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© 2010 South-Western, Cengage Learning
DO NOW
Do you…
1.) have a checking account?
2.) have a debit card? (If so, what happens if you withdraw more money than you have in your account?)
**What does it mean to have a “checking account?”
© 2010 South-Western, Cengage Learning
Chapter
© 2010 South-Western, Cengage Learning
Checking Accounts and Banking Services
9.1 Checking Accounts
9
© 2010 South-Western, Cengage Learning
Chapter 9
3
Lesson 9.1
Checking Accounts
GOALS■ Describe the purpose of a checking account
and the forms associated with it.■ Explain how to use a checking account.■ Discuss the types of checking accounts.
© 2010 South-Western, Cengage Learning
Chapter 9
4
Checking Account Basics
■ A checking account allows you to write checks to make payments.
■ A check is a written order to a bank to pay the amount stated to the person or business.
■ Also known as a demand deposit, because the money may be withdrawn at any time—that is, “on demand.”
© 2010 South-Western, Cengage Learning
Chapter 9
5
Debit Cards■ If you have a checking
account, you may be eligible for a debit card.
■ A debit card is a plastic card that deducts money from a checking account almost immediately to pay for purchases.
© 2010 South-Western, Cengage Learning
Chapter 9
6
Checking Account BasicsSteps:1.) You deposit money into a checking account. The bank holds this money in your account. 2.) Your write a check. (This notifies the bank to take money out of your account and give it to the recipient -payee). IE- PSEG3.) When the payee (PSEG) cashes the check it is cleared.4.) The bank then stamps the check and takes the money out of your account.5.) This means that a check has been cancelledas proof of payment.
(continued)
© 2010 South-Western, Cengage Learning
Chapter 9
7
Checking Account Basics
■ Because it is 2015, banks no longer send paper checks back to other banks for processing.
■ To make processing faster, they exchange check information electronically by transmitting an image of the check, called a substitute check.
© 2010 South-Western, Cengage Learning 8
© 2010 South-Western, Cengage Learning
Chapter 9
9
Checking Account Basics■ You must maintain enough money in
your account to cover all checks.■ A check written for more money than
your account contains is called an overdraft.
■ A bank that does not honor a check usually stamps the check with the words “not sufficient funds” (NSF).
■ When this occurs, the check has bounced.
■ Your bank will charge you a fee for each NSF check processed.
(continued)
© 2010 South-Western, Cengage Learning
Chapter 9
10
Checks…..
■ Floating a check is writing a check and hoping to deposit money to cover it before the check clears.
■ Often these checks are post-dated.■ Floating a check is very risky
because today’s electronic systems allow checks to process very quickly- DO NOT DO THIS!!!!
(continued)
© 2010 South-Western, Cengage Learning
Chapter 9
11
Parts of a Check
CheckNumber
ABA Number
Name and Address of Maker Date
Payee Numeric Amount
WrittenAmount
Signature
Account and Routing Numbers
Memo
© 2010 South-Western, Cengage Learning
Using your checking account-Write legibly
-Sign your name as it matches other documents and the back of your debit card.
-When you make a mistake- VOID the check.
-Check your account regularly to make sure you have sufficient funds.
© 2010 South-Western, Cengage Learning
Because it is 2015, we can…■Direct Deposit ■Pay bills online (Bill Pay) ■PIN (personal identification number) allows you to do this.
■Convenience of ATMs (Automated Teller Machines)
OR Go to the bank and fill out a deposit slip and/or withdraw slip fill out your personal checkbook register.
© 2010 South-Western, Cengage Learning
Chapter 9
14
Using Your Checking Account■ Using a checkbook register
■ A checkbook register is a booklet used to record checking account transactions.
© 2010 South-Western, Cengage Learning
Chapter 9
15
Endorsing Checks■ A check generally cannot be cashed until it is
endorsed. ■ To endorse a check, the payee signs the top
part of the back of the check in ink. ■ There are three major types of endorsements.
■ Blank endorsement-John Smith
■ Special endorsement-Pay to the order of John Smith
■ Restrictive endorsement -For deposit only, Chase Bank, Acct # 32849475, John Smith
© 2010 South-Western, Cengage Learning 16
Let’s practice!
1. Write out a check to a partner and exchange.2. Endorse the check you were given.After endorsement: Fill out the following:
1. What is the check number2. Where can the routing number be
found?3. Who is maker?4. Why did you write the check (memo)?
© 2010 South-Western, Cengage Learning
© 2010 South-Western, Cengage Learning
HW■Read 195-196 on checking accounts.Define the following:
■Joint accounts■Special accounts■Standard accounts■Interest-bearing accounts■Share accounts
© 2010 South-Western, Cengage Learning
Closure
■What are benefits of a checking account?■What does it mean to void a check?■What happens it you don’t have enough $ in your checking account when a payee cashes the check?
■What does it mean when a check is cleared?
■What is another name for a checking account?
© 2010 South-Western, Cengage Learning
Closure
What does post-date mean?What is a checkbook registry?
© 2010 South-Western, Cengage Learning
Agenda 9.2
■Do Now: Complete the worksheet on bank terms using 9.2 (199-203).
■ Activity: Checking Account■Closure
HW: Study Guide (30 pt quiz next class)
© 2010 South-Western, Cengage Learning
Chapter 9
22
Opening a Checking Account
■ Signature authorization form■ Initial deposit
Recap from HW:What are some types of accounts?
© 2010 South-Western, Cengage Learning
Chapter 9
23
Types of Checking Accounts■ Joint accounts■ Special accounts■ Standard accounts■ Interest-bearing accounts■ Share accounts
© 2010 South-Western, Cengage Learning
Chapter 9
24
Banking Services■ A full-service bank is one that offers every possible
kind of service, from savings and checking accounts to credit cards, safe deposit boxes, loans, and ATMs.
■ Other services commonly offered are online banking, telephone banking, certified checks, cashier’s checks, money orders, and debit cards.
■ Most banks offer FDIC (Federal Deposit Insurance Corporation) insurance, which protects the deposits of customers against loss up to $250,000 per account.
© 2010 South-Western, Cengage Learning
Chapter 9
25
Guaranteed-payment Checks■ A certified check is a personal check that
the bank guarantees or certifies to be good.■ A cashier’s check, also called a bank draft,
is a check written by a bank on its own funds.■ Traveler’s checks are check forms in
specific denominations that are used instead of cash while traveling.
© 2010 South-Western, Cengage Learning
Chapter 9
26
Money Orders
■ Banks sell money orders to people who do not wish to use cash or do not have a checking account.
■ A money order is like a check, except that it can never bounce.
■ There is a charge for purchasing a money order. ■ You also can purchase money orders through the
post office and local merchants.
© 2010 South-Western, Cengage Learning
Chapter 9
27
Bank Credit Cards
■ You can apply to a full-service bank for a bank credit card, such as a Visa or MasterCard.
■ If you meet the requirements and are issued a card, you can use it instead of cash at any business that accepts credit cards.
■ Banks offering national credit cards usually charge both an annual fee for use of the card and interest on the unpaid account balance.
© 2010 South-Western, Cengage Learning
Chapter 9
28
Overdraft Protection
■ Overdraft protection allows you to cover checks or withdrawals up to a specified amount, usually between $100 and $1,000, depending on the typical balance in your account.
■ With overdraft protection, your checks will be covered even if you have insufficient funds in your checking account.
© 2010 South-Western, Cengage Learning
Chapter 9
29
Automated Teller Machines
■ An Automated Teller Machine is often called an ATM.
■ To use ATMs, you must ■ Have a card that is electronically
coded■ Know your personal identification
number (PIN)■ Getting cash is a common ATM
transaction.■ Using a debit card you can withdraw
cash from your checking or savings account.
■ Using a Visa or MasterCard, you can receive a cash advance electronically.
© 2010 South-Western, Cengage Learning
Chapter 9
30
Online and Telephone Banking ■ Online and telephone banking
services give you the ability to access your accounts from a computer or telephone anytime, day or night.
■ Services include: ■ Transferring money from one
account to another■ Paying bills by authorizing the
bank to disburse money■ Getting account balances■ Seeing which checks have
cleared and which deposits have been entered
© 2010 South-Western, Cengage Learning
Chapter 9
31
Online and Telephone Banking
■ Most banks also allow and encourage electronic transfers of money.
■ An electronic funds transfer (EFT) uses a computer-based system that enables you to move money from one account to another without writing a check or exchanging cash.
(continued)
© 2010 South-Western, Cengage Learning
Chapter 9
32
Stop Payment Orders
■ A stop-payment order is a request that the bank not honor a specific check.
■ The usual reason for stopping payment is that the check has been lost or stolen.
■ Most banks charge a fee for stopping payment on a check.
© 2010 South-Western, Cengage Learning
Chapter 9
33
Safe Deposit Boxes■ Financial institutions offer
customers a safe deposit box to store valuable items or documents.
■ They charge a yearly fee based on the size of the box.
■ Keeping important documents and other items in a safe deposit box ensures that the items won’t be stolen, lost, or destroyed.
© 2010 South-Western, Cengage Learning
Chapter 9
34
Safe Deposit Boxes
■ Examples of items commonly kept in a safe deposit box include
■ Birth, marriage, and death certificates■ Deeds and mortgage papers■ Stocks and bonds■ Jewelry■ Coin collections
(continued)
© 2010 South-Western, Cengage Learning
Chapter 9
35
Loans and Trusts■ Financial institutions also
make loans to finance the purchase of cars, homes, home improvements, vacations, and other items.
■ Banks can also provide advice for estate planning and trusts.
■ Banks can act as trustees of estates for minors and others.
■ A trustee is a person or an institution that manages property for the benefit of someone else under a special agreement.
© 2010 South-Western, Cengage Learning
Chapter 9
36
Notary Public
■ A notary public verifies a person’s identity, witnesses the person’s signature on a legal document, and then “notarizes” the signature as valid.
■ Financial institutions typically have a person on their staff who is a notary public.
■ This person provides notary services for account holders, usually without charge.
■ For noncustomers, however, there is typically a small fee.
© 2010 South-Western, Cengage Learning
Chapter 9
37
Financial Services
■ Purchasing or selling savings bonds■ Investment brokerage services
© 2010 South-Western, Cengage Learning
Chapter 9
38
Bank Fees■ Banks charge fees to their customers to help cover their operating costs.
■ The best way to avoid fees is to choose the right kind of account.
■ Shop around and find the account that is right for you.
■ Be aware of the rules of your account, so that you don’t violate them and be required to pay high fees.
© 2010 South-Western, Cengage Learning
Chapter 9
39
Examples of Bank Fees
■ Loan fees■ Trustee fees■ Check cashing fees■ Per-check fees■ Monthly service fees■ Overdraft fees■ NSF check charges■ ATM transaction fees
■ Safe deposit box fees■ Teller service fees■ Minimum balance fees■ Fees for guaranteed-
payment checks■ Notary service fees■ Online bill payment
fees■ Fees to return canceled
checks
© 2010 South-Western, Cengage Learning 40
Homework:■Read Ch. 10 and 20, take notes, define terms.
■Find an advertisement in a specific topic assigned to you. The ad should be no more than 3 minutes.
■Start study guide for next test.