Chapter 9
Checking Accounts and Other
Banking Services
Lesson 9.1 Checking Accounts
I.
Purpose of a Checking Account
A.
B.
Checking Account is an account
that allows depositors to write
checks to make payments
Checks—a written order to a
bank to pay the stated amount to
the person named
C.
D.
Also called Demand Deposit
(withdrawn “on demand”)
Financial institutions usually charge
a fee, or require minimum deposits
II. How a Check Travels
A.
B.
C.
D.
Your payee cashes the check at
his/her bank
That bank returns it to your bank
Your bank withdraws the money
from your account and sends it to
the other bank
Your bank stamps the back of your
check (cleared the system)
E.
Canceled Check—a check that bears
the bank’s stamp, it has been paid
1. Use as proof of payment
2. Save as part of your record keeping
system
F. Advantages of a checking account
1. Provides convenient way to pay bills
2. Safer than using cash (major
purchase, pay bills, send in mail)
3. Built-in record keeping system, use
to track expenses, create budgets
4. As a customer, you have access to
other bank services
G.
1.
2.
3.
4.
Responsibilities of a Checking
Account
Write checks carefully and keep
accurate records
Verify the accuracy of the bank
statement monthly (reconcile)
Keep canceled checks with
your permanent records
Truncation—when a bank does
not return canceled checks
5. Maintain sufficient funds
a. Overdraft—a check written for more
money than your account contains
b. NSF (not sufficient funds) checks get
returned (bounced)
c. Bank charges an overdraft fee, can affect
credit
d. Floating a check—“post-dated check”
write a check before the deposit has
cleared, illegal and dangerous
e. Writing NSF checks can result in fine,
imprisonment, or both
III. Opening a Checking Account
A.
Fill out and sign a signature
authorization form
1. Bank can compare your signature to
the one on the check
2. Some have joint accounts
B. Secret question—mother’s maiden
name, used for identification
IV. Parts of a check
A.
B.
C.
D.
Check number—pre-numbered by bank
ABA Number—(American Bankers
Association) identifies the location and
district of your bank
Maker’s preprinted name and address
(drawer), do not print SS number
Date—banks may not honor checks over
6 months old
E.
Payee—the person to whom the
check is made payable
F. Numeric amount—amount of dollars
and cents to be paid, in figures
1. Start close to $
2. Raise cents above the line of writing
G.
H.
I.
Written amount—amount to be paid,
written in words
1. Begin writing at far left of line
2. Draw wavy line from cents to
“dollars”
Signature—bank can compare to
signature card
Account and Routing Numbers—
appears in bank coding at the
bottom of each check
J.
K.
Memo—provides place to write the
purpose of the check
Can purchase blank checks from
bank or printing company
V. Using Your Checking Account
A. Writing Checks
1.
Always use a pen—blue or black ink
2.
Write legibly
3.
Sign your name exactly as it
appears on the signature card
4.
Avoid mistakes—void (cancel) the
check and write a new one. Write
the word VOID in large letters
across the face of the check, save
for your records
5.
Have adequate funds in your
account
B. Paying Bills Online
1. Must register at your bank’s Web site
2. Receive PIN (personal identification
number) or password to enter your
account
3. Set up a list of payees, enter payment
amount. Bank will deduct amount from
your checking account and transfer to the
payee
4. Be sure to enter in check register
5. Some banks have fees and restrictions-shop around
C. Making Deposits
1.
a.
b.
c.
d.
e.
2.
Complete a deposit slip
Insert date, write in amount of cash,
checks (identify w/ABA number), sub
total deposit, subtract cash received, fill
in total deposit.
Sign if you will be receiving cash back
Keep copy of deposit slip as proof of
amount of deposit
Count money carefully
Properly endorse all checks
Can make deposits at ATM machines
D.
1.
2.
3.
4.
Using a Checkbook Register
Checkbook register—a booklet used to
record checking account transactions
Record current amount in balance
column
Record transaction as soon as you write
check or make deposit or payment
Write in check number, date, name of
payee, purpose
5.
Write amount in Payment/Debit
column if it reduces balance (checks,
online bill payments, debit card
purchases, withdrawals, check fees,
service charges)
6. Write amount in Deposit/Credit
column if it will add to balance
(deposits, interest earned)
7. Repeat the amount under the last
balance
8. Subtract or add to balance and write
in new balance
E. Reconciling Your Checking
Account
1.
2.
Reconciliation—match your
checkbook register with the bank
statement
Do the reconciliation immediately
upon receipt of the bank statement
to correct any errors made by you or
the bank
VI. Endorsing Checks
A. Blank endorsement—signature of the
payee written exactly as it appears on
the front of the check. Anyone can
cash it if it is lost.
B. Special Endorsement—endorsement in
full. Transfers the right to cash the
check to someone else. “Pay to the
Order of [new payee’s name] and the
signature of the original payee
C. Restrictive Endorsement—restricts or
limits the use of the check. “For
Deposit Only” Check can only be
deposited. Safer than the blank
endorsement.
VII.Types of Checking Accounts
A.
Joint Accounts
1. Opened by two or more individuals,
survivorship account because if one
person dies, the survivor becomes the
sole owner
2. “Or” account—either can write checks
3. “and” account—both have to sign
B.
Special Accounts—small or no fee, fee for
services used
C.
D.
E.
Standard Accounts—set monthly
service fee, but no per-check fee
Interest-Bearing Accounts—usually
must have minimum balance
Share Accounts—from credit unions
Lesson 9.2 Other Banking Services
I. Guaranteed-Payment Checks
A.
Certified check—a personal check
that the bank guarantees to be good
1. Take your personal check to your
bank
2. Bank officer will deduct amount
from account and stamp “certified”
3. Service fee--$2.50 to $5.00
B.
C.
D.
Cashier’s check—bank draft. Check
by the bank on it’s own funds.
Check is guaranteed, you can
remain anonymous, banks charge a
fee.
Money Orders—people who do not
wish to use cash, but do not have a
account
Debit Cards—allow immediate
deductions from a checking account
to pay for purchases; similar to
writing a check
E.
F.
G.
H.
Bank Credit Cards—VISA,
MasterCard
Automated Teller Machines—ATM.
Most banking transactions can be
made through EFT (electronic funds
transfer). Must have a PIN number
Online and Telephone Bank
Stop Payment Orders—request that
a bank not cash a specific check.
Usually when check has been lost or
stolen. Fee--$20 or more
I. Safe Deposit Boxes—used
to store valuable small
items or documents.
Rental fees $25--$100 year.
1. Birth, marriage, death
certificates
2. Deeds and mortgages
3. Stocks and bonds
4. Jewelry, coin
collections
J.
H.
I.
Loans and Trusts—cars, homes,
vacations, home improvements,
college
Trustee—a person or institution that
manages property for the benefit of
someone else under a special
agreement
Financial Services—purchasing or
selling savings bonds, investment
services.
II. Bank Fees
A.
B.
Banks charge fees to their
customers to help cover their
operating costs
Banks make a lot of money from
charging fees, shop around

The End!