1. Checking & Savings Accounts Lesson 2: Checking Account Basics – Part 1
FINANCIAL AWARENESS
Checking & Savings Accounts
Lesson 2: Checking Account Basics – Part 1
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2. Checking Account Basics
Having a checking account is important to the day to day management of your money.
A checking account enables you to make deposits, pay expenses and make purchases without the use of cash.
Most checking accounts allow you to either write a check or use a debit card to pay for purchases and monthly expenses.

3. Checking Account Basics
In this lesson, we will discuss the basics of money management to include:
Selecting a checking account,
Writing a check and
Using an ATM and debit card.
Paying bills and making purchases are a big part of everyday life; therefore, it is very important that you learn to manage your money and make wise decisions. 3

4. Selecting a Checking Account
Selecting a checking account requires research on your part to select the bank and type of account that is right for your needs.
Many banks offer free checking accounts but have specific criteria you must meet and maintain to avoid fees.
When you are researching your options, make sure you understand all of the fees and services the account provides. 4

5. Selecting a Checking Account
Look for a checking account that requires a small opening balance.
Some banks charge a monthly service fee if you go below the daily minimum balance.
When selecting an account, make sure you can maintain the set minimum balance to avoid this fee.

6. Selecting a Checking Account
Try to find a checking account that does not charge for printed checks and debit or credit card transactions.
Some banks have a maximum debit or credit card transaction limit per month and will charge for every transaction over this limit.

7. Exercise #1: Checking Account Basics
Distribute Exercise #1: Checking Account Basics.
You will use this handout throughout Checking Account Basics – Part 1 to mark your responses to questions. 7

8. Exercise #1: Checking Account Basics Question 1
Directions:
Read this scenario, then select the best answer to this question.
Scenario:
Zamora is opening her first checking account. She is a senior in high school and works part-time at the local mall. Zamora is paid twice a month on the 1st and 15th of each month. She is responsible for paying her car insurance each month and usually cashes her checks and spends her money on gas, new clothes and entertainment. She also wants to start saving some money to help out with future college expenses. 8

9. Exercise #1: Checking Account Basics Question 1
Which of the following checking account options would be best for Zamora’s situation?
Option 1: Free checking account with a per transaction charge for checks and ATM withdrawals
Option 2: Checking account with a $500 minimum balance requirement
Option 3: Free checking and savings account with a combined low minimum balance requirement of $100
Option 4: Checking account with a set monthly maintenance fee of $20 9

10. Exercise #1: Checking Account Basics Question 1 - Answer
Which of the following checking account options would be best for Zamora’s situation?
Option 1: Free checking account with a per transaction charge for checks and ATM withdrawals
Option 2: Checking account with a $500 minimum balance requirement
Option 3: Free checking and savings account with a combined low minimum balance requirement of $100
Option 4: Checking account with a set monthly maintenance fee of $20
Answer
With this option, Zamora gets a checking and savings account and will only pay a fee if her combined balance goes below $100. 10

11. Explanation
Even though you have not learned a lot about a checking or savings account yet, you can still use your judgment to select the best option for Zamora.
With Option 1, Zamora would be charged every time she wrote a check or made a cash withdrawal, since we do not know the fee charged or how many transactions she will make in a month, this option could end up costing her a lot of money.
With Option 2, it would be difficult for Zamora to keep a $500 minimum balance since she is a student and working part-time. Could you maintain this high of an account balance?

12. Explanation
While Option 4 sounds good, it does not offer Zamora a savings account and depending upon her account activity each month, she may not accrue $20 in fees using one of the other options.
With the information given, Option 3 would be the best choice for Zamora. As long as she keeps a low $100 combined balance between her checking and savings accounts, she will never be charged a fee.

13. Questions to Ask When Selecting a Checking Account
Here are some questions to ask when selecting a checking account:
What is the minimum opening balance?
Is there a minimum daily balance?
If so, what is the minimum balance?
What is the fee if you go below the minimum balance?

14. Questions to Ask When Selecting a Checking Account
Is there a monthly service charge?
If so, how much is it and what is it for?
Is there a transaction fee for debit or credit card transactions?
If so, what is the per transaction fee?

15. Questions to Ask When Selecting a Checking Account
Is there a monthly maximum transaction limit?
If so what is the maximum limit?
What is the per transaction fee if maximum limit is exceeded?
Is there a check limit per month?
If so, what is the limit and fee for exceeding the limit? 15

16. Questions to Ask When Selecting a Checking Account
Is there a charge for withdrawing money from an ATM machine?
If so, how much per transaction?
Is there a charge for using another bank’s ATM machine?
Does the account include overdraft protection?
If so, what is the overdraft protection fee? 16

17. Questions to Ask When Selecting a Checking Account
What is your deposit hold policy?
A deposit hold policy is the length of time a deposit is held before the money is available for withdraw.
Is there a fee for printed checks?
If so, how much? 17

18. Questions to Ask When Selecting a Checking Account
Will I have access to 24/7 telephone and online banking? Is there a fee for these services? If so, how much?
Will I receive monthly statements?
Are there any other hidden fees, charges or requirements? 18

19. Exercise #1: Checking Account Basics Question 2
When selecting a checking account which of the following questions should you ask?
What is the minimum opening balance?
Is there a monthly service charge?
Does the account include overdraft protection?
All of the above 19

20. Exercise #1: Checking Account Basics Question 2 – Answer
When selecting a checking account which of the following questions should you ask?
What is the minimum opening balance?
Is there a monthly service charge?
Does the account include overdraft protection?
All of the above
Answer
You should ask all of these questions when selecting a checking account. 20

21. Selecting a Checking Account
Some banks now offer incentives and benefits to attract new customers such as free checking and savings accounts or ‘free’ money for opening an account.
Be careful when selecting these offers because they usually charge a fee after the introductory period is over. 21

22. Selecting a Checking Account
Make sure you have the right to close the account at any time and switch to another bank without incurring any penalty fees. Always read financial documents closely before signing.

23. Federal Deposit Insurance Corporation (FDIC)
Most financial institutions insure their customers’ deposits through the Federal Deposit Insurance Corporation (FDIC).
The FDIC preserves and promotes public confidence in the U.S. financial system by insuring deposits in banks.
This basically states that if your bank goes out of business, you would not lose your money up to a set amount. 23

24. Federal Deposit Insurance Corporation (FDIC)
The FDIC is an independent agency of the federal government funded by premiums that banks pay for deposit insurance coverage and from earnings on investments in U.S. Treasury securities.
Almost all banks in the U.S. are FDIC insured; however, you should clarify this before opening an account. 24

25. Writing a Check
A personal check is the most common form of check used. It is a check written on your individual checking account.
Now that you have selected a bank and opened a personal checking account, you can begin writing checks. 25

26. Writing a Check Here are the different parts of a check:
Personal Information
Check Number
Date
Pay to the order of or Payee
$ amount
Written amount
Bank Name
For, Memo or Note
Signature Line
Bank Routing Number, Account Number and Check Number 26

27. Temporary Checks
When you open a checking account, the bank will give you temporary checks with your account information to use until you receive your printed checks.
Most temporary checks will not have your personal information printed on them. You must handwrite this information on the temporary checks. 27

28. Temporary Checks Cont.
Temporary checks can be used to pay bills; however, most retailers will not accept a temporary check without several forms of identification.
You should receive your printed checks and debit card in the mail within a few business days after you opened the account.
If you do not receive your printed checks within the timeframe stated, contact your bank immediately. 28

29. Parts of a Check Personal Information
Most checks will have your personal information printed in the top left-hand corner of the check.
This information should include:
your name and others if it is a joint account,
mailing address and
city, state and zip code. 29

30. Parts of a Check Personal Information
It is usually optional to have your telephone number, driver’s license number or other identification information included on your check.
Most businesses will ask for your driver’s license number and phone number if it is not printed on your check.
In this day and age of identity theft, you do not want to print your social security number on your checks. 30

31. Parts of a Check - Check Number
The check number is usually printed in the top right-hand corner of the check.
When you open a new account, most checks will be printed starting at check number 100 unless you specify otherwise. 31

32. Parts of a Check - Check Number
A low check number is usually an indication to the payee that the checking account is new and may require you to show additional identification.
Most banks will let you select the starting number for your printed checks.
The check number is also included in the MICR (Magnetic Ink Character Recognition) line at the bottom of the check along with the bank routing number and your account number. 32

33. Parts of a Check – Date Line
Write the date the check is written in the date line.
Write the month, day and year in any format (i.e., MM/DD/YY or Month Day, Year, etc.) as long as it is legible. 33

34. Parts of a Check – Date Line
Most banks recommend that you do not post-date a check.
Post-dating a check is when you write a future date on the check instead of the current date to be able to pay your bills on time before the money is actually in your account. 34

35. Parts of a Check – Date Line
While post-dating a check is not illegal, according to the Uniform Commercial Code, the bank will process a check regardless of the date and the funds will be taken from your account.
If you have insufficient funds, you are responsible for the INF fees.
A check becomes a binding form of exchange for goods and services the moment you sign the check regardless of the date on the check. 35

36. Exercise #1: Checking Account Basics Question 3
What is post-dating a check?
When you write a past date on a check instead of the current date
When you write a future date on a check instead of the date the check is being written
When you write any date on a check because you do not know the actual date
When you illegally write the wrong date on your check 36

37. Exercise #1: Checking Account Basics Question 3 - Answer
What is post-dating a check?
When you write a past date on a check instead of the current date
When you write a future date on a check instead of the date the check is being written
When you write any date on a check because you do not know the actual date
When you illegally write the wrong date on your check
Answer
Post-dating a check is when you write a date in the future instead of the current date on a check. 37

38. Parts of a Check – Payee Payee/Pay to the Order of
The Payee or Pay to the Order of line is where you write the name of the person or business to which you are paying.
If you do not know who to make the check out to, you need to ask.
Do not leave the Payee line blank because anyone can write-in their name and cash the check. 38

39. Parts of a Check – Bank Name
The bank name and branch will be printed somewhere on the check to identify which bank will process the check. 39

40. Parts of a Check – Check Amount
The $ amount is where you write the dollar and cent amount of the check using numbers.
Begin the numbers close to the dollar sign so no one can insert another number.
For example, $200.76 40

41. Parts of a Check – Check Amount
Written Amount
This is where the amount of the check is written in words.
Begin at the far left end of the line.
If you do not use the entire space, draw a line to fill in the empty space to the word “Dollars.”
For example,
Two hundred & 76/ Dollars 41

42. Parts of a Check – Check Amount
Written Amount
The amount written in this section is what the bank uses to process the check.
Therefore, you need to make sure the $ amount and the written words match. 42

43. Parts of a Check – Check Amount
Always double-check to make sure these two amounts are the same. It is easy to make a mistake.
For example,
Two hundred seventy-six instead of
Two hundred & 76/100
In this example, the bank would deduct $ from your account instead of $200.76; this is a $75.24 mistake! 43

44. Parts of a Check – Check Amount
If you write a check for less than $1, in the written amount section, write the number and the word cents and draw a line through the rest of the line to include the word “Dollars.”
For example, $0.75 should be written as 44

45. Parts of a Check Cont. For, Memo or Note Line
This area is for you to reference why the check was written.
You can also write an account number or name in this section to assist the payee in applying the check to the correct account.
This is the only area on a check that can be left blank. 45

46. Parts of a Check Cont. Signature Line
This is where you sign your name as it appears on your signature card when you opened the account.
Always sign your name the same way.
The bank will not process a check if it is not signed.
If you forget to sign a check, this will delay the payment being posted to your account and can result in late fees.
NEVER sign a blank check because if the check is lost or stolen, it can be written for any dollar amount. 46

47. Parts of a Check Cont. Routing, Account and Check Numbers
At the bottom of a check, you will see a series of numbers.
The first set of numbers is usually the bank routing number.
The second set is your account number and the third is the check number. 47

48. Parts of a Check Cont.
These numbers are printed utilizing special ink called, Magnetic Ink Character Recognition (MICR).
This is a financial institution standard which enables checks to be universally scanned and processed electronically. 48

49. Exercise #1: Checking Account Basics Question 4
Directions:
Write the letter in the correct space to complete the check.
Question 4
Complete the check to pay the bill.
(A) Fifty-four dollars & 22/00
(B)
(C) Valley Phone Company
(D) June 15, 2006
(E) Rebecca Hurgis 49

50. Exercise #1: Checking Account Basics Question 4 - Answer
Directions:
Write the letter in the correct space to complete the check.
Question 4
Complete the check to pay the bill.
(A) Fifty-four dollars & 22/00
(B)
(C) Valley Phone Company
(D) June 15, 2006
(E) Rebecca Hurgis 50

51. Lesson 2: Checking Account Basics – Part 1
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