Exploring Business
Unit 3: Personal Finance
Part 1: Introduction to Checking Account
Objectives:
•
•
•
•
•
Describe the purpose of a checking account
Write checks & record in a register
Examine several endorsements
Compare account balances using a bank
reconciliation
Analyze different types of loans and
insurance
College & Career Readiness
Standards

Reading



English


Identify a clear idea or purpose of any
paragraph(s) in uncomplicated passages
Identify clear cause-effect relationships in
uncomplicated passages
Identify the central idea or main topic of a
straightforward piece of writing
Math

Solve routine one-step arithmetic problems
(using whole numbers)
Checking vs. Savings & CD’s
Checking
 A transactional bank
account.
 Easily accessible
Savings & CD’s
 Not meant for
transactions
 Offer better interest
rates
 Encourages you to not
spend money with
restrictions.
 Not easily accessible
during non-banking
hours.
Advantages of a
Checking Account
1.
2.
3.
4.
Convenience
Safety
Proof of Payment
Record of Finances
Advantages of a
Checking Account
1. Convenience
Write checks at home
 Pay bills by mail
 Debit Card

• Online payments
• Swipe card and money is taken directly out
of checking account
• Need Cash? = ATM
Advantages of a
Checking Account
2. Safety
Money on hand involves risk of losing it
by fire, theft, or carelessness
 Less temptation to spend money
 Check can only be cashed by person or
business to whom it is payable

Advantages of a
Checking Account
2. Safety

FDIC & NCUA
• Most banks & credit unions are members
• FDIC insures deposits up to $250,000
Advantages of a
Checking Account
3. Proof of Payment

Check is legal proof of your finances
• Payment to others
• Confirm with bank
• All checks are now
electronically
imaged
Advantages of a
Checking Account
4. Record of Finances
Check is legal proof of your finances
 How much are you spending
 Where your money is going
 How much you have remaining

Types of Checking
Accounts - Overview

Differ in what they offer to
customers
Annual Fee
 Minimum Balance
 Fee for each check written (Service
Charge)
 Fee for ATM use (Service Charge)
 Interest earning accounts

Types of Checking
Accounts

Regular Checking Accounts
No service charges
 Low Minimum Account Balance
 Typically No Interest on Account

• Student Checking Accounts
• Senior Checking Accounts
Types of Checking
Accounts

Interest Checking Accounts

Most require Minimum Monthly Balance
• Most $500 or more

Service Charges/Fees
• May require a specific # of checks written
or debit card transactions
• May require direct deposit
• Monthly Service Charge

Pays a Low Rate of Interest on Account
Tips for Good Check
Writing
1.
2.
3.
4.
5.
6.
Write checks in ink.
Only write checks if you have
money in account to cover them.
Use the current date
Always fill in the amount.
Void checks on which you make
errors.
Do Not write checks to “Cash”
Writing the Amount on a
Check (In Words) pg 56
1.
$39.45 __________________________________ Dollars
2.
$89.00 __________________________________ Dollars
3.
$110.00 _________________________________ Dollars
4.
$1,522.16 ________________________________ Dollars
5.
$2,671.95 ________________________________ Dollars
Deposit Slips
275979076
routing
number
12345678
account
number
Check Register

A separate form on which a
depositor keeps a record of deposits
and withdrawals.

EVERY check must be recorded in a
check register.
Enter into Register

Business News- Lebron- Dunkin
Endorsements – Back of Check
written evidence you received payment or
that you transferred your right of
receiving payment to someone else.
 Allow recipient of the check to cash,
deposit, or transfer it to someone else.
 Legal evidence.
 Must be in ‘Float’ area.

Float = 1.5 inch space on left side of check,
on back.
Types of Endorsements
Blank: your name in exactly as it is
written on the face of check.
 Special: includes name of person
to whom check has been
transferred.
 Restrictive: limits the use of the
check.
 Forgery: writing another person’s
signature on a check without his or
her authority.

Types of Endorsements
1
1.
2.
3.
2
Blank Endorsement
Special Endorsement
Restrictive Endorsement
3
What Happens If They Don’t
Take Checks?
Use a Debit Card!
Click
Visa Debit
Commerical

What is a
Debit Card?

Enable customers to withdraw
money directly from account.
Linked to a specific account, typically
checking.
 When you make a purchase it
automatically deducts that amount
from the account linked to card
 You are using your own money!

Making Purchases with
Debit Card
Card will be ‘swiped’
 Enter PIN
 Cashier gets approval code


Code shows you have enough money in
account for purchase
Questions to Ask about
Debit Cards
Annual Fees?
 Account Link?
 ATM withdrawal fees?



These are separate from the machine fee!
What happens if card is lost?

Electronic Fund Transactions Act
• You are responsible for up to $50 if
reported in 2 days.
• You are responsible for up to $500 if
reported in 3-60 days.
Online Banking

Faster, Easier, Secure
http://www.uwcu.org/OnlineBanking/
Default.aspx
Creating a Debit Card
Future of Debit Cards
Bank Reconciliation
http://www.spotthedifference.com/
http://www.spotthedifference.com/St
eamTrain
Bank Reconciliation

a statement showing how your
check register balance and a bank
statement balance are brought into
agreement.

Why do a reconciliation?

Mistakes Happen!
Checking Accounts - Terms
Service Charge: the fee a bank
charges for using a service.
 Overdrawing: writing a check for
more than you have in your
checking account.
 Bank Statement: A monthly
report sent to you from the bank
that shows the condition of your
checking account.

Checking Accounts - Terms

Outstanding Check: A check that has
not been paid, or cashed.

Cancelled Check: A check that has
been paid (cashed by person who
received the check).

Deposit in-transit: A deposit made to
but has not yet been posted to your
account.
Steps to Complete a Bank
Reconciliation





Step 1: Identify any outstanding checks
Step 2: Identify any deposits in transit
Step 3: Analyze bank statement for
transactions not recorded in the check
register. Example: Automatic Payments
(PayPal)
Step 4: Look for recording and math errors
Step 5: Compare adjusted balance to bank
statement balance
Activity 1.4 Reconciling a Bank
Statement
 Balance From Bank
 Ad Deposits not showing
 Subtract outstanding checks

Reconciliation
21,481.90
$22,387.85
3514.00
0
3514.00
804 2588
805 33
0
12.95
2621
22374.90
12.95
22374.90
Check Point –
Practice Time
Complete Checkbook Reconciliation
 Pg 27
 Show Mr. Fassl
 Then you can work on your DEBIT
CARD (if not done..finish for HW)
 (Guest speaker Wed)

Loans

Examples
Mortgage: a legal document that allows a
bank to lay claim against your property.



Home/Property Loan
Payments may include Taxes and Insurance
Installment Loan: where regular
payments are made in specific amounts over a
period of time.


Car loan is example.
Some banks will hold the title until loan is paid
off
Rate Sheet
Interest
= Principal * Rate * Time
Principal: amount of loan.
 Rate: interest rate for loan.
 Time: length of loan.



1 = 1 Year
Maturity Date: the date at which
the loan is paid off or comes due.
Interest
= Principal * Rate * Time
Example:
 $500, 7% interest, 1 Year

Interest = 500 * 7%*1
Interest = $35
Act #3 pg 47
A. $ 117,947.81 X
.09 (9%)
Balance of Principal
10,615.30
=$_______
Int. for 1 year
10,615.30 / 12 = $_________
884.61
B. July’s Interest= $_________
int. for 1 year
C. Amt. Applied to Principal
195.06
884.61
$ 1079.67
- $ ___________
= $_____________
Monthly Payment
int. for 1 month
Amt. to principal.
D. Balance Left
117,752.75
195.06
$117,947.81 - $____________
= $_____________
Bal. June 10
amt. to principal
bal. July 10
Checkpoint pg (49)216
 Your
 Next
Turn….HWK pg 56
Slide We’ll do Note #1
Together
Activity 6-2 Page 56
Part #1 Principal X Rate X Time = Interest
3
2,000
14%
12 = _______
70
#1 _______
____
__/___
Part #2 Principal + Interest=Amount Paid at Maturity
2,000
2,070
70
#1
________
+ ______
= ____________
May 16 to May 31 = 15 Days
Jun 1 to Jun 30 = 30 Days
July 1 to July 31 = 31 Days
Aug 1 to Aug 14= 14 Days
Part #3 Maturity Dates
See page 44 in your packet
#1 3 Months from May 16 = _____________
Aug 14
Insurance
Helps you share the risk of financial
loss.
 Premium: the amount of money
you pay for an insurance policy.


Monthly, Semi-Annually, Annually
Claim: a request for the insurance
company to pay you.
 Deductible: the amount of money
you are liable for on an insurance
claim.

Types of Insurance

Vehicle


Property




Renter’s
Business
Health
Life


Liability, Comprehensive, Collision
Term, Universal, Variable, Whole Life
Farm and Ranch