1. Chapter 29
Checking Accounts pp

2. Learning Objectives Identify types of checking accounts.
Describe some of the major services that banks provide
Name the ways checking transactions are recorded.
Explain how to reconcile a checking account.

3. Why It’s Important
Paying with checks is the most common medium of exchange.

4. Opening an Account
1. Checking accounts are sometimes called ______________ because each check a customer writes is an order to the bank to release money from the _______________.
demand deposits
account on demand

5. Types of Accounts
2. Most banks offer several types of checking accounts. A wise consumer investigates all the _____________ available, as well as their __________________
kinds or accounts
advantages and costs

6. Regular Account a few checks don’t keep a minimum amount of money
3. A regular checking account is designed for customers who write ______________ each month and ___________________
______________ in the account.
Some accounts require a ____________________.
5. If the balance falls below the minimum, a _________________ is deducted from the account.
a few checks
don’t keep a minimum
amount of money
minimum balance.
service charge

7. Interest-Bearing Account
6. An interest-bearing account is a checking account that __________________________
_______________
earns interest on your account’s balance.

8. Interest-Bearing Account
7. An interest-bearing account usually has a _______________________ with an unlimited number of checks allowed each month.
8.The minimum balance might be much ___________than for a regular checking account.
minimum balance requirement
higher

9. Joint Account joint account
9. A _____________ is an account shared by _____________ who are equally responsible for the account.
10. With a joint checking account, __________________________ on the account.
two people
either person can write checks

10. Which type of account requires the smallest amount of money to open?
Figure
29.1
TYPES OF CHECKING ACCOUNTS
This chart shows the different types of checking accounts available at one bank.
Which type of account requires the smallest amount of money to open?

11. Signature Card signature card verify your identity
11. A ______________ is a record of your signature used by the bank to ___________________.
The signature card helps ________________________ from cashing your checks.
The signature you put on your card is the _______________ you have to use when you sign your checks.
verify your identity
prevent other people
same one

12. Signature Card
Stacey E. Graham

13. Fast Review
What is an advantage and a disadvantage of an interest-bearing checking account?
2. What is the main purpose of a signature card?
It earns interest on the balance but requires a high minimum balance
To verify your identity

14. Overdraft Protection
14. One risk of having a checking account is writing checks for ______________ than you have in your account, or ______________ your account.
15. Banks _______________ for a returned check.
more money
overdrawing
charge a fee

15. Overdraft Protection wrote the check to
16. The business you _______________
will probably also charge a fee.
17. Overdraft protection is a _____________ for overdrawn checks.
18. You pay a _______________ for the overdraft protection and ___________on the overdrawn amount until it is repaid.
wrote the check to
line of credit
service fee
interest

16. Stop Payment stop payment
19. A ______________ is an order for a bank not to cash a particular check.
20. Banks _____________ to stop payment on a check.
stop payment
charge a fee

17. Debit Cards
21. A debit card is like a credit card but money __________________
________________ when you use it rather than charging the amount to a credit account.
is taken directly from your checking account

18. Online Checking
22. Online banking allows you to ___________________________
_____________ at any time of the day over the Internet.
check your accounts, transfer money, or pay bills

19. Online Checking less expensive for banks
Online checking is ___________
____________, so service fees are often lower than a traditional account.
24. Banks offer the option of scheduling ____________________________ from your checking account.
automatic payment of your bills

20. How is a debit card different from a credit card?
Fast Review
What happens if a customer has insufficient funds in a checking account to pay a check?
How is a debit card different from a credit card?
The check “bounces” or is returned to the person who tried to cash it.
A debit card takes money directly from your checking account and you don’t pay interest on the purchase.

21. Account Records
25. An advantage of a checking account is that it enables you to keep records of your ___________________________
records of your financial transactions

22. Check Parts Date Check Written ABA Number payee drawee Bank Acct.
Niki Lantz
34.00
Thirty-four and 00/
Stacey E. Graham
Nov
Bank of Lanc. County
Lancaster PA
Strasburg, PA
ABA
Number
payee
drawee
Bank Acct.
Number
Drawer
Bank Routing No.

23. Writing a Check 26. The party to _______________
___________ and who is cashing the check is the ___________.
27. The party __________________ and is paying the money, or drawing it from an account, is called the ____________.
28. The _______________________ where the drawer has an account is the ____________
whom the check is written
payee.
wrote the check
drawer
bank or financial institution
drawee

24. Writing a Check check register
29. Your _______________ is your checkbook log where you keep ___________________________.
check register
track of all your checking transactions

25. Depositing a Check
To deposit a check in your account you need to fill out a ________________
31. To deposit or cash a check requires an _____________, or the signature of the payee on the back of the check..
deposit ticket.
endorsement

26. Depositing a Check
32. To endorse a check, follow these rules for your protection:
Endorse the check on the back
Use a black pen so your signature can’t be erased
Blank Endorsement
Sign Here______________
_____________________
Restricted Endorsement

27. Depositing a Check exactly as it’s written
33. Sign your name ______________
__________ on the front of the check. This is called an _________
____________.
34. If you’re depositing a check rather than cashing it, write ___________
_____________ above your signature. This is called a ____________________.
blank endorsement
“For Deposit Only”
restricted endorsement

28. Bank Statements bank statement
35. A ______________ is the __________record of all the transactions in your checking account.
bank statement
bank’s

29. Michael and Conchetta Chung received this bank statement.
Figure
29.2
SAMPLE BANK STATEMENT
Michael and Conchetta Chung received this bank statement.
What were the totals for checks written and for deposits for the month?

30. Bank Statements
36. A bank statement includes a record of all ______________________
___________.
37. A bank statement also includes a record of all ________________, or checks you’ve written that have been cashed.
withdrawals, deposits, interest and fees.
canceled checks

31. What are the three different parties on a check?
Fast Review
What are the three different parties on a check?
Why should you write “For Deposit Only” on the back of a check?
The payee (person who is cashing the check, The drawer (person who wrote the check) and the drawee (the bank where the drawer has the account.
If the check is lost it can only be used to deposit into your account

32. Graphic Organizer Graphic Organizer Paying by Check Write the check NOIs
there
enough money
in your account? NO
YES
The bank charges you a fee and returns the check to the business. The business also charges you a fee.
The bank withdraws funds from your account and pays the check.

33. Bank Reconciliation Bank Reconciliation
38. _______________ is the process of seeing whether _______
___________________________ for your account.
your records agree with the bank’s records

34. Balancing Your Checkbook
39. The __________ to reconciling your account is to see whether the bank has processed all your checks and deposits.
first step

35. Balancing Your Checkbook
Outstanding checks
_________________ are checks that have been __________
_____________________.
written but haven’t yet been cashed

36. Balancing Your Checkbook
41. Deposits that haven’t been recorded on the bank statement should be __________ to the bank statement balance.
added

37. Balancing Your Checkbook
service fee
42. The ______________ should be ____________ from the balance in your check register.
subtracted

38. Balancing Your Checkbook
earns interest
43. If your account _____________, ________the interest shown on the bank statement to your check register.
add

39. Balancing Your Checkbook
44. If the balances on your bank statement and in your check register _________________________ (or brought into agreement) your check register balance with the bank statement balance.
are the same, you have reconciled

40. Finding Errors
45. If the balances on your bank statement and in your check register don’t agree, check your own account records to see whether you __________________________
__________________________
wrote the correct amount for each check and deposit.

41. Finding Errors 46. Check all your _________________________.
47. Check to see whether you carried the ____________________ for each new page of your check register.
additions and subtractions
correct balance forward

42. Finding Errors
48. Recheck to see that you have _________________ all of the outstanding checks and deposits that haven’t been processed by the bank.
correctly identified

43. Finding Errors
bank’s
49. Check the ________ additions and subtractions.

44. Fast Review
What is the difference between a cancelled check and an outstanding check?
A canceled check has been cashed by the bank. An outstanding check is a check that has been written that hasn’t been cashed yet.
continued

45. Fast Review
What charges do you need to add and subtract from your check register to reconcile it with your bank statement?
You need to add interest and subtract service charges.

46. When you write a check at the store, what do you think the store does with it?
continued

47. What do you think an intermediary bank does?
What’s the purpose of the routing number on a check?
continued

48. How do you know when a check has cleared?

49. End of
Chapter 29
Checking Accounts pp

50. Key Words demand deposits interest-bearing account signature card
overdrawing
overdraft protection
stop payment
debit card
continued

51. Key Words check register endorsement bank statement canceled checks
bank reconciliation
outstanding checks

52. Online Bill-Paying
CheckFree provides the online bill-paying service for the majority of the United States’ largest banks. It works with the banks that want to provide online bill paying for their customers.
continued

53. Online Bill-Paying
CheckFree has little competition since others don’t want to build the required complex computer system.
continued

54. Analyze
What other vendors could CheckFree build relationships with in order to be successful?