Checking Accounts and Banking Services

1. 9 Checking Accounts and Banking Services 9.1 Checking Accounts

2. Checking Account Basics • A checking account allows you to write checks to make payments. • A check is a written order to a bank to pay the amount stated to the person or business named on it. Chapter 9

3. (continued) Checking Account Basics • Checks follow a process through the banking system. • The payee cashes your check. • The bank that cashed the check returns it to your bank. • Your bank withdraws the money from your account and sends it to the other bank. • Your bank then stamps the back of your check, indicating that it has cleared. Chapter 9

4. (continued) Checking Account Basics • You must also maintain enough money in your account to cover all the checks you write. • A check written for more money than your account contains is called an overdraft. • A bank that does not honor a check stamps the check with the words “not sufficient funds” (NSF) and returns the check to the payee’s bank. . • Your bank will charge you a fee for each NSF check processed. • Also known as a bounced or hot check. Chapter 9

5. Parts of a Check CheckNumber Name and Address of Maker Date ABA Number Payee Numeric Amount WrittenAmount Memo Signature Account and Routing Numbers Chapter 9

6. Using Your Checking Account • Writing checks • Paying bills online • Making deposits • Using a checkbook register • A checkbook register is a booklet used to record checking account transactions. Chapter 9

7. Bank Reconciliation • The process of matching your checkbook register with the bank statement is known as bank reconciliation. Chapter 9

8. Endorsing Checks • A check generally cannot be cashed until it is endorsed. • To endorse a check, the payee signs the top part of the back of the check in ink. • There are three major types of endorsements. • Blank endorsement • Special endorsement • Restrictive endorsement Chapter 9

9. Blank Endorsement • A blank endorsement is the signature of the payee written exactly as his or her name appears on the front of the check. Chapter 9

10. Special Endorsement • A special endorsement, or an endorsement in full, is an endorsement that transfers the right to cash the check to someone else. Chapter 9

11. Restrictive Endorsement • A restrictive endorsement restricts or limits the use of a check. Chapter 9