Fbla C, Checking Accounts

Explain the reasons for having a checking account 

lets you store cash safely and securely while enjoying easy access to your money with debit cards, electronic transfers, or checks.

Explain how to open a checking account.

choose a bank, gather required documents, complete an application, review terms and conditions, make an initial deposit, set up account features, and receive account details.

What are some advantages of online banking.

Convince, speed, cost saving, account management, security features

What are some disadvantages of online banking.

Limited personal interaction, technical issues, security risk, limited access to physical services, learning curve

Define paperless bank statements.

Paperless bank statements are digital versions of traditional bank statements that are delivered electronically. Instead of receiving physical copies in the mail, account holders access their statements online through a bank's website or mobile app. This method reduces paper waste, offers easier storage and retrieval, and often provides more immediate access to financial information. 

What are the three types of endorsements for checks. 

Blank Endorsement, Restrictive Endorsement, Restrictive Endorsement

What are Blank Endorsement

A blank endorsement is made when the back of a check is signed without any added restrictions. Because a blank endorsement check can be deposited by anyone (even if their name is not written on the check), this method is best used when the check will be deposited immediately, like while using a mobile banking app.  

What are Restrictive Endorsement

A restrictive endorsement ensures that a check will be deposited into a specific account. Adding a restriction such as “for deposit only” or “for mobile deposit only” to the endorsement area helps to reduce the risk of the money being stolen if the check is lost. In fact, some institutions now require this to be written on checks before they are deposited.  

What are Special Endorsement

A “special” endorsement allows the payee to make the check payable to another person. For example, if Ms. Smith wants to make the check payable to Mr. Smith, she would write “Pay to the order of Mr. Smith” on the back of the check-in the endorsement area. Because there is a potential risk of forgery when using special endorsement, banks are discouraged from cashing these types of checks unless the payee is present. Using a mobile banking app to deposit a special endorsement check helps the bank to legitimize the payment and protect your account from fraud. 

Explain overdraft protection. 

Overdraft protection is a banking service that helps prevent your account from going into negative balance when you make a transaction that exceeds your available funds. If you opt for overdraft protection, your bank may cover the shortfall, allowing your transaction to go through. This can apply to debit card purchases, checks, or automatic payments. 

Explain how to reconcile a bank statement. 

Gather Your Documents (Bank Statement and Personal Records)

Compare Balances (Starting Balance)

Review Deposits (Match Deposits and Identify Missing Deposits)

Review Withdrawals (Match Withdrawals and Identify Missing Withdrawals)

Check for Fees and Interest (Bank Fees and Interest Earned)

Adjust Your Records (Add Missing Transactions and Adjust for Fees and Interest)

Calculate the New Balance (Reconcile)

Investigate Discrepancies

Document the Reconciliation 

Repeat Regularly

What is reconcile a bank statement?

the process of comparing two different records

Define the purpose of the FDIC. 

protects the money depositors place in insured banks in the unlikely event of an insured-bank failure. 

What is a debit card

a payment card that deducts money directly from your checking account

What is a credit card

used to pay for items or services using credit and charge interest on the money spent.

What are the differences between credit cards and debit cards

In essence, debit cards are linked directly to your bank account and help you manage your spending, while credit cards allow you to borrow money with the potential for rewards and credit building. Each has its advantages and drawbacks, depending on your financial habits and needs. 

Explaining the importance of maintaining a check register. 

Track Spending, Avoid Overdrafts, Reconcile Bank Statements, Identify Spending Patterns, Budgeting Tool, Record of Transactions, Promotes Financial Discipline, Easy Reference for Tax Preparation

what is a check register

record of all transactions made to a checking account, including checks, cash payments, and deposits

Explain the importance of developing a solid relationship with your bank by taking good care of your checking account.  

makes it easier to ask account-specific questions and handle your day-to-day banking needs.

Define direct deposit

is an electronic payment method where funds, such as salary or government benefits, are automatically transferred directly into a bank account instead of being issued as a physical check.  

Define advantages associated with direct deposit.  

Convenience, Faster Access to Funds, Security, Reduced Fees, Automatic Savings, and Environmentally Friendly

Explain the convenience of automatic withdrawal for certain reoccurring expenses.  

eliminating the need to manually pay recurring bills each month

time-Saving, Consistency, Budgeting, Reduced Stress, and Streamlined Processes

Explain the checking account routing number.

a nine-digit code used to identify a specific financial institution in the United States. This number is essential for processing various transactions, including direct deposits, wire transfers, and automatic payments.  

Explain the role of the drawer for a checking account.  

the person with the money who issues a check