Chapter 23
BANKING AND CREDIT
23.1 Financial Institutions
23.2 Checking Accounts
23.3 Credit and Its Use
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Lesson 23.1
FINANCIAL INSTITUTIONS
Objectives
 Name and describe the
four major types of
financial institutions
 Discuss how electronic
banking may change
money management
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Lesson 23.1
TYPES OF INSTITUTIONS
AND SERVICES
 Commercial banks
 Full-service banks offer many financial
conveniences and services.
 Automated teller machines (ATMs) are
electronic terminals in which customers can
insert a plastic card to withdraw cash, make
deposits, or transfer funds to another account.
 Mutual savings banks
 Savings and loan associations
 Credit unions
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Lesson 23.1
ELECTRONIC BANKING
 Electronic banking is a broad term
used to describe various types of
electronic fund transfers (EFTs).
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Automated teller machines (ATMs)
Telephone banking systems
Computer banking systems
Direct deposits or withdrawals
Point-of-sale transfers
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Lesson 23.1
DEBIT CARD
 A debit card is a plastic card used to
immediately transfer funds for a
purchase from a bank account to a
seller.
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Lesson 23.2
CHECKING ACCOUNTS
Objectives
 Describe types of checking
accounts and how to open an
account
 Illustrate how to write and
endorse a check, maintain a
check register, make a deposit,
and reconcile a bank statement
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Lesson 23.2
UNDERSTANDING
CHECKING ACCOUNTS
 Checks provide a safe and convenient
way to pay bills.
 Checks can be used as freely as cash.
 Using checks makes it easier to keep
good financial records.
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Lesson 23.2
TYPES OF
CHECKING ACCOUNTS
 Regular checking account
 Special checking account
 Negotiable order of withdrawal (NOW)
account
 Share draft account
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SAMPLE CHECK
Lesson 23.2
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Lesson 23.2
OPENING A
CHECKING ACCOUNT
 A signature card is a form that is
completed when opening a checking
account.
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Lesson 23.2
WRITING A CHECK
 Date
 Postdating is dating a check ahead of time.
 Payee
 The person or institution that you write the check to
is the payee.
 Numerical amount
 Written amount
 Purpose or account number
 Signature
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A CORRECTLY WRITTEN CHECK
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Lesson 23.2
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Lesson 23.2
KEEPING A CHECK REGISTER
 A check register is used to record
checks written, deposits made, and
other transactions.
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SAMPLE CHECK REGISTER
Lesson 23.2
ONE-LINE ENTRY
TWO-LINE ENTRY
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Lesson 23.2
ENDORSING A CHECK
 An endorsement is your signature,
sometimes with a brief message, on
the back/left side of a check.
 Blank endorsement
 Restrictive endorsement
 Full endorsement
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FORMS OF ENDORSEMENT
Lesson 23.2
Blank Endorsement
Restrictive Endorsement
Full Endorsement
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Lesson 23.2
RULES FOR
ENDORSING
CHECKS AND
WITHDRAWING
DEPOSITS
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Lesson 23.2
MAKING A DEPOSIT
 The process of putting money into a
checking account is known as making
a deposit.
 A deposit ticket is a preprinted form
used to make a deposit into a checking
account.
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SAMPLE DEPOSIT TICKET
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Lesson 23.2
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Lesson 23.2
STATEMENT OF ACCOUNT
 A statement of account is a summary of all
transactions completed in a checking account
for a given time period.
 The summary includes:
 Amount of each check and the date the bank
received it
 Deposits you made
 Any service charges
 Any interest earned
 Beginning and ending balances
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Lesson 23.2
STATEMENT
OF ACCOUNT
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Lesson 23.2
BALANCING A CHECKBOOK
 Comparing the bank statement with your
check register is known as balancing (or
reconciling) a checkbook.
 Balancing a checkbook ensures that both
you and your bank have recorded all the
activity on your account accurately.
 Instructions on how to balance your account
are usually printed on the back of the
statement.
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Lesson 23.2
FORM FOR
BALANCING
A CHECKBOOK
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Lesson 23.3
CREDIT AND ITS USE
Objectives
 Name and describe the
two basic types of credit
 Calculate the cost of
credit
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Lesson 23.3
CREDIT
 Credit refers to the receipt of money,
goods, or services in exchange for a
promise to pay.
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Lesson 23.3
TYPES OF CREDIT
 Loan credit
 Sales credit
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Lesson 23.3
THE COST OF CREDIT
 The finance charge is the total dollar
amount you pay for using credit.
 The annual percentage rate (APR) is the
percentage cost of credit on a yearly basis.
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