Exploring Business Unit 3: Personal Finance Part 1: Introduction to Checking Account

1. Exploring BusinessUnit 3: Personal FinancePart 1: Introduction to Checking Account Objectives: Describe the purpose of a checking account Write checks & record in a register Examine several endorsements Compare account balances using a bank reconciliation Analyze different types of loans and insurance

2. College & Career Readiness Standards • Reading • Identify a clear idea or purpose of any paragraph(s) in uncomplicated passages • Identify clear cause-effect relationships in uncomplicated passages • English • Identify the central idea or main topic of a straightforward piece of writing • Math • Solve routine one-step arithmetic problems (using whole numbers)

3. Checking vs. Savings & CD’s Checking Savings & CD’s Not meant for transactions Offer better interest rates Encourages you to not spend money with restrictions. Not easily accessible during non-banking hours. • A transactional bank account. • Easily accessible

4. Advantages of a Checking Account • Convenience • Safety • Proof of Payment • Record of Finances

5. Advantages of a Checking Account 1. Convenience • Write checks at home • Pay bills by mail • Debit Card • Online payments • Swipe card and money is taken directly out of checking account • Need Cash? = ATM

6. Advantages of a Checking Account 2. Safety • Money on hand involves risk of losing it by fire, theft, or carelessness • Less temptation to spend money • Check can only be cashed by person or business to whom it is payable

7. Advantages of a Checking Account 2. Safety • FDIC & NCUA • Most banks & credit unions are members • FDIC insures deposits up to $250,000

8. Advantages of a Checking Account 3. Proof of Payment • Check is legal proof of your finances • Payment to others • Confirm with bank • All checks are now electronically imaged

9. Advantages of a Checking Account 4. Record of Finances • Check is legal proof of your finances • How much are you spending • Where your money is going • How much you have remaining

10. Types of Checking Accounts - Overview • Differ in what they offer to customers • Annual Fee • Minimum Balance • Fee for each check written (Service Charge) • Fee for ATM use (Service Charge) • Interest earning accounts

11. Types of Checking Accounts • Regular Checking Accounts • No service charges • Low Minimum Account Balance • Typically No Interest on Account • Student Checking Accounts • Senior Checking Accounts

12. Types of Checking Accounts • Interest Checking Accounts • Most require Minimum Monthly Balance • Most $500 or more • Service Charges/Fees • May require a specific # of checks written or debit card transactions • May require direct deposit • Monthly Service Charge • Pays a Low Rate of Interest on Account

14. Tips for Good Check Writing • Write checks in ink. • Only write checks if you have money in account to cover them. • Use the current date • Always fill in the amount. • Void checks on which you make errors. • Do Not write checks to “Cash”

15. Writing the Amount on a Check (In Words) pg 56 • $39.45 __________________________________ Dollars • $89.00 __________________________________ Dollars • $110.00 _________________________________ Dollars • $1,522.16 ________________________________ Dollars • $2,671.95 ________________________________ Dollars

16. Deposit Slips 275979076 12345678 routing number account number

17. Check Register • A separate form on which a depositor keeps a record of deposits and withdrawals. • EVERY check must be recorded in a check register.

18. Enter into Register

19. Business News- Lebron- Dunkin

20. Endorsements – Back of Check written evidence you received payment or that you transferred your right of receiving payment to someone else. • Allow recipient of the check to cash, deposit, or transfer it to someone else. • Legal evidence. • Must be in ‘Float’ area. • Float = 1.5 inch space on left side of check, on back.

21. Types of Endorsements • Blank: your name in exactly as it is written on the face of check. • Special: includes name of person to whom check has been transferred. • Restrictive: limits the use of the check. • Forgery: writing another person’s signature on a check without his or her authority.

22. Types of Endorsements • Blank Endorsement • Special Endorsement • Restrictive Endorsement 1 2 3

23. What Happens If They Don’t Take Checks? Use a Debit Card! Click Visa Debit Commerical 

24. What is a Debit Card? • Enable customers to withdraw money directly from account. • Linked to a specific account, typically checking. • When you make a purchase it automatically deducts that amount from the account linked to card • You are using your own money!

25. Making Purchases with Debit Card • Card will be ‘swiped’ • Enter PIN • Cashier gets approval code • Code shows you have enough money in account for purchase

26. Questions to Ask about Debit Cards • Annual Fees? • Account Link? • ATM withdrawal fees? • These are separate from the machine fee! • What happens if card is lost? • Electronic Fund Transactions Act • You are responsible for up to $50 if reported in 2 days. • You are responsible for up to $500 if reported in 3-60 days.

27. Online Banking • Faster, Easier, Secure http://www.uwcu.org/OnlineBanking/Default.aspx

28. Creating a Debit Card Future of Debit Cards

29. Bank Reconciliation http://www.spotthedifference.com/ http://www.spotthedifference.com/SteamTrain

30. Bank Reconciliation • a statement showing how your check register balance and a bank statement balance are brought into agreement. • Why do a reconciliation? • Mistakes Happen!

31. Checking Accounts - Terms • Service Charge: the fee a bank charges for using a service. • Overdrawing: writing a check for more than you have in your checking account. • Bank Statement: A monthly report sent to you from the bank that shows the condition of your checking account.

32. Checking Accounts - Terms • Outstanding Check: A check that has not been paid, or cashed. • Cancelled Check: A check that has been paid (cashed by person who received the check). • Deposit in-transit: A deposit made to but has not yet been posted to your account.

33. Steps to Complete a Bank Reconciliation • Step 1: Identify any outstanding checks • Step 2: Identify any deposits in transit • Step 3: Analyze bank statement for transactions not recorded in the check register. Example: Automatic Payments (PayPal) • Step 4: Look for recording and math errors • Step 5: Compare adjusted balance to bank statement balance

34. Activity 1.4 Reconciling a Bank Statement • Balance From Bank • Ad Deposits not showing • Subtract outstanding checks

36. Reconciliation 21,481.90 $22,387.85 3514.00 0 3514.00 0 804 2588 805 33 12.95 2621 12.95 22374.90 22374.90

37. Practice Time Check Point – • Complete Checkbook Reconciliation • Pg 27 • Show Mr. Fassl • Then you can work on your DEBIT CARD (if not done..finish for HW) • (Guest speaker Wed)

38. Loans Examples • Mortgage: a legal document that allows a bank to lay claim against your property. • Home/Property Loan • Payments may include Taxes and Insurance • Installment Loan: where regular payments are made in specific amounts over a period of time. • Car loan is example. • Some banks will hold the title until loan is paid off

39. Interest Rate Sheet = Principal * Rate * Time • Principal: amount of loan. • Rate: interest rate for loan. • Time: length of loan. • 1 = 1 Year • Maturity Date: the date at which the loan is paid off or comes due.

40. Interest = Principal * Rate * Time • Example: • $500, 7% interest, 1 Year Interest = 500 * 7%*1 Interest = $35

41. Act #3 pg 47 10,615.30 117,947.81 10,615.30 884.61 A. $ X .09 (9%) =$_______ Balance of Principal Int. for 1 year B. July’s Interest= $_________ / 12 = $_________ int. for 1 year C. Amt. Applied to Principal $ 1079.67 - $ ___________ = $_____________ Monthly Payment int. for 1 month Amt. to principal. D. Balance Left $117,947.81 - $____________ = $_____________ Bal. June 10 amt. to principal bal. July 10 195.06 884.61 117,752.75 195.06 Checkpoint pg (49)216

42. Your Turn….HWK pg 56 • Next Slide We’ll do Note #1 Together

43. Activity 6-2 Page 56 3 2,000 14% 12 70 Part #1 Principal X Rate X Time = Interest #1 _______ ____ __/___ = _______ Part #2 Principal + Interest=Amount Paid at Maturity #1 ________ + ______ = ____________ Part #3 Maturity Dates See page 44 in your packet #1 3 Months from May 16 = _____________ 2,000 2,070 70 May 16 to May 31 = 15 Days Jun 1 to Jun 30 = 30 Days July 1 to July 31 = 31 Days Aug 1 to Aug 14= 14 Days Aug 14

44. Insurance • Helps you share the risk of financial loss. • Premium: the amount of money you pay for an insurance policy. • Monthly, Semi-Annually, Annually • Claim: a request for the insurance company to pay you. • Deductible: the amount of money you are liable for on an insurance claim.

45. Types of Insurance • Vehicle • Liability, Comprehensive, Collision • Property • Renter’s • Business • Health • Life • Term, Universal, Variable, Whole Life • Farm and Ranch