Presentation on theme: "Money on demand! The Checking Account"— Presentation transcript:
1 Money on demand! The Checking Account The most widely used service that a bank offers.Moneyon demand!
2 Benefits of a checking account ConvenienceSafety to make payments with less risk than using cash.Proof of paymentA record of finances for managing your money.Benefits of a checking account
3 The Checking AccountChecking Account – A banking service where money isdeposited into an account and checks can be writtento withdraw money from the account. AKA: Demand DepositOther ways to withdraw money from a checking account:ATM withdrawalsDebit card transactionsOn-line banking transactionsA check is a substitute for money.Writing checks is safer than carrying cash!
4 The Checking Account Opening Your Checking Account Complete applicationComplete Signature Card, which is used to verify your signature.Make Deposit!
5 The Checking Account Making Deposits: If you are depositing checks into your checking account,the checks must be endorsed.To endorse means to transfer ownership.To endorse a check, you must sign the back of the check.
6 The Checking Account Three types of endorsements: 1. Blank endorsement: Simple signature on back. Signcheck as it is written on check.2. Restrictive endorsement: Restricts further transfers.A typical endorsement will read “For Deposit Only.”
7 The Checking Account Three types of endorsements: Special Endorsement. Transfer ownership to anotherperson. A typical special endorsement will read:“Pay to the order of:”
8 The Checking Account Using Your Checking Account Making Deposits Complete deposit slipDateList cash/currencyList checks separatelyIndicate cash received back (if desiring cash back)Indicate total deposit
9 The Checking Account Using Your Checking Account Parts of a check: Check NumberABA Number (American Banker’s Association)Preprinted Name and AddressDatePayeeNumeric AmountWritten Amount – Legal amount
10 The Checking Account Using Your Checking Account Parts of a check contd.:Drawer is the maker of the check.Payee is the person who the check is written to.Drawee is the bank that pays the check.Account NumberMemo line
11 The Checking Account Eight proper check writing habits 1. Write checks on the proper form2. Use permanent ink3. Only write checks if money is available4. Use the current date5. Avoid making checks payable to “Cash”6. Always fill in the amount7. Void checks on which you make errors.8. Record every payment from your checking account.
12 The Checking Account Recording checking account activity Checkbook Register – A record keeping system used tokeep track of checks that you have written, debit cardtransactions, ATM (Automatic Teller Machine) trans-actions (deposits and withdrawals), and on-line bankingTransactions. You could also use a Check stub or duplicate copy.Any transactions that has affected your account should beRecorded in the checkbook register.
13 The Checking Account Using a Checkbook Register, contd. What should be included in your check register:Check Number – if applicableDateDescription of transaction (I.e., to whom check waswritten, debit card transaction, etc.)AmountBalance – A MUST!
14 The Checking Account Debit Card Transactions Debit cards allow you to make payments for itemsat any place that a VISA/Mastercard is accepted.Payments are deducted directly from your checkingaccount.Debit Cards are a faster & safer way of writing a checkDebit Cards are NOT credit cards. Payment is deductedimmediately. (Credit cards allow for “extra time” to pay andincur finance charges (interest).
15 The Bank Reconciliation! The Checking Account Bringing into agreement your bank statement balance and your check register balance!
16 The Checking Account The Bank Reconciliation Process Bringing into agreement your check register balance withthe bank statement balance.The Path of a Check
17 The Checking Account The Bank Reconciliation Process Bringing into agreement your check register balance withthe bank statement balance.Many bank customers wrongly assume that the accountbalance shown on the bank statement is the actualamount of money available. This is NOT true!You must reconcile your checkbook register with thebank statement to “prove your balance” and make surethat they are in agreement.
18 The Checking Account The Bank Reconciliation Process Bank Statements are received from the bank monthlyand show all of the transactions that have occurred duringthe month.The bank’s balance and your checkbook registerbalance will usually NOT agree because of OUTSTANDINGCHECKS and DEPOSITS and fees.
19 The Checking Account Checking Account Vocabulary Outstanding Check - A check that has been written butHas not been processed (paid) by the bankCancelled Check – A check that the bank has processedand paid.Overdraft – A check that cannot be processed and paidby the bank because of insufficient funds.(AKA: Bouncing a check)
20 Deposits in transit Service charges Deposits that have not reached the bank or been recorded by the bank before the statement is preparedService chargesE.g., check printing and processing, account feesNSF ChecksNot sufficient fundsSomebody wrote us a rubber check
21 The Checking Account When you receive your bank statement, IMMEDIATELY do the following:Verify all of the transactions on your bank statementagainst what you have recorded in your check register.if you have forgotten any, record them in your checkregister.Re-calculate your balances in your check register tomake certain that you have calculated correctly.
22 The Checking Account THEN, IMMEDIATELY do the following: Perform the reconciliation process:Step 1: List your current STATEMENT balance.Step 2: Add outstanding depositsStep 3: Subtract outstanding checks or debit card transactions.and any fees that the bank has charged.The total should equal your checkbook balance. If itdoesn’t, something is wrong and you need to re-checkyour calculations and make certain that EVERYTHING has beenrecorded.
23 Reconciled! The Checking Account When both the statement balance and the checkregister balance agree, your checking account has been. . .Reconciled!…a must in maintainingcheckbook responsibility!
24 Why your checking account and bank balance might be different. You may have forgotten to record a transaction.Bank may have charged you a service charge.Bank doesn’t know about a deposit.Interest earned may have been added.You may have recorded the amount of a check incorrectly.Some of your checks may not have cleared.Why your checking account and bank balance might be different.