Chapter © 2010 South-Western, Cengage Learning Checking Accounts and Banking Services Checking Accounts 9

© 2010 South-Western, Cengage Learning SLIDE 2 Chapter 9 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.

© 2010 South-Western, Cengage Learning SLIDE 3 Chapter 9 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. (continued)

© 2010 South-Western, Cengage Learning SLIDE 4 Chapter 9 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. (continued)

© 2010 South-Western, Cengage Learning SLIDE 5 Chapter 9 Parts of a Check Check Number ABA Number Name and Address of Maker Date PayeeNumeric Amount Written Amount Signature Account and Routing Numbers Memo

© 2010 South-Western, Cengage Learning SLIDE 6 Chapter 9 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.

© 2010 South-Western, Cengage Learning SLIDE 7 Chapter 9 Bank Reconciliation The process of matching your checkbook register with the bank statement is known as bank reconciliation.

© 2010 South-Western, Cengage Learning SLIDE 8 Chapter 9 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

© 2010 South-Western, Cengage Learning SLIDE 9 Chapter 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.

© 2010 South-Western, Cengage Learning SLIDE 10 Chapter 9 Special Endorsement A special endorsement, or an endorsement in full, is an endorsement that transfers the right to cash the check to someone else.

© 2010 South-Western, Cengage Learning SLIDE 11 Chapter 9 Restrictive Endorsement A restrictive endorsement restricts or limits the use of a check.