BANKING/CHECKING ACCOUNTS

Banking/Checking Accounts

• How Banks Work

• Using a checking account

• Balancing your checking account

• Electronic banking

• Other banking services

How Banks Works

• Business to earn a profit

• Provide security

• Purchasing power

• Banks are regulated

Banks

• FDIC-Federal Deposit Insurance Corporation

Created by the federal government.

Insures up to a maximum of $250,000.

Credit UnionCredit unions are non-profit. When you’re doing business with a credit union the profits of that credit union are being returned to the members of the credit union in the form of lower loan interest rates and higher dividends.

Banking/Checking Accounts42 billion checks are written a year according to a Federal Reserve study in 2001.

Check are written orders we use to tell our bank or other depository institution to pay money or to transfer funds from our accounts to the check holder.

Types of Checking Accounts• The demand deposit account The most common type of checking account.

• Share Draft Account-The name of a checking account from a credit union.

• Interest-bearing checking accounts Offered by most types of deposit institutions. Money market is one type

of interest bearing account. MMDA-Money Market Deposit Account.

• Now Accounts (Negotiable Order of Withdrawal) Interest bearing checking account

Checking Accounts

Checking Accounts Fees

• Maintenance fee

• Service charges

Checking Accounts

• Parts of a check• Recording each transaction-check register• Account running balance• Overdrawing• Cashing a check-Endorsements• Deposit slips• Bank Statements• Reconciling your account

Parts of the check

Can you name the parts of the check?

Endorsements

1. Blank2. Restrictive3. 2 party/Transfer/Special4.Corrective

4 Ways to Endorse

Deposit/Withdrawal Slips

Deposit Slip Example

1. Savings2.Checking3.Withdrawal

Banking Services

• Wire Transfer A bank can arrange money to wire from your account.

• Safe Deposit Box Boxes with individual locks that you may rent from a bank.

Banking Services

Special Types of Checks

• Certified Checks Once stamped or perforated the bank becomes

liable for the amount certified. You have a checking account at the bank.

• Cashier’s Checks A person who buys a cashier’s check does not

need to have a checking account at that bank. A cashier’s check has a better guarantee of payment because it is drawn by a bank against itself.

Banking Services• Money Order For people who don’t maintain a checking account or who prefer not to make payments

with cash, money orders often serves the same function as personal checks. Money orders, sometimes called register checks, can be purchased at banks and some retail stores. Personal money orders are usually issued in smaller amounts and are cheaper than cashier checks.

• Government Checks Almost everyone will receive a government check in their lifetime. A tax refund is an

example of a government check. Federal government checks are drawn on the U.S. Treasury and state or local government checks are drawn on commercial banks or on the government treasury.

• Traveler’s Check Traveler’s checks are sold through banks and travel companies, usually in $20, $50, $100,

and $500 denominations. The usual cost is the face value plus a small percentage. The purchaser of traveler checks signs them at the time of purchase and again when they are collected. This practice protects both the user and the cashing party. Lost or stolen traveler’s checks will be insured by the issuing company.

Banking

• IRA ACCOUNT Individual Retirement Account. $2000 is

allowed each year for each individual, exempt from taxation until 591/2 years of age. Heavy penalties for early withdrawal.

• Certificate of Deposit Savings account certificate form instead of

passbook, earns an attractive interest rate for a certain amount of time.

Vocabulary• Reconciliation Bringing two figures into balance or agreement. Uses

the bank balance and the checkbook register.

• Cancelled Check Your bank might return your cancelled check with

your statement. Each check will have a cancelled stamp on it. This stamp indicates that your bank has paid the check.

Vocabulary

• Check Clear or ClearingWhen you deposit a check, you can’t withdraw the money immediately unless you already have enough money in your account to cover the check.

The check must “clear” first.

When your bank receives payment for the check the check has cleared and the money is available.

Electronic Banking

• Electronic Banking is the new frontier of banking.

• EFT-Electronic Funds Transfer

Bank moves money from one account to another electronically.

Electronic Banking

EFT’S are commonly made through

• ATM

• Direct Deposit

• Debit Cards

• Automatic Bill Payments

• On-line Banking

Electronic Banking

• ATM

• Computer Terminal

• Deposits

• Withdraw Cash

• Check Account Balance

• Pay Certain Types of Bills

Electronic Banking

• ATM Pin number-Personal Identification Number

• ATM Transactions

Deposits

Withdraw

• ATM Costs

• What if I lose my card?

Electronic Banking• Theme parks, resorts, hotels and gas

stations are notorious for changing high ATM fees.

• It costs nearly $3 every time you go to another bank's ATM. Two such withdrawals per week means you're throwing away $300 per year.

Electronic Banking

• Debit Cards

• Works like a check

No check writing

• Stores prefer

Immediate payment received by store

http://finance.yahoo.com/banking-budgeting/article/109125/10-places-not-to-use-your-debit-card?mod=bb-checking_savings