1. Unit 2 Banking Procedures
Copyright 2007 Thomson South-Western

2. Chapter 2 Checking Accounts Key Terms
Deposit/credit
Debit
Balance/reconcile
Statement balance
Debit card
PIN
EFT (electronic funds transfer)
Online and smart phone banking
Automated Teller Machines
Overdrawn
Overdraft Penalty
Identity theft
Overdraft protections
Minimum account balance
Interest bearing account
Slide 2

3. Introduction to Checking Accounts
A check is a handwritten or computer generated order specifying the amount of money to be paid and the name of the person or company who should receive the funds
5-1 Checking Accounts
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4. Introduction Checking Accounts
Is a demand deposit in a bank or other financial institution
Provides a safe place to keep money
Provides easy access to the money
Demand deposit – a deposit of money that can be withdrawn without prior notice
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5. Federal Deposit Insurance Corporation
Also known as the FDIC
The FDIC insures each account in a federally chartered bank up to $250,000.
Savings accounts, Checking accounts, Money Market accounts, and CD’s are all covered
5-1 Checking Accounts
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6. Opening an Account To open an account, you will need to
Provide personal data and identification
Complete a signature card
Deposit money
Some banks charge monthly fees or a fee for each check written
What specific information do you need to bring with you? Social security card, driver’s license, proof of address
If you plan on writing a LOT of checks, this type of account might not be for you
5-1 Checking Accounts
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7. Signature Card
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8. What is a Checking Account?
Common financial service used by many consumers
Funds are easily accessed
Check
ATM (automated teller machine)
Debit card
Telephone
Internet
Services and fees vary depending upon the financial institution

9. Why Do People Use Checking Accounts?
Reduces the need to carry large amounts of cash
Convenience – useful for paying bills
Spending Plan Tool
Keeps a written record of where money is spent
Safety – using checks is safer than carrying cash
Does not earn large amounts of interest

10. Checking Account Activity
Compare and contrast 2 checking accounts
Name of bank/website?
Students checking?
Is there a minimum balance? Is there a required balance or fee if below.
Is a debit card included?
Are checks free?
What is the address of the closest branch to your house?
Would you use this bank? Why?
Ask Rebecca for new typed out handout – Fix slide Using the handout, compare the checking account options at two banks
Refer to rubric for grading
Guided practice checking account activity and then go over answers on next two slides and conclusion slide choosing a checking account. I have 2 formal activities with a rubric to show you.
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11. Comparing Checking Accounts
location branch offices; hours of operation; availability of ATMs fees monthly fees; per check fees; printing of checks; balance inquiry fees; ATM fees other charges overdraft charge; stop-payment fees; certified check fees
So ask students what they found by reviewing slide 16 & 17
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12. Comparing Checking Accounts continued
Interest - rate earned; minimum deposit to earn interest; compounding method; fee charged for falling below necessary balance
Restrictions -minimum balance; deposit insurance; holding period for deposited checks
special features- direct deposit; automatic payments; overdraft protection; online banking; discounts or free checking for students, seniors, or employees of certain companies
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13. Choosing a checking account
Read the fine print
Keep a minimum account balance- the amount of money you must keep in the account to avoid service charges, qualify for special service or earn interest on the checking account
Interest bearing account- an account that earns interest
Hidden fees/high minimum balances
Perks you can get like free checks and easy-to-use mobile phone apps, statements and overdraft protections
Special starter accounts for students
Conclusion
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14. Writing Checks Use ink to write the data on checks
The current date
The name of the payee
The amount in numbers and words
Your signature
A note on the Memo line
If you make a mistake
Write VOID on the check and in the register
Begin a new check and make sure to record it in the check register.
Why is it important to write a check that you voided in your check register? Internal control/change in sequence to make sure not lost or forgotten to record.
5-1 Checking Accounts
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15. What is a Check? Used at the time of purchase as the form of payment
Piece of paper pre-printed with the account holder’s:
Name
Address
Financial institution
Identification numbers

16. H
I may omit this slide because I like the 2 below

17. Writing a check 20 Which do banks l
1. Date Enter the date on which you are writing the check.
2. Payee- Enter the name of the person or the company you are going to give the check to.
Amount of check in numerals Enter the amount of the check, in numbers. Don’t leave any space between the pre-printed dollar symbol ($) and the numbers indicating the amount of the check; there should be no room for someone to add in extra numbers.
4. Amount of check in words Enter the amount of the check in words. Start writing at the far left side of the line. Follow the dollar amount by the word “and,” then write the amount of cents over the number 100. Draw a line from the end of the 100 to the end of the line.
ook at 3 or 4 if the amounts do not match?
teens – lesson 6 - slide 6-Fb

18. Writing a check
1. Date Enter the date on which you are writing the check.
2. Payee- Enter the name of the person or the company you are going to give the check to.
Amount of check in numerals Enter the amount of the check, in numbers. Don’t leave any space between the pre-printed dollar symbol ($) and the numbers indicating the amount of the check; there should be no room for someone to add in extra numbers.
4. Amount of check in words Enter the amount of the check in words. Start writing at the far left side of the line. Follow the dollar amount by the word “and,” then write the amount of cents over the number 100. Draw a line from the end of the 100 to the end of the line.
Which do banks look at 3 or 4 if the amounts do not match?
teens – lesson 6 - slide 6-Fb

19. Writing a check (continued)
5. Name Your personal information is printed here. Never list your Social Security number on your printed check.
6. Signature Sign your check exactly the way you signed your name on the signature card you filled out when you opened your account.
7. Memo Use this space to note why you wrote the check. If you are paying a bill, this is a good place to put information requested by the company.
8. Identification numbers These numbers are used to identify the bank, your account number, and the check number. They are printed in a special magnetic ink that machines can read.
Identification numbers are also called routing numbers
teens – lesson 6 - slide 6-Fb

20. Sample Check What is the legal tender amount on a check?
Written amount
Who is the payee? Food mart Who is the drawee? Bank – sky central bank Who is the drawer? Carley Jackson person who signs the check? Look at the link
What is the legal tender amount on a check?
5-1 Checking Accounts
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21. Endorsements Endorse checks to be deposited 5-1 Checking Accounts
Restrictive endorsement - Allows the check to only be deposited
5-1 Checking Accounts
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22. Endorsing a check blank endorsement Anyone can cash check
restrictive endorsement
More secure than blank endorsement
Which do you feel is best and why? Restrictive endorsement because it allows the check to only be deposited
special (or full) endorsement
Transfer check to another party
teens – lesson 6 - slide 6-E

23. Making Deposits Complete a deposit slip, including
Current date
Amount of cash (bills and coins)
Check numbers and amounts
Total amount of cash and checks
Cash amount received, if any, and your signature
Net deposit amount
Record your deposit in the check register
5-1 Checking Accounts
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24. Front of Deposit Slip
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25. Completing a Deposit Slip
Checks
If more checks are being deposited than number of spaces on the front, use the back
List each check
Add the total, enter it on the front

26. Back of Deposit Slip
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27. Make a Deposit deposit in this field.
1. Write the date of the
deposit in this field.
2. If you are depositing currency (paper bills), write the total amount here.
3. If you are depositing coins, write the total amount here.
4. If you are depositing a check, write the check number individually and last name of check writer (bank transit number here, which is the top portion of the two-part number printed in the upper corner of the check).
5. Write the amount of the check here.
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28. Make a Deposit
6. If you are depositing more checks than can be listed on the front, continue to list them on the back, and write the total amount of the checks on back here.
7. Write the total amount you are depositing here.
8. If you are making a deposit inside a bank with a teller and you want to receive cash back from your deposit, write the amount you want in this field.
9. Write the total amount (less cash back) of your deposit in this field.
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29. Keeping a Checkbook Register
Checks and a checkbook register are received when you open an account
A checkbook register
Used to track checking account transactions
Provides a record of payments made for bills or purchases (even online payments)
Shows how much money is in the account
Always fill out the register before you write a check
5-1 Checking Accounts
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30. Sample Checkbook Register
Deposit
Withdrawal
Online
Payment
Bank Charges
5-1 Checking Accounts
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31. Keeping a running balance
(a) Keeping a Running Balance: Check Transaction
(b) Keeping a Running Balance: ATM Cards
teens – lesson 6 - slide 6-Ga

32. Keeping a running balance (continued)
(c) Keeping a Running Balance: Check Cards
teens – lesson 6 - slide 6-Gb

33. Check Register
Look at the link

35. Checking Account Balances
Important to keep track of debits or credits Debit withdrawal from your account What else could decrease your account? ________________________________ Deposit/credit – money you put into your account __________________________________ Conclusion: Gets larger when a deposit or credit is made and smaller when withdrawals/checks are written against the account

36. Monthly Bank Statement
Lists each monetary transaction and the current account balance for a specified time period
Includes:
Dates
Identification for each transaction (number or type, date, amount)
Transaction amounts for withdrawals and/or deposits
Interest earned (if applicable)
Fees or charges (if applicable)

37. Monthly Bank Statement
Lists each transaction and current account balance
Deposits
Checks
Debit Card transactions
ATM transactions
Additional fees

38. Reading a bank statement
One downfall the cut off date
teens – lesson 6 - slide 6-H

39. Reconciling a Bank Statement
Bank statements
Come in paper or electronic form
Show the checks, other withdrawals, and deposits made to an account
Purpose of a bank reconciliation
To review the bank statement
To update the checkbook register
To bring the statement and register balances into agreement
5-1 Checking Accounts
Slide 39

40. Reconciling a Checking Account
Reconcile
Balance the checkbook register each month to the balance shown on the statement
Do this every month to ensure the correct balance in the checkbook
Knowing the correct balance can help to avoid bouncing checks
Account balance = Start of the month account balance total amount of deposits made
- total amount of checks written
Compare and contrast check register to bank statement

41. Steps for Reconciling
View the monthly bank statement and check register

42. Place a check mark in the √ T column for all transactions that have been cleared and are shown on the bank statement √

43. Reconciling a checking account
step 1: Obtain the current balance from your bank statement. step 2: Add any deposits that you have recorded in your check register but that are not on this statement. step 3: Subtract any outstanding checks (checks you have written but that have not yet cleared the banking system). step 4: Compare the result with the current balance in your check register. Note: The balance in your check register should be adjusted to include: (a) deductions for service fees or other charges; (b) additions for direct deposits and interest earned
Get a picture of a bank reconciliation

44. Step 1: Determine the current statement balance from the bank statement

45. Calculate the Subtotal
Step 2: Add any outstanding deposits – transactions that have not cleared the bank
Calculate the Subtotal

46. Ethics Writing Bad Checks
A bad check is one you write but do not have money in the account to pay
Monitor your account carefully to avoid writing a bad check by mistake
Show ethical behavior by not writing a bad check intentionally
5-2 Savings Accounts
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47. Subtract any outstanding checks/withdrawals and calculate
Step 3:
Subtract any outstanding checks/withdrawals and calculate
Step 4 Compare the total with the checkbook register. If the totals are different, double check the math and make sure all service fees and bank charges are recorded in the check register.

48. Bouncing a Check
Check written for an amount over the current balance held in the account
‘Bounces’ due to insufficient funds, or not enough money in the account to cover the check written
A fee will be charged to the account holder
Harm future opportunities for credit

49. Overdraft and Overdraft Protection
Failure to record such transactions, particularly debits, could result in your account balance to be overdrawn – having a negative balance
Overdraft penalty-a fee to cover the cost of process your bad check
Overdraft protection-an arrangement with the bank to cover checks so they will not bounce

50. Check 21 Check Clearing for the 21st Century Act (Check 21)
When a check is written, the money is automatically withdrawn from a bank account
Makes “bouncing checks” difficult
Ex. Macy’s and other department stores

52. ATM Automated teller machine, or a cash machine
Can be used to withdraw cash and make deposits at an ATM only
Additional fees may be assessed if the ATM used is not provided by the financial institution sponsoring the card
You need to have a PIN (personal identification number)

53. Debit Card Swipe it through the store machine or put into an ATM
Allows you to withdraw cash or make a purchase at a store
Enter the PIN (personal identification number)
Money is automatically taken from the bank account when purchases are made electronically
Complete transaction
Ask students to brainstorm pro’s and con’s to debit cards
PIN confirms authorized access to the account

54. Pro’s and Con’s - Debit Cards
Pro’s Cons’
Convenient
Small
Can be used like a credit card
Allows a person to carry less cash
Does not allow overspending
Can lose track of balance if transactions are not written down
Opens checking account up to credit fraud
Others can gain access to the account if the card is lost and PIN is known

55. Electronic, Online & Smartphone Banking
Electronic Funds Transfer-EFT- the movement of funds using computers systems, telephones or electronic terminals or smart phones
Online and smart phone banking allows account holders to access their account information view transaction history and perform banking transactions via the internet or their mobile phone
Touch-Tone banking-electronic services banks offer consumers like checking account balances, pay bills and transfer money using a touchtone phone.
ConcDiscuss main difference between traditional checks and debit cards
-swipe card that looks like a credit card rather than writing a check
-debit card funds are accessed immediately by merchants and funds are automatically deducted, whereas checks must clear
-debit cards are used at atms to get cash
Mobile phone users use apps for their banking

56. Bank Services Safe deposit box Overdraft protection
Cashier’s checks and money orders
Stop Payment
Bank cards
Bank loans
Banks offer home mortgages and other types of loans.
5-2 Savings Accounts
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57. Online Banking
Involves banking using phone or Internet access to bank accounts
Offers various services
Electronic payment of bills
Transfer of money between accounts
Checking that deposits are posted
Seeing which checks have been processed
Seeing interest or fees that have been posted
Students will be able to know online banking services using the Internet – complete handout on online banking demonstration
Rd pg ryan book page 145 recall 1-4
5-2 Savings Accounts
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58. Identity Theft
Is stealing someone’s personal identifying information and using it to make purchases or to get other benefits
Millions of Americans have their identity stolen every year
You have to protect yourself and your personal information such as: address, phone number…
How? Old statement in the trash, online scams, computer viruses, stealing your documents
What to do? Be on guard!
Monitor your financial statements regularly.
Shred your old documents.
Maintain computer security
Keep you private info private – don’t just provide it to anyone

59. Protecting Account Data
Crimes can be committed using account and personal data
Check fraud and forgery
Identity theft
To help prevent crime
Keep cards and account information in a safe place
Protect your PIN or password when using cards
5-1 Checking Accounts
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60. Conclusion Why is it important to maintain your checking account?
It helps you to make better financial decisions and take responsibility for those decisions
Slide 60