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Chapter 9 Checking Accounts and Other Banking Services. Checking Accounts Other Banking Services and Fees. Lesson 9.1 Checking Accounts. Describe the purpose of a checking account. - PowerPoint PPT Presentation
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Chapter 9Checking Accounts and Other Banking Services
Checking AccountsOther Banking Services and Fees
GOALSGOALS
Lesson 9.1
Checking Accounts
Describe the purpose of a checking account. Discuss how to prepare a signature
authorization form, checks, check endorsements, deposit slips, a checkbook register, and a bank reconciliation.
Be able to distinguish between different types of checking accounts.
Checking Account
CheckA written order to a bank to pay stated amount to payee
Demand depositAnother name for checking account
Canceled checkStamped by bank showing it has “cleared” (See P237 for entire process)
Checking Account
Why open a checking account?Convenient and safer than carrying cashCancelled checks serve as receipts or proof of paymentCheck records help in determining family budgets
Checking Account
How to open checking accountPrepare a signature cardTwo pieces of ID are usually neededMust have a minimum deposit
Checking Account
OverdraftA check written for more money than you have in your accountAnother word for a check “bouncing”You will be charged at least $20 for NSF (non-sufficient funds)
Floating a checkWhen you knowingly write a check without enough moneyYou are hoping a deposit will “hit” before the check is cashed
Parts of a Check
071000741 08 40 856 0581
581ARDYS JOHNSONPhone: 555-01004250 West 18th AvenueChicago, IL 60601-2190
SKY CENTRAL BANKChicago, Illinois
PAY TO THEORDER OF
DOLLARSFor Classroom Use Only
MEMO
DATE 2-74710
$
July 1, 20--Food Mart 36.12
Thirty-six and 12/100
groceries Ardys Johnson
Using Your Checking Account
Writing checksAlways use a pen with dark inkWrite legiblySign name EXACTLY as it appears on checkIf you make a mistake do not correct, just write VOID across check
Save “voided” check for your records
Make sure you have enough money in your account to cover check
Using Your Checking Account
Making depositsOn “deposit slip”
Date of transactionAmount of cashList checks individuallyTotal amount depositingAny cash you are receiving back
Must sign deposit slip if receiving $$
Net depositKeep a copy for your records
Using Your Checking Account
Checkbook registerBooklet used to record all checking account transactions
Record balance from last page to the next page on top right boxAs soon as you do a transaction (ATM, deposit, check) record itAlways check for credits (+) or debits (-)Double check math – always update balanceBe sure to include any service fees
Reconciling Your Checking Account
Provided on back of bank statementSent once a monthIncludes withdrawals, deposits, service charges and interest earnedReconcile
Just means to check your records with the bank’s records
Reconciling Your Checking Account
Steps to reconcileStart with ending balance from the bankAdd any deposits that you have recorded, but the bank hasn’t recordedSubtract any checks or withdrawals that you have recorded but not the bankGet new balanceShould be the same! Check for any errors.
Reconciling Your Checking Account
1. Write ending balance from bank statement.
2. Add credits or deposits not on statement.
3. Total lines 1 and 2.4. Write total checks
outstanding.5. Subtract line 4 from line 3.
(Should agree with checkbook balance)
1279.38
100.001379.38
139.901239.48
Endorsing Checks
Blank endorsementPaid to you and you sign it
Joint endorsementCheck is made out to 2 people, both must sign
Special endorsement – “Pay to the order of”Signing over the check to someone else to cash
Restrictive endorsement – “For deposit only”
Use when depositing in ATMs or mailing depositsMisspelled name
Sign with incorrect spelling first, the sign correct spelling below
Types of Checking Accounts
Joint accountsOpened to two or more people
Survivorship account – someone dies, then the account is left to surviving person.Avoids “inheritance tax”Anyone on account has the right to all the money in account
Special accountsAvailable for people that do not write that many checks each monthUsually a flat rate, plus a fee per check
Types of Checking Accounts
Standard accountsUsually set fee per month, but no per-check feeMaintain a minimum balance – no fee
Interest-bearing accountsEarn a larger % of interest on balanceHigher minimum balance requirements
Share accountsCredit unionsUsually lower minimum balances or no minimum balanceLittle or no service fee
GOALSGOALS
Lesson 9.2
Other Banking Services and Fees
Describe various banking services other than checking accounts available to consumers.
Identify services for which banks commonly charge a fee.
Other Banking Services
Guaranteed-payment checksCertified Check
Write the check and the bank will automatically deduct from checking account and stamp “certified”The payee knows that the check is goodBanks charge around $2.50 per check to certifyUse if you are buying a house, car, etc.
Cashier’s Check (or bank draft)Give the bank money and they write a check from their fundsSimilar to a certified check, but your identity is not revealed
Other Banking Services
Money ordersSimilar to other guaranteed-payment checksCan purchase at banks, post offices and local businessesFee depending on the size of the money order
Other Banking Services
Debit cardsUsually have the VISA or MasterCard logo.Use at ATMs to get out moneyUse at retail stores to make purchasesMoney is immediately taken out of your checking account
May be a minimum purchase amount, just like credit cards
Other Banking Services
Credit cardsUsually have the VISA or MasterCard logoCharged interest for any unpaid account balance
Try to always pay off at end of month!
Choose one that does not have an annual fee
Automated teller machines (ATM)Make withdrawals/deposits to checking and savings accounts Make payments on loans and billsMust have a PIN number to access – keep secure!Best to only use ATMs at banks
Other Banking Services
Online/Telephone banking Get up-to-date account balancesCheck anytime – day or night
Stop payment ordersNotifies bank not to cash a check or checksBanks charge a fee of $10 or moreUse stop payment if checks are lost or stolen
Other Banking Services
Safe deposit boxesMetal box or safeYearly rental fees from $25 - $100Store valuable items you do not want stolen or damaged in case of house fire
Jewelry, birth, marriage, death certificates, deeds, etc.
Other Banking Services
Loans and trustsMake car, home or home improvements loansCan be “trustee” to a minor or person that needs money/property managed
Financial servicesSome large banks provide brokerage services for buying/selling stocks and bonds
Bank Fees
Examples of bank feesLoan feeTrustee feeCheck cashing fee for non-customersPer-check feeMaintenance feeCheck printing feeATM transaction fee
Other terms…
FDIC (Federal Deposit Insurance Company)
Banks insure your deposits up to $100,000 per account in case of bankruptcy, robbery, etc. Does not insure any amount over $100,000Banks oversees do
