Lesson 5. 1: Checking Accounts

demand deposit

the money can be withdrawn at any time

canceled check

check that has cleared your account

overdraft

check written for more money that ones account

check float

writing a check to deposit money before clear

checkbook register

booklet used to record checking account transactions

bank reconciliation

process of matching your checkbook register with the bank statement

joint account

account opened by two or more people

special account

account that has small amount of activity each month

standard account

small or no monthly service fee and no per-check fee

share account

savings account representing ownership interest

check

written order to a bank to pay the amount stated to the person or business named on it

payee

cashes your check

substitute check

exchange check information electronically by transmitting an image of the check

What advantages does a checking account offer?

1. It provides a convenient way to pay your bills

2. Writing a check is often safter than using cash, especially when making major purchases, paying bills, or buying products through the mail.

3. It has a built-in record keeping system that you can use to track expenses and create budgets

4. It gives you access to other bank services, such as loans, online baking and 24-hour access to your money through automated teller machines. (ATMs)

What does it mean when a check is bounced?

It means that the bank that does not honor a check stamps it with the words “not sufficient funds” (NSF) and returning it to the payee’s bank

Why is floating a check dangerous?

1. It’s illegal in most states

2. Today’s electronic system allows checks to be processed very quickly

3. It can hurt your credit record

What should you consider while writing a check?

• Always use a pen, preferably one with dark ink that does not skip or blot.

• Write legibly. Keep numbers and letters clear and distinct, without extra space before, between, or after them.

• Sign your name as it appears preprinted on the check and signature card.

• Avoid mistakes. If you make a mistake, write “VOID” across the face of the check to cancel it and then write a new check.

• Be certain you have deposited adequate funds in your account to cover each check you write

What is used to deposit money into your account?

deposit slip

blank endorsement

signature of the payee written exactly as his or her name appears on the front of the check

third-party check

check that is signed over to a third person by the orginal payee

special endorsement

endorsement that transfers the right to cash the check to someone else

restrictive endorsement

restricts or limits the use of a check

money market account

interest-bearing checking account that pays a higher rate of interest