Notes in ppt slide 38-44

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Transcript Notes in ppt slide 38-44

Exploring Business Unit 3: Personal Finance

Part 1: Introduction to Checking Account

• • • • • Objectives: Describe the purpose of a checking account Write checks & record in a register Examine several endorsements Compare account balances using a bank reconciliation Analyze different types of loans and insurance

College & Career Readiness Standards

Reading   Identify a clear idea or purpose of any paragraph(s) in uncomplicated passages Identify clear cause-effect relationships in uncomplicated passages   English  Identify the central idea or main topic of a straightforward piece of writing Math  Solve routine one-step arithmetic problems (using whole numbers)

Checking vs. Savings & CD’s

Checking

  A transactional bank account.

Easily accessible

Savings & CD’s

    Not meant for transactions Offer better interest rates Encourages you to not spend money with restrictions.

Not easily accessible during non-banking hours.

Advantages of a Checking Account

1.

2.

3.

4.

Convenience Safety Proof of Payment Record of Finances

Advantages of a Checking Account

1. Convenience    Write checks at home Pay bills by mail Debit Card • Online payments • Swipe card and money is taken directly out of checking account • Need Cash? = ATM

Advantages of a Checking Account

2. Safety    Money on hand involves risk of losing it by fire, theft, or carelessness Less temptation to spend money Check can only be cashed by person or business to whom it is payable

Advantages of a Checking Account

2. Safety  FDIC & NCUA • Most banks & credit unions are members • FDIC insures deposits up to $250,000

Advantages of a Checking Account

3. Proof of Payment  Check is legal proof of your finances • Payment to others • Confirm with bank • All checks are now electronically imaged

Advantages of a Checking Account

4. Record of Finances     Check is legal proof of your finances How much are you spending Where your money is going How much you have remaining

Types of Checking Accounts - Overview

 Differ in what they offer to customers      Annual Fee Minimum Balance Fee for each check written (Service Charge) Fee for ATM use (Service Charge) Interest earning accounts

Types of Checking Accounts

 Regular Checking Accounts    No service charges Low Minimum Account Balance Typically No Interest on Account • Student Checking Accounts • Senior Checking Accounts

Types of Checking Accounts

 Interest Checking Accounts    Most require Minimum Monthly Balance • Most $500 or more Service Charges/Fees • May require a specific # of checks written or debit card transactions • May require direct deposit • Monthly Service Charge Pays a Low Rate of Interest on Account

Tips for Good Check Writing

3.

4.

5.

1.

2.

6.

Write checks in ink.

Only write checks if you have money in account to cover them.

Use the current date Always fill in the amount.

Void checks on which you make errors.

Do Not write checks to “Cash”

Writing the Amount on a Check (In Words) pg 56

1.

$39.45 __________________________________ Dollars 2.

$89.00 __________________________________ Dollars 3.

$110.00 _________________________________ Dollars 4.

$1,522.16 ________________________________ Dollars 5.

$2,671.95 ________________________________ Dollars

Deposit Slips

275979076

routing number

12345678

account number

Check Register

 A separate form on which a depositor keeps a record of deposits and withdrawals.

 EVERY check must be recorded in a check register.

Enter into Register

 Business News Lebron- Dunkin

Endorsements –

Back of Check

 written evidence you received payment or that you transferred your right of receiving payment to someone else.

Allow recipient of the check to cash, deposit, or transfer it to someone else.

 Legal evidence.

 Must be in ‘Float’ area.

 Float = 1.5 inch space on left side of check, on back.

Types of Endorsements

    Blank: your name in exactly as it is written on the face of check.

Special: includes name of person to whom check has been transferred.

Restrictive: limits the use of the check.

Forgery: writing another person’s signature on a check without his or her authority.

Types of Endorsements

1 2 1.

2.

3.

Blank Endorsement Special Endorsement Restrictive Endorsement 3

What Happens If They Don’t Take Checks?

Use a Debit Card!

Click Visa Debit Commerical 

What is a Debit Card?

 Enable customers to withdraw money directly from account.

   Linked to a specific account, typically checking.

When you make a purchase it automatically deducts that amount from the account linked to card You are using your own money!

Making Purchases with Debit Card

   Card will be ‘swiped’ Enter PIN Cashier gets approval code  Code shows you have enough money in account for purchase

Questions to Ask about Debit Cards

    Annual Fees?

Account Link?

ATM withdrawal fees?

 These are separate from the machine fee!

What happens if card is lost?

 Electronic Fund Transactions Act • You are responsible for up to $50 if reported in 2 days.

• You are responsible for up to $500 if reported in 3-60 days.

Online Banking

 Faster, Easier, Secure http://www.uwcu.org/OnlineBanking/ Default.aspx

Creating a Debit Card

Future of Debit Cards

Bank Reconciliation

http://www.spotthedifference.com/ http://www.spotthedifference.com/St eamTrain

Bank Reconciliation

 a statement showing how your check register balance and a bank statement balance are brought into agreement.

 Why do a reconciliation?  Mistakes Happen!

Checking Accounts -

Terms

   Service Charge: the fee a bank charges for using a service.

Overdrawing: writing a check for more than you have in your checking account.

Bank Statement: A monthly report sent to you from the bank that shows the condition of your checking account.

Checking Accounts -

Terms

Outstanding Check: A check that has not been paid, or cashed.

Cancelled Check: A check that has been paid (cashed by person who received the check).

Deposit in-transit: A deposit made to but has not yet been posted to your account.

Steps to Complete a Bank Reconciliation

     Step 1: Identify any outstanding checks Step 2: Identify any deposits in transit Step 3: Analyze bank statement for transactions not recorded in the check register. Example: Automatic Payments (PayPal) Step 4: Look for recording and math errors Step 5: Compare adjusted balance to bank statement balance

    Activity 1.4 Reconciling a Bank Statement Balance From Bank Ad Deposits not showing Subtract outstanding checks

Reconciliation 804 2588 805 33 21,481.90 $22,387.85

3514.00

0 3514.00

0 12.95

2621 22374.90

12.95

22374.90

Check Point – Practice Time

     Complete Checkbook Reconciliation Pg 27 Show Mr. Fassl Then you can work on your DEBIT CARD (if not done..finish for HW) (Guest speaker Wed)

Loans

Examples 

Mortgage:

a legal document that allows a bank to lay claim against your property.

  Home/Property Loan Payments may include Taxes and Insurance  Installment Loan: period of time.

where regular payments are made in specific amounts over a  Car loan is example.  Some banks will hold the title until loan is paid off

Rate Sheet

Interest = Principal * Rate * Time

   Principal: amount of loan.

Rate: interest rate for loan.

Time: length of loan.  1 = 1 Year  Maturity Date: the date at which the loan is paid off or comes due.

Interest = Principal * Rate * Time

  Example: $500, 7% interest, 1 Year Interest = 500 * 7%*1 Interest = $35

Act #3 pg 47

A. $ 117,947.81

Balance of Principal Int. for 1 year int. for 1 year C. Amt. Applied to Principal Monthly Payment int. for 1 month Amt. to principal.

D. Balance Left Bal. June 10 amt. to principal bal. July 10

Checkpoint pg (49)216

 Your Turn….HWK pg 56  Next Slide We’ll do Note #1 Together

Activity 6-2 Page 56

Part #1 Principal X Rate X Time = Interest #1 _______ ____ __/___ = _______ Part #2 Principal + Interest=Amount Paid at Maturity Part #3 Maturity Dates See page 44 in your packet May 16 to May 31 = 15 Days Jun 1 to Jun 30 = 30 Days July 1 to July 31 = 31 Days Aug 1 to Aug 14= 14 Days

Insurance

    Helps you share the risk of financial loss.

Premium: the amount of money you pay for an insurance policy.

 Monthly, Semi-Annually, Annually Claim: a request for the insurance company to pay you.

Deductible: the amount of money you are liable for on an insurance claim.

Types of Insurance

     

Vehicle

Liability, Comprehensive, Collision Property

Renter’s Business Health Life

Term, Universal, Variable, Whole Life Farm and Ranch