Checks & Payment
Methods
CHAPTER 17, SECTION 3
The following are some of the benefits that
checking accounts provide for consumers.
Convenience
and ease of
making
payments
Safety to make
payments with
less risk than
using cash
Proof of
payment
A record of
finances for
managing your
money
The First Deposit
 Opening
a checking account starts with
signing a signature card. This document is
used to verify your signature.
 The
bank compares the signature on checks
to the one on the signature card.
 Sometimes
two or more people have an
account together called a joint account.
Signature Card
Types of Endorsements

Before you deposit a check, it must be endorsed. This involves writing
your name on the back of the left end of the check.

An endorsement is written evidence that you received payment of that
you transferred your right of receiving payment to someone else.

Your endorsement must be make in the 1 1/2 –inch space on the left
side of the check.

There are 3 different endorsements that have different purposes.

Bank Endorsement

Full Endorsement

Restrictive Endorsement
Blank Endorsement
Full Endorsement
Restrictive Endorsement
Two Signature Required
Restrictive Endorsement
Writing a Check
Write checks in order by
number so you know which
checks have been paid
Write the date on the
proper space.
Write the payee’s name on
the line following Pay to the
Order of.
Write the amount of the
check in figures after the
printed dollar sign.
Write the dollar amount in
words on the line below the
payee’s name.
Write the purpse of the
payment on the line at the
bottom of the check.
Sign your checks with the
same signature you wrote
on your signature card.
Proper Check Writing
1.
Write checks only on the
forms provided by your
bank.
5.
Avoid making checks payable
to “Cash” or to “Bearer”.
6.
Always fill in the amount.
2.
Write checks in ink.
7.
3.
Only write checks if money
is available.
Void checks on which you make
errors.
8.
Record every payment from
your checking account, whether
the payment is by check or EFT.
4.
Use the current date.
Stopping Payment

In certain situations, you may not want your bank to
pay a check that you have written. To do so, you will
fill out a stop payment order, a written notice that
tells the bank not to pay a certain check.

Because banks charge a high fee for stopping
payment on a check, use this process only for good
reason.
The Reconciliation Process
As a depositor, you will need to review the
record of your account that the bank
keeps. At regular intervals, usually
monthly, the bank will send you a report
on the status of your account known as a
bank statement.
While bank statement formats vary, most
present the following information…

The balance at the beginning of
the month.

The deposits made during the
month.

Any electronic fund transfers (EFT) or
special payments the bank has
made.

Service charges for the month,
including charges for such special
services as stopping payment on a
check.

The checks paid by the bank
during the month.

Any automated teller transactions
 Any interest earned on the account.
made during the month.
 The balance at the end of the
month.
Find Differences

You keep your own record of your checking account, usually
in a check book register. The bank statement is the bank’s
record of your account.

The document created to show how the two balances were
brought into agreement is called the bank reconciliation.

Bringing the balances into agreement is known as reconciling
the bank balance.

The bank prints forms for reconciling on the backs of bank
statements.
The balance shown on your records and the
bank statement may be different. Here are
some common reasons why…



Some of the checks you wrote
may not have cleared (been
paid). These are called
outstanding checks.
You may have forgotten to
record a transaction in your
register, such as an ATM deposit
or automatic bill payment.
A service charge may appear
on the bank statement.

You may have mailed a deposit
to the bank that has not yet
been received.

Interest earned may have been
added.

You may have recorded the
amount of a check incorrectly in
the check register. You may
have added or subtracted
incorrectly.
Calculate Adjusted Balance
To determine the true balance in your account, take
the following steps:
1.
Subtract the
total of the
outstanding
checks
from the
bank
statement
balance.
2.
Add any
deposits in
transit to the
balance
statement
balance
3.
Subtract
service
charges,
fees, and
automatic
payments
from your
checkbook
balance.
4.
Add any
interest
earned to
your
check
register
balance.
Other Types of Payments
Certified Checks
Traveler’s Checks
• A certified check is a personal
check for which a bank has
guaranteed payment.
• Traveler’s checks are special forms
designed for making payments
when away from home.
Cashier’s Checks
• A cashier’s check is a check
that a bank draws on its own
funds.
Money Orders
• A money order is a form of
payment that orders the issuing
agency to pay the amount printed
on the form to another party.
Types of Money Orders

Several types of organizations commonly sell money orders.

A bank money order is sold by a bank stating that money is to be paid to a
specific person or business.

A postal money order purchased from the U.S. Post Office can be sent safely
through the mail. It can be cashed only after the payee signs it.

An express money order is issued by various organizations including traveler’s
check companies, travel agencies, and many supermarkets, pharmacies, and
convenience stores.

A telegraphic money order involves buying a message to direct a telegraph
office to pay a sum of money to a certain person or business.