BANKING and CHECKING

1. BANKING and CHECKING Chapter 7

2. Why Do We Have Banks?

3. Banks • Banks are a private business • How do banks earn their money? • Interest Rates • Service Fees • Example: Deposit $100 * .04% int. = $104 Borrow $100 * .06% int. = $106 Bank Income = $2

4. Banks • Provide security • Protects your purchasing power • The amount your money can buy • Banks are regulated • FDIC • Reserves

5. Banking • Deposits are insured • FDIC – Federal Deposit Insurance Corporation • $100,000 max • Money lent to borrowers • People: houses, cars, etc. • Business: start-up, buildings equipment • Credit is verified to ensure payback

6. PARTS OF A CHECK • Drawer= person writing the check • Drawee= the bank that is instructed to pay • Payee= person that the check is made out to

7. WHY Checks? • Provide safety • Only the payee can cash • Bank, not payee, is responsible for illegally cashed check • Bank suffers loss • Bank asks for identification • If lost, can stop payment • Convenience • Records of transactions

8. Opening a Checking Account • 18 yrs. or older • Joint Checking? • Complete signature card • Protects against forgery • Valid Identification • Minimum Deposit • Social Security Number • Proof of address

9. Writing a Check • Write in ink • Blue or Black ink • Write in words, cents in fraction • Write at left of column, fill rest with line • Date check • Name of payee • Amount in words and numbers • Your signature Check Number Number Payee Date July, 2 2006 Mrs. Monticello 50.00 Fifty and 00/100 Signature Words

10. Electronic Banking ATM’s • Automated Teller Machine (ATM) • Make deposits • Withdraw cash • Transfer money • Check account balances • Pay bills • Convenience • Usage fees • Use Responsibly • Need the following: • ATM card • Personal Identification Number (PIN)

11. More Terms • Debit Cards (Check Cards) • Don’t have to carry or write checks • Can’t overdraw • Stores appreciate because they receive payment immediately • Direct Deposit • Non-negotiable check • Automatic Withdrawal • Will automatically withdraw on specific day each month

12. Card Cautions!!!! • Keep your card in a safe place • Memorize your ID • Never give it out • Never say it out loud • Keep all receipts! • Record transactions • Notify bank immediately if card lost

13. Certified Check • Personal check • Stamped and signed by bank officer • Charges a fee - $5-$20 • Withdrawals money to ensure you have funds

14. Cashier’s Check • Checks written from bank’s account • Signed by bank’s cashier • Bank makes check to payee • $25 fee approximately • Down payments on houses, cars, large amounts • Confidence knowing from bank

15. Money orders • Less expensive ($1-$10) • Maybe you don’t have a checking account? • Can be purchased from bank or other financial institute • Amex office • Post office • Lists you as the drawer and is written to payee

16. Traveler’s Checks • Never good to carry large amounts of cash • Lost • Stolen • Some businesses do not accept out-of-town checks • Can be replaced quickly (serial #’s) • Receipt given and used as a register • Banks, Amex, travel agencies offer • Increments $20, $50, $100 • Fee of 1% • 2 signatures required and ID upon usage

17. Safe Deposit Boxes • $30/$40 annually • Need ID, signature, key—very secure • Valuable, documents—non monetary items