checking account and debit cards

economics and personal finance

what is a checking account?

common banking tool used by many consumers.

funds are easily accessed by -

checks, debit cards, atm (automated teller machine), digital and electronic payments.

why do people use checking accounts?

• redcuces the need to carry large amounts of cash

close to fifty percent of americans carry twenty dollars in cash each day.

• convenient - useful for paying bill

• keeps a record of where money is spent

• safety - using checks and debit cards is much safer than using cash

what is a checking account register?

a place to immediately record all monetary transactions for a checking account.

• such as written checks, atm withdrawals, debit card purchases, deposits, digital payments, and additional bank fees.

what is a checkbook?

contains the checks and the register to track monetary transactions.

• keeping a record of all your checking transactions can be done in an electronic register or a paper register.

what is a check?

a piece of paper pre-printed with the account holder’s

• name, address, depository instution’s routing number, and account indentification numbers.

what is the term “bouncing a check” mean?

a check wriiten for an amount payable over the current balance held in the account.

• the check bounces due to insufficient funds, or not enough money in the account to cover the check written.

what are the downsides of bouncing a check?

• a fee will be charged to the account holder

• the practice bouncing checks can harm future opportunites for credit

what can some banks do so you’re unable to bounce a check?

some banks allow protection from overdrafting your account by connecting savings and checking accounts.

what can an atm be used for?

an automatic teller machine can be used to dispense cash, transfer money, or make deposits.

what is a “foreign transaction fee?”

any additional fees that may be assessed if the atm used is not one provided by the depository instiution sponsoring the card.

what is a debit card and what is it used for?

a plastic card that looks like a credit card but is electronically connected to a bank account.

• money is automatically taken from the bank account when purchases are made.

how do you confirm the user is authorized to access the account?

the debit card requires a pin (personal identification number).

what are both the positives and negatives of a debit card?

positive factors - convenient, small, allows a person to carry less cash, doesn’t allow overspending.

negative factors - can lose track of balance if transactions aren’t written down, opens checking accounts for possible fraud, others can gain access to the account if the card is lost and the pin is known by others.

how and when do you endorse a check properlly?

you must have a signature on the back of the check to give approval for the check to be deposited or cashed.

• a check should be endorsed to be deposited.

what are the three types of endorsements?

blank, restrictive, and special

how do you fill out a blank endorsement and who is able to cash or deposit the check?

• the receiver of the check must sign his or her name.

• anyone can cash or deposit the check after it has been signed.

what is a restrictive endorsement, how do you fill it out, and is it a secure endorsement?

• a check that is only allowed to be desposited and not cashed.

• the receiver of the check writes “for desposit only” and the account number above his or her signature.

• a restrictive endorsement is more secure than a blank endorsement.

what is a special endorsement, how do you fill it out, and what can it also be referred to as?

• a check that is able to be transferred to a second party.

• the receiver must sign and write “pay in the order of (fill in person’s name).”

• also known as a two - party check.

what is a deposit slip and where can it be located?

• typically a pre - printed slip with the account number.

• this check allows money either cash or check to be deposited into the correct amount.

• can be found in the back of a checkbook.

what are the steps to make a deposit and where can they be done at?

1. you must complete a deposit slip to be able to make a deposit.

2. the deposited amount must be recorded in the checking account register to keep the balance current.

• deposits can be made at an atm, with a bank teller, or electronically.

why do people write checks and how can they be taken for payment?

• individals write checks to pay for items using a checking account.

• the check must be completed, signed, and given to the person or business asking for payment in order for it to be authorized.

what do the pre - printed items on a check consist of?

• name and address of the account holder, name and address of the despository institution, check number, identification numbers, and account and routing numbers.

what personal information must you use when writng a check and what information should you never give out on a check?

• the check must include an account holder’s name and address.

• you may include a phone number, but it is not required.

• you should never list a social security number for personal safety reasons.

what is the importance of a check number?

a form of printed chronologically of numbers used to properly identify checks.

how to properly date a check?

a check must be dated the day it is written

• don’t post - date checks always make sure a future date is written on it.

what needs to be placed in the blank “pay to the order of” seen on a check?

the name of the person or business to whom the check is being written to.

how to write the amount of the check in numerals properly?

• the amount of the check must be written numerically in the box.

• make sure to write the cents smaller and begin to underline it.

• write the numbers directly next to the dollar sign to prevent someone else from adding numbers to change the amount.

how to write the amount the check is for in words correctly?

• this needs to be done written in words on the second line located on the check.

• start at the far left of the line, write the amount the check is for in words, followed by ‘and’, and the amount of cents over the number one - hundred.

• lastly, draw a line from the end of the words on the given line to the word ‘dolars’.

what are you supposed to write next to the word “memo” on a check?

• a space used to identify the reason for writing a check, this step is presented as optional.

• this is a good place to write down information requested by a company when paying a bill, generally the account number.

why must you perform your signature on a check?

the account holder’s signature is a form of agreeing to the transaction.

what are the three identification numbers on a check?

1. the routing numbers to identify the account’s financial institution.

2. an account number.

3. the check number.

what is the check clearing for the twenty - first century act (check twenty - one)?

when a check is written, the money is immediately withdrawn from a bank account.

what is a overdraft and how can it be taken care of?

• a protection from a depository institution.

• consumers may choose to allow their depository institution to accept transactions which will exceed their available balance and be charged a twenty to thirty dollar transaction fee.

• another option, may be to choose to have overdrafts taken from a savings account.

what are the definitons for the following terms found on a debit card?

• account number - links all purchases made with the card to a designated bank account.

• expiration date - the debit card is currently valid and may be used until the given date.

• cardholder’s name - the cardholder’s full name is written out and displayed across the card.

• magnetic strip - when the debit card is swiped, the magnetic strip automatically withdraws funds from the cardholder’s account.

• chip card - a microchip is embedded in both debit and credit cards, your pin number guarntee a more secure transaction when you use your card physically with chip - enabled terminals.

• authorized signature - you must sign in the signature box on the back of the debit card to authorize payments.

  - you should always write, “see id” in the signature box to ensure the person using the card is authorized to do so.

• verification number - a three - digit code which is located on the back of the card in the signature area.

  - helps ensure as well that the card belongs to the cardholder’s possession when making purchases and prevents unauthorized use.

what is a checking account register and what is its purpose?

• a place to record all monetary transactions for a checking account.

  - such as deposits, checks, atm usage, debit card purchases, and additional bank fees.

• used to keep a running balance of the account, whether it's done on a electronic spread sheet or your register.

what must you have presented on your check to have it registered and what are the meanings of the terms?

• date - the given date the check was written or transaction was made.

• number - the number of the written check; if a debit card or atm was used by writing dc or atm.

• description of transaction - the person and or business the check was written to or where the debit card had been used.

• payment (debit) - the amount of the transaction, a deduction from the balance.

• deposit (credit) - the amount of the transaction, an addition to the balance.

• place a square root t - a box used to track whether the check has cleared on the monthly bank statement when reconciling at the end of each month.

• fee (if any) - any extra fees charged to the account; listed on the bank statement.

balance - the running total of the checking account.

- caculated by adding or subtracting each transaction; you must keep this updated.

what can you see on a monthly bank statement?

- lists each monetary transaction and the current account balance for a specified time period.

• dates

• identification for each transaction (number or type, date and amount).

• transaction amounts for withdrawals and or deposits.

• intrest earned (if relevant).

• fees or charges (if relevant).

monthly bank statements lists what kind of transactions?

- lists each transaction and current account balance.

• deposits, checks, debit card transactions, atm transactions, pre - arranged automatic payments, and additional fees.

what does the term “reconciling a checking account” mean, how often should you do this, and why is it important?

• balance the checkbook register each month to the balance shown on the statement.

• this act should be done every month to ensure the correct balance in the checkbook.

• knowing the correct balance can help to avoid bouncing checks.

what are the proper steps for reconciling a check?

1. view your monthly bank statement and check register.

2. determine the current amount balance from the bank statement.

3. add any outstanding deposits - transactions that haven’t cleared the bank.

4. compare the total with the checkbook register.

- if the totals appear different, double check the math and make sure all service fees and bank charges are recorded in the check register.

what procedures should you take if a checkbook, atm, or debit card becomes lost or stolen?

immediately report it to the depository institution and file a report to the police.

what act does a depository institution do when a checkbook is reported lost or stolen?

depository institutions generally do not hold the account holder liable for any fraudulent charges.

what act does a depository institution do when a debit card is reported lost or stolen?

• within two business days - the cardholder is only liable for fifty dollars.

• a report after two business days - the cardholder may be liable for up to five - hundred dollars.

• may not charge the account holder anything if the correct steps were taken to report the lost or stolen card.

- varies depending upon the depository institution.

what platforms can be used to make a mobile paymennt?

• apple pay, google pay, square cash, paypal, and venmo.

what are the proper steps you must take in order to make a mobile deposit?

1. sign up for mobile banking with your depository institution.

2. take a picture of the check being used with your phone.

3. take a picture of your endorsement found on the back of your check to finalize your deposit.