Checking Accounts and Other Bank Services

Purpose of a Checking Account

• It allows the depositor to pay a stated amount (Check) to a person or business without having to use cash.

• It allows you to withdraw funds at any time and is known as demand deposit. It provides convenience.

• It provides a system of keep accurate records of your finances.

• The canceled check allows for proof of purchase or payment if a dispute arises.

Advantages of a Checking Account

1. It provides a convenient way to pay your bills.

2. It is often safer than using cash. It is a permanent record.

3. It has a built in record keeping system that allows you to track expenses which helps you to budget.

4. A checking account allows you to access to other services such as loans and ATM services.

Checking Account Responsibilities

• You must maintain sufficient funds in your account. Overdrafts result in penalties.

• You can not purposely float a check. This is illegal in most states.

Opening a Checking Accounts

Signature Authorization Form

It is a form in which you provide your actual signature. This bank uses this form to compare it with the signature you write on your check. This is done to prevent others from forging checks using your name.

Start up Fees

Most banks require that you have an initial balance of a least $50.00. Most banks also require that you maintain a minimum balance in your account.

Using Your Checking AccountWriting Checks

• Always use Pen• Write legibly. Make your

numbers clear and distinct without spaces before, between or after them

• Avoid mistakes. When you make a mistake void the check.

• Be sure you have adequate funds before writing the check.

Using Your Checking AccountMaking Deposits

• Write the date of the transaction.

• In the cash section write the total amount of currency.

• In the check section write the check number and amount.

• Subtract any cash you want back from the total amount.

• Keep copies of your deposit slips.

Using A Checkbook Register

Checkbook Register A booklet used to record checkbook transactions.

Steps to using the Register

1. Record the Current Balance at the top of the register.

2. As soon as you write a check or make a deposit, record the transaction in the register.

3. Be sure to write the check number, date, payee and subtract the amount in the register.

4. Make sure to record deposits in proper column and add to balance.

Reconciling Your Checking Account

Reconciliation The process of matching your check register with the bank statement.

Steps to Reconciliation

1. Write the ending balance shown on the bank statement.

2. List any deposits that do not appear on the statement and add them to the ending balance to get a subtotal.

3. List any checks or withdrawals or checks not shown on the statement. Subtract them from the subtotal to get a final balance.

4. The balance should be the same as your checkbook register.

Endorsing Checks

Check EndorsementA check can not be cashed until the back of the check has been endorsed with the same name as on the front of the check.

Types of Endorsements

• Blank Endorsement

• Special Endorsement

• Restrictive Endorsement

Types of Checking Accounts

Joint Accounts

A checking account opened by two or more people. Most commonly used by married couples. It is also known as a survivorship account because the surviving member has rights to all the money left in the account.

Types of Checking Accounts

Special Accounts This is setup for customers who write a small number of checks each month. Services charges are charged at a flat rate. Some banks assess a small or no fee.

Standard Accounts It has a set monthly service fee of between $5 and $12 dollars but not per check fee.

Types of Checking Accounts

Interest-Bearing Accounts

This is a checking account that earns interest. You cannot go below a minimum average set by the bank. A fee is charged if it drops below the amount.

Share AccountsThese are checking accounts with low or no average daily balance requirements and no service fees. This is often offered through a credit union.

Other Banking Services

Guaranteed-Payment Checks

The check guarantees payment. Examples of this include a certified check which the bank stamps before being presented to the payee, and cashiers check which is a check written by the bank.

Money Orders It is like a check but it can never bounce. You can also purchase these at the post office or from local businesses.

Other Banking Services

Debit Cards They allow immediate deductions from your checking account for withdrawals or to pay for purchases.

Bank Credit Cards

You can apply for a Visa or MasterCard credit card with a bank. You are borrowing money.

Online and Telephone Banking

You can access your account from a computer or telephone. After entering a password you can complete common bank transactions.

Other Banking Services

Stop Payment Order A request that a bank not cash a specific check.

Safe Deposit BoxesIt is used to store important documents such as birth certificates, marriage and death certificates, stocks and bonds.

Loans and TrustsBanks allow you to make loans for cars, homes, vacations, and others. The bank will act as a trustee managing your account in case of a death.

Other Banking Services

Banking Fees

Banks charge fees to cover operating costs. It charges a fee to act as a trustee and it also charges a fee to non-customers. The bank may refuse to cash a check if you are not a member of that bank.