Transcript Chapter 26
Chapter 26
Opening a Checking Account
Advantages of Checking
Account
Convenience – spend money through
paper (checks) or the EFT systems.
Safety – from physically being damaged,
or from careless spending
Proof of Payment – once the check is
cashed, it is a legal proof of payment
Record of Finances – the bank will provide
a record of finances, demonstrating how
necessary it is to keep track of all
deposits and credits
Types of Checking Accounts
Regular Checking Accounts – best when
planning on writing a lot of checks.
There is not a service charge on most
regular checking accounts.
Minimum balance – stated amount that the
account must not fall below.
Average monthly balance – the sum of the
daily balance divided by the number of days
in the month. This average needs to stay
above a certain point, in order to avoid a
service charge.
Additional Charge
Service Charge – a fee a bank
charges for handling a checking
account.
Types of Checking Accounts
Interest Checking Accounts – These
accounts make it possible for a
checking account to earn interest on
the amount kept in the bank.
However, if this is the account that you
want, there is normally a minimum
balance or minimum average monthly
balance of at least $500.
Money Market Rate
The interest rate that big users of
money, such as governments and
large corporations, pay when they
borrow money.
As this rate changes, so does the
rate the banks pay holders of certain
accounts.
Other Types of Checking
Accounts
Credit Union – provide checking
accounts for its members.
Members are called Shareholders when
they have money on deposit.
Their checks are called Sharedrafts.
With these accounts, interest rates may
vary and the number of sharedrafts per
month may be limited.
Opening a Checking
Account
Signature Card – The official card which
the depositor signs, and the bank keeps,
in order to use it as an official signature.
Joint Account – when two people and
more have an account together.
Deposit Slip – a form on which you list all
items you are depositing currency, coins,
and checks.
Endorsing Checks for
Making Deposits
Endorsement –
is written evidence that you received
payment or that you transferred your
right of receiving payment to someone
else.
Purposes of Endorsements
1 – Endorsements allow the
recipient of the check to cash,
deposit, or transfer it to someone
else.
2 – Endorsements serve as legal
evidence that the receiver cashed or
transferred the check to someone
else.
Purposes of Endorsements
3 – Endorsements mean that the
endorser will pay the check in case
the next owner of the check cannot
collect the money.
Placement of Endorsement
The bank has a stamp that they
must put on the back of the check
The signature of the endorser must
sign in the designated area of the
check
If the check is not signed in the right
spot, it is not legible, or incomplete, the
check may be returned.
Types of Endorsements
Blank Endorsement
consists of only the endorsers name.
makes a check payable to anyone who
has the check.
Special Endorsement
includes the name of the person to
whom the check has been transferred.
More types of
Endorsements
Restrictive Endorsements
limits the use of the check to the
purpose given in the endorsement.
For deposit only – the check may only
be deposited in your account.
Recording the Deposit
Deposits can be made…
At the bank
At an ATM
Or sent through the mail
Recording the Deposit
Checkbooks contain forms on which
a depositor writes a record of
deposits made and checks written.
Check Stub
• Attached to each check
Check Register
• Booklet designed to record and keep track
of funds in a checking account.