Chapter 26
Opening a Checking Account
Advantages of Checking
Account
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Convenience – spend money through
paper (checks) or the EFT systems.
Safety – from physically being damaged,
or from careless spending
Proof of Payment – once the check is
cashed, it is a legal proof of payment
Record of Finances – the bank will provide
a record of finances, demonstrating how
necessary it is to keep track of all
deposits and credits
Types of Checking Accounts

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Regular Checking Accounts – best when
planning on writing a lot of checks.
There is not a service charge on most
regular checking accounts.
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Minimum balance – stated amount that the
account must not fall below.
Average monthly balance – the sum of the
daily balance divided by the number of days
in the month. This average needs to stay
above a certain point, in order to avoid a
service charge.
Additional Charge

Service Charge – a fee a bank
charges for handling a checking
account.
Types of Checking Accounts

Interest Checking Accounts – These
accounts make it possible for a
checking account to earn interest on
the amount kept in the bank.

However, if this is the account that you
want, there is normally a minimum
balance or minimum average monthly
balance of at least $500.
Money Market Rate
The interest rate that big users of
money, such as governments and
large corporations, pay when they
borrow money.
 As this rate changes, so does the
rate the banks pay holders of certain
accounts.

Other Types of Checking
Accounts

Credit Union – provide checking
accounts for its members.
Members are called Shareholders when
they have money on deposit.
 Their checks are called Sharedrafts.
 With these accounts, interest rates may
vary and the number of sharedrafts per
month may be limited.

Opening a Checking
Account
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Signature Card – The official card which
the depositor signs, and the bank keeps,
in order to use it as an official signature.
Joint Account – when two people and
more have an account together.
Deposit Slip – a form on which you list all
items you are depositing currency, coins,
and checks.
Endorsing Checks for
Making Deposits

Endorsement –

is written evidence that you received
payment or that you transferred your
right of receiving payment to someone
else.
Purposes of Endorsements
1 – Endorsements allow the
recipient of the check to cash,
deposit, or transfer it to someone
else.
 2 – Endorsements serve as legal
evidence that the receiver cashed or
transferred the check to someone
else.

Purposes of Endorsements

3 – Endorsements mean that the
endorser will pay the check in case
the next owner of the check cannot
collect the money.
Placement of Endorsement
The bank has a stamp that they
must put on the back of the check
 The signature of the endorser must
sign in the designated area of the
check

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If the check is not signed in the right
spot, it is not legible, or incomplete, the
check may be returned.
Types of Endorsements

Blank Endorsement
consists of only the endorsers name.
 makes a check payable to anyone who
has the check.
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Special Endorsement
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includes the name of the person to
whom the check has been transferred.
More types of
Endorsements
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Restrictive Endorsements
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limits the use of the check to the
purpose given in the endorsement.
For deposit only – the check may only
be deposited in your account.
Recording the Deposit

Deposits can be made…
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At the bank
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At an ATM
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Or sent through the mail
Recording the Deposit
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Checkbooks contain forms on which
a depositor writes a record of
deposits made and checks written.

Check Stub
• Attached to each check
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Check Register
• Booklet designed to record and keep track
of funds in a checking account.