1. Managing Your Checking Account and Other Financial Services
Chapter 28
Managing Your Checking Account and Other Financial Services

2. Processing Your Checks
Clearing -
Returning a check to the drawer’s bank to be paid and charged to his or her checking account.
Example - the next image illustrates the process which a check goes through, in order to be cleared, between to local parties.

4. The Clearinghouse Clearinghouse -
A place where member banks exchange checks in order to clear them.
The method of clearing the checks through a clearinghouse is similar to that just discussed, except for the fact that the clearinghouses handle thousands of checks for many different banks.
Automated Clearinghouse - transfers funds among banks using electronic payment entries.

5. Federal Reserve System - Check Clearing
One of the main functions of the Federal Reserve is clearing checks between banks in different cities.
This process is a little more complex due to the volume of checks being cleared.
Banks use a clearinghouse and their districts Federal Reserve Bank to settle their balances, while the Federal Reserve uses the Interdistrict Settlement Fund to settle their net amounts due among the banks in each of the 12 districts.

6. Your Bank Statement Banks Statement - Included in the Statement -
A report sent by the bank to a depositor showing the status of his or her account.
Included in the Statement -
Beginning Balance (beginning of month)
Transactions made throughout month, involving the account
Service Charges
Interest earned by the account
Ending Balance (end of the month)

7. Examining Returned Checks
Some banks will return the checks which have been paid to the drawer.
Cancelled Checks -
Each check that has been paid, gets cancelled by the bank. The banks do this by simply using a machine that stamps a cancellation number on the front or back of the check.
These can be used as evidence that payment was actually received, if one of the payments are in question.

8. Bank Reconciliation
The bank statement gives you a copy of the transactions involving your account throughout the month.
It is necessary to bring this statement into agreement with your check register or your check stubs.
Bank Reconciliation -
A statement showing how the checkbook balance and the bank statement were brought into agreement.
Start here 3rd hour on 12/3 same for 5th

9. Finding Differences Outstanding Checks -
Checks that have not been deducted from the bank-statement balance.
Forgetting to record a transaction
Often the situation with EFTs
Service Charges
Interest Earned
Or an error in recording

10. Calculating the Adjusted Balance
Possible Fixes -
Subtracting the total of the outstanding checks she had listed on the form, from the bank statement balance.
Subtracting service charges
Adding interest earned
Subtracting any forgotten EFTs
Correcting any errors in recording

11. Selecting a Financial Institution
Services Offered -
Select the lowest cost
Locate the best interest rate on your savings
Find the lowest interest rate for loans
Safety -
FDIC - Federal Deposit Insurance Corporation
Convenience -
24-hour banking services
Branch offices near your home
ATM locations
Fees and Charges
Restrictions