1. MYPF 5.1 Checking Accounts 5.2 Banking Services and Fees
5/12/2018 5
Checking and Banking
5.1 Checking Accounts
5.2 Banking Services and Fees
© 2016 South-Western, Cengage Learning
Chapter 1

2. Lesson 5.1 Checking Accounts
Learning Objectives
LO 1-1 Describe the purpose of a checking account and the forms associated with it.
LO 1-2 Explain how to use a checking account.
LO 1-3 Discuss the types of checking accounts.
Chapter 5
© 2016 South-Western, Cengage Learning

3. 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.
A checking account is also called a demand deposit, because the money may be withdrawn at any time—that is, “on demand.”
Chapter 5
© 2016 South-Western, Cengage Learning

4. Checking Account Basics
(continued)
Checks follow a process through the banking system.
The payee cashes your check.
The payee’s bank returns the check 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.
A canceled check is a check that has cleared your account.
Chapter 5
© 2016 South-Western, Cengage Learning

5. Checking Account Basics
(continued)
Many banks no longer send paper checks to other banks for processing.
They transmit an image of the check, called a substitute check.
A substitute check can be used in the same way as an original check.
Chapter 5
© 2016 South-Western, Cengage Learning

6. Checking Account Basics
(continued)
You must 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 usually stamps the check with the words “not sufficient funds” (NSF) and returns the check to the payee’s bank.
When this occurs, the check has bounced.
Your bank will charge you a fee for each NSF check processed.
Chapter 5
© 2016 South-Western, Cengage Learning

7. Checking Account Basics
(continued)
Floating a check is writing a check and hoping to deposit money to cover it before the check clears.
Floating a check is risky because today’s electronic systems allow checks to process very quickly.
Floating a check is illegal in most states.
Chapter 5
© 2016 South-Western, Cengage Learning

8. Checking Account Advantages
Convenience
Safety
Built-in record-keeping system
Access to bank services
Chapter 5
© 2016 South-Western, Cengage Learning

9. Opening a Checking Account
A signature form provides an official signature that the bank can compare to the signature you write on your checks.
Most banks require a certain amount as an initial deposit to open a checking account.
Chapter 5
© 2016 South-Western, Cengage Learning

10. Parts of a Check Check Number Name and Address of Maker Date
ABA Number
Payee
Numeric Amount
Written Amount
Memo
Signature
Account and Routing Numbers
Chapter 5
© 2016 South-Western, Cengage Learning