Checking Accounts

1. Checking Accounts

2. Once you have started earning money, you have to figure out the best way to spend it. Meaning HOW you are going to spend it- how you are going to pay bills and make purchases. You have options when it comes to financial services 1. Different types of accounts 2. Different types of financial institutions 3. Different ways of moving money around.

3. A BANK is a for-profit company, owned by investors in its stock. These stockholders elect a paid board of directors to manage the bank. Anyone can walk up and open an account. CREDIT UNIONS are financial institutions owned by their customers, who are also called members. These members elect a volunteer board of directors to manage the credit union. By law each credit union must serve a defined segment of the population. (You have to work for or have a family member who works for an employee in that segment)

4. Checking Accounts – Banks Share draft accounts – Credit Unions Convenience- You don’t always have to have cash before making a purchase. You can not send cash through the mail. You can easily access your account using a debit at an ATM. Safety-You do not have to carry cash. Budgeting- A money management tool. Helps you keep record of expenses. Proof of Payment- Written proof that you made a payment.

5. Where to Open an Account • Consider these factors- • Convenience-Near home or workplace • Service – • ATM’s • Drive up banking • Online banking • Debit cards • Overdraft protection • Safe-deposit boxes • Loans • Types of Accounts • Individual Account • Joint Account • Interest Paying Account • Fees • Check fee • Minimum balance • ATM fees • Online Banking Fees

6. Opening a Checking Account 1. Fill out an application form 2. Sign a signature card 3. Show your ID Your social security number Money to deposit

7. Check –a written order instructing a bank to take a specified amount of money out of the account on which the check is drawn and give to the person whose name appears on the check. You are responsible for making sure your account information is safe. You also need to make sure you have enough money in your account. Misusing a checking account can result in fees, closure of your account, reporting to credit bureaus. Intentionally writing checks without funds is check fraud- a serious crime.

8. Checks Writing a check is like creating a mini contract between you and the person or business you are paying. When you sign at the bottom of the check you are agreeing to pay the person named on the check.

9. Check Precautions Always write checks in ink. After endorsing a check, back side of check, cash or deposit it immediately. Keep unused checks in a safe place Check your statement every month to make sure there are no mistakes or unauthorized use of your account

10. 6 1 2 3 4 5 9 8 7 11 10 Click the numbers Put your personal signature here. Enter the date you write each check. Here is the number of this Check. This is just your check number again (see above right). Here is where you write the name of the party you are writing your check to (the payee). Be sure to write or print legibly! On the lower line, write out the amount like this. Make sure your personal information on the check is correct. This is your Account Number. (Note that sometimes these two numbers are the reverse of what is shown here.) Legibly print the amount of money this check is for. This is the Routing Number for your bank (used for electronic transfers of funds from your account to the payee’s account) Place to add any information you want to related to this check. Check Details 5-F

11. Debit Cards- also called Check Cards • Deductions are straight from you checking account. • Combine the functions of checks and ATM cards. • Have credit card logos. • Are used to • Pay bills • Make Purchases as a Debit or Credit • Withdraw Cash from an ATM or cash back from a purchase • In order to use as a Debit Card you must have a PIN number given to you in a separate letter from the card.

12. ATM cards- Automated Teller Machines Allows cash to be withdrawn from your checking account. You will need to enter a security code called a PIN-Personal identification number Some banks charge a service fee.

13. Security Tips for PIN numbers • avoid birthdays, social security number, or home address • Memorize your pin number. • Do not carry it in your wallet or write it on your card

14. Smart Debit Card Use PIN Security Immediately record transactions Keep receipts to check against your statements. Use your Banks ATM machines to avoid fees Be aware of your surroundings when using your debit card. Immediately report a lost or stolen card.

15. Facts about Service Fees • Monthly Service Fee-If you don’t meet certain qualifications such as minimum balance or limit the number of checks written. • ATM or Debit Fees- When you access a different banks ATM machine. Both Banks will charge you a fee. • Returned check fee- If a check deposited into your account is returned for insufficient funds. • Insufficient funds or overdraft- when you write a check but don’t have enough money in your account. • Stop payment fee- you ask your financial institution to stop a check drawn on your account from being cashed.

16. Other types of Checks Certified checks- a check for which a bank guarantees payment Cashier’s checks- A check drawn on a bank’s own funds and signed by an officer of the bank Money orders – Used like a check, this is an order purchased for a specific amount to be paid to a certain party. Traveler’s checks- Checks purchased in common denominations that are replaceable if lost or stolen.

17. 6 7 5 4 3 2 1 x Today’s date goes here 1 2 5 0 9 Savings DepositExercise 5-C, Page 62 3 7 5 2 5 Print Your Name Here Print Your Address Here 4 5 0 0 3 Sign Your Name Here 7 5 0 0 3 3 3 3 3 3 4 3 2 5 3 4 Click the numbers 5-E-1

18. Lets answer the following questions Name two advantages of having a checking account? Why should a check be written in ink? What is the difference between a debit card and an ATM card? When you open a checking account, why are you asked to sign a signature card? What are four factors you should consider when choosing a financial institution (bank)? What form do you fill out when you want to put money into an existing checking account? What is the purpose of using duplicate checks or a check register? What items should be recorded in a check register?

20. 3 1 2 Keep a Record Click Here Deposit 1/11 Deposit to Checking 200 00 200 00 200 00 Auto 1/11 Charge for Personalized Checks 20 00 20 00 WD 180 00 23 11 100 1/15 Fine Foods 23 11 Groceries 156 89 5-G

21. Does It Balance?Reconciling your checking account statements 1 of 2 Why reconciling is important • Lets you check for mistakes and checks you wrote but did not enter. • Gives you a chance to subtract other charges that the financial institution may have added. • Lets you add any interest that your checking account may have earned. 5-H-1

22. Does It Balance?Reconciling your checking account statements 2 of 2 Why reconciling is important • Not all the checks you have written will always be shown, because they may not have been cleared by your bank or credit union. • Uncleared checks will show up on your next statement. 5-H-2

23. Balancing a Checkbook

24. Does it Balance? • Addinterest and other deposits made but not yet entered in your checkbook balance sheet. • Subtractany service charge or other deductions not previously entered in your checkbook balance sheet. • Adddeposits made but not shown on this statement. • Subtractchecks issued and withdrawals made but not shown on the statement. 5-H-3