1. CHAPTER 5 The Banking System
5-1 Checking Accounts
5-2 Savings Accounts
5-3 Banking Services and Fees

2. 5-1 Checking Accounts Learning Objectives
5-1.1 Explain the role of money.
5-1.2 Explain the purpose and use of a checking account.
5-1.3 Prepare checks and deposit slips, and maintain a check register.
5-1.4 Prepare a bank reconciliation and understand account fees and choices.
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3. The Role of Money
Divisibility
Durability
Store of Value
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4. What Is the Purpose of a Checking Account?
A demand deposit account at a bank on which checks are drawn
Check
A written order to a bank to pay a stated amount to a person or business
Opening a Checking Account
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5. What Is the Purpose of a Checking Account? (continued)
Keeping a Check Register
Check register: A tool used to track checking account transactions
Deposit: Money added to a checking or savings account
Withdrawal: Taking money from your account
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6. Check Register
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7. How Do You Make Payments and Withdrawals?
Writing Checks
Postdated check: A check written with a date that will occur in the future
Paying Bills Online
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8. Personal Check
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9. Online Bill Payment Page
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10. How Do You Make Payments and Withdrawals? (continued)
Using Debit Cards and ATM Cards
Debit card: A bank card used to withdraw or deduct money from your checking account
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11. How Do You Make Payments and Withdrawals? (continued)
Making Deposits
Endorsement: A signature, with or without instructions, written on the back of a check
Third-Party Checks
Direct Deposits
Electronic funds transfer: The use of a computer-based system to move money from the drawer’s account to the payee’s account
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12. Deposit Slip
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13. Check Endorsements
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14. How Do You Reconcile a Bank Statement?
Bank reconciliation
The process of adjusting the check register and bank statement balances so that they agree
Truncated Checks
Other Fees and Interest Earnings
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15. Bank Reconciliation
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16. 5-2 Savings Accounts Learning Objectives
5-2.1 Discuss the purpose of savings.
5-2.2 Explain how you can grow your savings with interest.
5-2.3 List and compare savings options and features.
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17. What Are the Benefits of Saving?
Savings account
A demand deposit account designed for the accumulation of money in a safe place for future use
Liquid
The capability to withdraw money at any time without penalty
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18. How Can You Grow Your Savings?
Computing Interest
Principal: Sum of money set aside on which interest is paid
Simple interest: Interest computed on principal once in a certain period of time
Compound interest: Interest earned on both the principal and previously earned interest
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19. Simple and Compound Interest
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20. How Can You Grow Your Savings? (continued)
Future Value of Money
Saving a Single Sum
Saving on a Regular Basis
Annuity: A fixed amount set aside on a regular basis over time
Present Value of Money
Rule of 72
A quick formula for computing how long it will take to double money invested at a given interest rate
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21. Future Value (Compound Sum) of $1
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22. Future Value of an Annuity of $1
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23. Present Value of $1
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24. What Are Your Savings Options?
Methods of Saving
Money market account: A type of savings account that earns the market rate of interest on the money deposited
Certificate of deposit (CD): A time deposit that pays a fixed rate of interest for a specified length of time
U.S. savings bond: A bond issued by the federal government that pays a guaranteed minimum rate of interest
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25. What Are Your Savings Options? (continued)
Methods of Saving (continued)
Individual Retirement Accounts
Places to Save Your Money
Banks and Credit Unions
Online-Only Banks
Brokerage Firms
International Banks
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26. 5-3 Banking Services and Fees
Learning Objectives
5-3.1 Describe banking services available to consumers at most banks and credit unions.
5-3.2 Discuss the costs of banking services.
5-3.3 Explain consumer responsibilities for holders of bank accounts.
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27. What Banking Services Are Available to Consumers?
Payment Services
Cashier’s check: A check issued against the bank’s funds
Certified check: A personal check that the bank guarantees
Stop payment: An instruction to the bank not to honor a check that has been issued or lost
Automatic Teller Machines
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28. What Banking Services Are Available to Consumers? (continued)
Bank Cards
Smart card: A card that contains a computer chip that stores electronic money
Overdraft protection
A bank service that covers a shortage in your account
Internet banking
Accessing and managing your account online
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29. What Banking Services Are Available to Consumers? (continued)
Safe deposit box
A secure container located in a bank vault
Loans
Financial Advising
Car-Buying Services
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30. What Are the Costs of Banking?
Monthly Account Fees
Nonsufficient Funds (NSF) Fees
Bounced check: A check that is not honored by a bank and is returned to the payee’s bank due to insufficient funds
ATM Fees
Special Services Fees
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31. What Are the Costs of Banking? (continued)
Inactive account
A checking or savings account that does not meet minimum usage requirements
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32. What Are Consumer Responsibilities of Banking?
Maintain Your Balance
Floating a check: Writing a check and planning to make a deposit later to cover it before the check is processed
Monitor Your Account
Know Your Rights
Consumer Education
Consumer Protection Laws
Consumer Complaint Program
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