1. 7.2 Use Your Checking Account
Banking Service
7.2 Use Your Checking Account

2. 7.2 Use Your Checking Account
Goals:
Demonstrate how to write, endorse, record, and deposit checks
Identify types of checking accounts and checking account fees.

3. 7.2 Use Your Checking Account
Key Terms:
Checking account
Check register
Account balance
Overdrawing
Endorsement
Third party check

4. Your checking account
A bank account that allows depositors to write checks to make payments is a checking account.
How old do you need to be to open a checking account?
18 years old, anyone younger must open a joint account

5. Advantages of using checks
Safety- the greatest advantage of using a check is safety! Why?
Convenience
Don’t want to carry large sums of cash, bulky etc.
Can mail checks of any amount.
Records of your Transactions
Checks automatically serve as records for your transactions. Banks send you a statement, which is a written record of all your transactions.

6. Sample Check 1. Date you write the check 2. Your name and address
3. Payee
4. Your signature
5. Amount of check in numbers
6. Amount of check in words
7. Check number
8. Bank the check is drawn on
9. Routing number & account number

7. How to write a check
When writing a check you MUST fill out the following parts:
The date you write the check
The name of the payee
The amount of the check, written in numbers and words
Your signature

8. Rules to writing a check
Always fill out checks in ink so that no one can erase or change them
Write clearly
When writing the amount in words- show cents as a fraction
Start writing at the left of the amount space, so no one can alter your check, then fill that space with a line
Use the memo to write yourself a brief description of what the check is for.

9. Recording your checks in your register.
Checks come with a booklet called a check register, for recording your transactions.
Record each transaction
Record fees
Record interest
Calculate your new balance-
Your account balance is the total amount in account at a specific date.
Record check numbers. This is the most effective way to keep from overdrawing on your account.

10. Bouncing a check
Overdrawing means writing a check for more than you have in your account.
When the bank receives a request to pay a check for which you have insufficient funds, it may refuse to pay and charge you a fee of $35 or more.

11. How to cash or transfer a check
To cash a check:
Take it to your bank
Sign your name on the back of the check in the designated space- endorsement. An endorsement acknowledges that you received the money or transferred your right to the money to someone else
Have ID ready
Third Party Check- used when you want to sign over a check to someone else. You write “Pay to the order of Sandy Whelan” and then endorse the check by signing your name below.

12. Depositing a check
You may deposit all or part of a check into your account.

13. The check clearing process
In order for you to have access to the money, the check has to “clear” first.
This process can occur electronically overnight or used to take a week depending how far away the bank is located.

14. Checking Account Types & Costs
Interest-bearing accounts:
Sometimes banks pay interest to depositors on checking accounts.
Noninterest-bearing accounts:
If you don’t have a large sum to keep in a checking account, you will probably open a checking account that pays no interest.

15. Checking Account Costs
Two types of Checking Account Fees:
Monthly maintenance fee- this is a flat fee to cover the costs of maintaining your account regardless of the number of checks you write.
Service charge for each check you write. (usually between 15 and 25 cents per check)
Be sure to investigate the fees charged by competing banks to find the best deal for your financial situation.

16. Which should Lisa choose?
Lisa wants to open an account. She thinks she will write an average of 10 checks per month. She may choose from two different accounts. One has a $5 monthly maintenance fee and charges $.15 per check. The other has a $3 monthly maintenance fee but charges $.25 per check.
How much would Lisa pay in fees for each account? Which account should she choose?