pp. 470-483

Chapter 29 Checking Accounts

2

Learning Objectives

1.1. IdentifyIdentify types of checking accounts.

2.2. Describe Describe some of the major services that banks provide

3. Name Name the ways checking transactions are recorded.

4.4. Explain Explain how to reconcile a checking account.

3

Why It’s Important

• Paying with checks is the most common medium of exchange.

4

Opening an Account1. Checking accounts are

sometimes called ______________ because each check a customer writes is an order to the bank to release money from the _______________.

demand deposits

account on demand

5

Types of Accounts

2. Most banks offer several types of checking accounts. A wise consumer investigates all the _____________ available, as well as their __________________

kinds or accounts

advantages and costs

6

Regular Account3. A regular checking account is designed

for customers who write ______________ each month and ___________________

______________ in the account.

4. Some accounts require a ____________________.

5. If the balance falls below the minimum, a _________________ is deducted from the account.

a few checksdon’t keep a minimumamount of

money

minimum balance.

service charge

7

Interest-Bearing Account

6. An interest-bearing account is a checking account that __________________________

_______________

earns interest on your account’s balance.

8

Interest-Bearing Account

7. An interest-bearing account usually has a _______________________ with an unlimited number of checks allowed each month.

8.The minimum balance might be much ___________than for a regular checking account.

minimum balance requirement

higher

9

Joint Account9. A _____________ is an account

shared by _____________ who are equally responsible for the account.

10. With a joint checking account, __________________________ on the account.

joint accounttwo people

either person can write checks

10

Figure29.1 TYPES OF CHECKING ACCOUNTS

This chart shows the different types of checking accounts available at one bank.

Which type of account requires the smallest amount of money to open?

11

Signature Card11. A ______________ is a record of your

signature used by the bank to ___________________.

12.The signature card helps ________________________ from cashing your checks.

13.The signature you put on your card is the _______________ you have to use when you sign your checks.

signature card

verify your identity

prevent other people

same one

12

Signature Card

Stacey E. Graham

13

Fast Review

1. What is an advantage and a disadvantage of an interest-bearing checking account?

2. What is the main purpose of a signature card?

It earns interest on the balance but requires a high minimum balance

To verify your identity

14

Overdraft Protection14. One risk of having a checking

account is writing checks for ______________ than you have in your account, or ______________ your account.

15. Banks _______________ for a returned check.

more moneyoverdrawing

charge a fee

15

Overdraft Protection16. The business you _______________ will probably also charge a fee.

17. Overdraft protection is a _____________ for overdrawn checks.

18. You pay a _______________ for the overdraft protection and ___________on the overdrawn amount until it is repaid.

wrote the check to

line of credit

service fee

interest

16

Stop Payment

19. A ______________ is an order for a bank not to cash a particular check.

20. Banks _____________ to stop payment on a check.

stop payment

charge a fee

17

Debit Cards21. A debit card is like a credit

card but money __________________ ________________ when you use it

rather than charging the amount to a credit account.

is taken directly from your checking account

18

Online Checking22. Online banking allows you to

___________________________ _____________ at any time of the

day over the Internet.

check your accounts, transfer money, or pay bills

19

Online Checking23.Online checking is ___________ ____________, so service fees are often

lower than a traditional account.

24. Banks offer the option of scheduling ____________________________ from your checking account.

less expensive for banks

automatic payment of your bills

20

Fast Review

1. What happens if a customer has insufficient funds in a checking account to pay a check?

2. How is a debit card different from a credit card?

The check “bounces” or is returned to the person who tried to cash it.

A debit card takes money directly from your checking account and you don’t pay interest on the purchase.

21

Account Records

25. An advantage of a checking account is that it enables you to keep records of your ___________________________records of your financial transactions

22

Check Parts

Niki Lantz 34.00

Thirty-four and 00/100--------------------------------

Stacey E. Graham

Nov 17 06

Bank of Lanc. CountyLancaster PA

Stacey E. GrahamStrasburg, PA

Date Check Written

ABA

Number

Bank Routing No.

Bank Acct.

Number

Drawer

payee

drawee

23

Writing a Check26. The party to _______________ ___________ and who is cashing

the check is the ___________. 27. The party __________________ and

is paying the money, or drawing it from an account, is called the ____________.

28. The _______________________ where the drawer has an account is the ____________

whom the check is written

payee.wrote the check

drawer

bank or financial institutiondrawee

24

Writing a Check

29. Your _______________ is your checkbook log where you keep ___________________________.

check register

track of all your checking transactions

25

Depositing a Check

30.To deposit a check in your account you need to fill out a ________________

31. To deposit or cash a check requires an _____________, or the signature of the payee on the back of the check..

deposit ticket.

endorsement

26

Depositing a Check32. To endorse a check, follow

these rules for your protection:•Endorse the check on the back •Use a black pen so your signature

can’t be erased

Sign Here______________

_____________________

_____________________

_____________________

Blank Endorsement

Restricted Endorsement

27

Depositing a Check33. Sign your name ______________ __________ on the front of the

check. This is called an _________ ____________.

34. If you’re depositing a check rather than cashing it, write ___________

_____________ above your signature. This is called a ____________________.

exactly as it’s written blank

endorsement

“For Deposit Only”

restricted endorsement

28

Bank Statements35. A ______________ is the

__________record of all the transactions in your checking account.

bank statementbank’s

29

Figure29.2 SAMPLE BANK STATEMENT

Michael and Conchetta Chung received this bank statement.

What were the totals for checks written and for deposits for the month?

30

Bank Statements36. A bank statement includes a

record of all ______________________ ___________.

37. A bank statement also includes a record of all ________________, or checks you’ve written that have been cashed.

withdrawals, deposits, interest and fees.

canceled checks

31

Fast Review

1. What are the three different parties on a check?

2. Why should you write “For Deposit Only” on the back of a check?

The payee (person who is cashing the check, The drawer (person who wrote the check) and the drawee (the bank where the drawer has the account.

If the check is lost it can only be used to deposit into your account

32

Graphic OrganizerPaying by CheckPaying by Check

Graphic OrganizerGraphic Organizer

The bank charges you a fee and returns the check to the business. The business also charges you a fee.

Write the check

The bank withdraws funds from your account and pays the check.

Isthere

enough moneyin your account?NO YES

33

Bank Reconciliation

38. _______________ is the process of seeing whether _______

___________________________ for your account.

Bank Reconciliation your

records agree with the bank’s records

34

Balancing Your Checkbook

39. The __________ to reconciling your account is to see whether the bank has processed all your checks and deposits.

first step

35

Balancing Your Checkbook

40._________________ are checks that have been __________

_____________________.

Outstanding checks

written but haven’t yet been cashed

36

Balancing Your Checkbook

41. Deposits that haven’t been recorded on the bank statement should be __________ to the bank statement balance.

added

37

Balancing Your Checkbook

42. The ______________ should be ____________ from the balance in your check register.

service feesubtracted

38

Balancing Your Checkbook

43. If your account _____________, ________the interest shown on the bank statement to your check register.

earns interestadd

39

Balancing Your Checkbook

44. If the balances on your bank statement and in your check register _________________________ (or brought into agreement) your check register balance with the bank statement balance.

are the same, you have reconciled

40

Finding Errors45. If the balances on your bank

statement and in your check register don’t agree, check your own account records to see whether you __________________________

__________________________

wrote the correct amount for each check and deposit.

41

Finding Errors

46. Check all your _________________________.

47. Check to see whether you

carried the ____________________ for each new page of your check register.

additions and subtractions

correct balance forward

42

Finding Errors

48. Recheck to see that you have _________________ all of the outstanding checks and deposits that haven’t been processed by the bank.

correctly identified

43

Finding Errors

49. Check the ________ additions and subtractions.

bank’s

44

Fast Review

1. What is the difference between a cancelled check and an outstanding check?

continued

A canceled check has been cashed by the bank. An outstanding check is a check that has been written that hasn’t been cashed yet.

45

Fast Review

2. What charges do you need to add and subtract from your check register to reconcile it with your bank statement?

You need to add interest and subtract service charges.

46

When you write a check at the store, what do you think the store does with it?

continued

47

What do you think an intermediary bank does?

What’s the purpose of the routing number on a check?

continued

48

How do you know when a check has cleared?

pp. 470-483

End ofChapter 29 Checking Accounts

50

Key WordsKey Words

demand depositsinterest-bearing accountsignature cardoverdrawingoverdraft protectionstop payment debit card continued

51

Key WordsKey Words

check registerendorsementbank statementcanceled checksbank reconciliationoutstanding checks

52

CheckFree provides the online bill-paying service for the majority of the United States’ largest banks. It works with the banks that want to provide online bill paying for their customers.

continued

Online Bill-Paying

53

CheckFree has little competition since others don’t want to build the required complex computer system.

continued

Online Bill-Paying

54

What other vendors could CheckFree build relationships with in order to be successful?

Analyze