services

2. Checking Accounts  Purpose of a checking account  Opening a checking account  Parts of a check  Using your checking account  Endorsing checks  Types of checking accounts

3. Purpose of Checking Account  Check – a written order to pay a person or business  Demand deposit – money can be withdrawn “on demand”  Canceled check – check has cleared the banking system  Overdraft – check written for more money than is in the account  Floating a check – issuing a check before money has been deposited to cover it

4. Advantages of a Checking Account  Convenient way to pay bills  Safer than using cash  Built-in record keeping system  Provides access to other services:  Online banking  ATM services  Loans, etc.

5. Opening a Checking Account  Signature authorization form (Figure 9-1, p. 200)

6. Parts of a Check (Figure 9-2, p. 201) A. Check number – checks are pre- numbered for identification B. ABA number – American Bankers Assoc. Top half = location and district of bankTop half = location and district of bank Bottom half = identifies specific bankBottom half = identifies specific bank C. Name and address of maker D. Date – date the check is written E. Payee – party whom the check is payable

7. Parts of a Check (Figure 9-2, p. 201) F. Numeric amount – amount of check in figures G. Written amount – amount of check in words H. Signature I. Account and routing numbers – identifies your account and bank J. Memo – purpose of check

8. Using Your Checking Account  Writing checks  Paying bills online  Making deposits  Using a checkbook register  Reconciling your account

9. Writing Checks  Always use a pen!  Write legibly  Sign your name as it appears on the check  Avoid mistakes – VOID checks with errors  Be sure you have the funds to cover the check

10. Paying Bills Online (Figure 9-3, p. 204)  Establish PIN (personal identification number)  Enter transactions in checkbook register

11. Making Deposits (Figure 9-4, p. 205)  Insert date  Insert amount of currency and coin  List individual checks with identification  ABA number, check number, maker name, etc  Subtotal cash and checks  Subtract any cash received and insert Net Deposit (also, if cash is received you must sign under the date)

12. Using a Checkbook Register (Figure 9-5, p. 206)  Record current balance in Balance box  Record transactions immediately  Use the following transaction codes:  Check number for checks  DEP for deposits  ATM for cash machine transactions  ON for online transactions  SC for service charges  INT for interest earned

13. Using a Checkbook Register (Figure 9-5, p. 206)  Include the date of the transaction  Insert the payee on the Description line  For checks and other payments – enter amount in Payment column and Balance column (subtract from previous balance)  For deposits and other additions – enter amount in Deposit column and Balance column (add to previous balance)

14. Reconciling Your Checking Account (Figure 9-6, p. 207)  Reconciliation – process of matching your checkbook register balance and the bank statement balance

15. Reconciling Your Checking Account (Figure 9-6, p. 207)  Match transactions from bank statement to register – place a check mark on register  Insert ending balance from bank statement  List any outstanding deposits and add to bank balance  List outstanding debit transactions (checks, ATM withdrawals, debit card transactions, online payments, etc.) and subtract from subtotal above

16. Endorsing Checks  Endorsement – payee signs back of check exactly as name appears

17. Endorsing Checks (pp. 209 & 210) Three ways to endorse a check: 1.Blank Endorsement – Payee signs name just as it appears on check – If misspelled, sign both ways 2.Special Endorsement (endorsement in full) – Transfers check to another party 3.Restrictive Endorsement – Limits the use of the check

18. Types of Checking Accounts  Individual or joint accounts  Special accounts  Interest-bearing accounts  Share accounts

19. Individual or Joint Accounts  Individual account – sole owner  Joint accounts – 2 or more owners  Survivorship account – anyone on account has the right to the entire amount  “or” vs. “and” accounts  “or” accounts – only requires 1 signature per check  “and” accounts – requires 2 or more signatures per check

20. Other Accounts  Special accounts – flat fee per month plus small per check fee  Standard accounts – flat fee per month with no per check fee (minimum balance may apply)  Interest-bearing accounts – earn interest based on daily balance  Share accounts – credit union accounts

21. Other Banking Services  Guaranteed-payment checks – bank guarantees the check is good  Certified check – personal check  Cashier’s check (bank draft) – bank check  Money orders – similar to check, but guaranteed

22. Other Banking Services  Debit cards  Used to make purchases or for cash withdrawals  Transactions immediately deducted from checking account  Bank credit cards  Used to make purchases  Interest charged on unpaid monthly balance

23. Other Banking Services  Automated Teller Machines (ATMs)  Uses debit card and PIN for cash withdrawals  Online/telephone banking  Conduct banking transactions online or over the phone  Stop payment orders  Request bank to not cash specific check  Stop payment fee

24. Other Banking Services  Safe deposit boxes  Used for valuable small items or documents  Annual rental fee  Loans and trusts  Consumer loans  Estate planning  Financial services  Buying/selling savings bonds  Investment brokerage services  Stocks and bonds

25. Bank Fees  Loan application fee  Check cashing fee  ATM fees  Overdraft fees  Cashier’s check and certified check fees  Money order fees  Online banking fees