Where to Stash Your Cash Notes

Learning Targets

  • 1.1 Identify the advantages and disadvantages of a debit card
  • 1.2 Open and manage a checking account
    • 1.2a Write a check
    • 1.2b Fill out a deposit slip
    • 1.2c Maintain a checkbook register
    • 1.2d Reconcile a checking account
    • 1.2e Endorse a check
  • 1.3 Understand online banking, bill pay, and ATM machines

Financial Institutions

  • Banks
    • Work for profit.
    • Accept deposits from customers and use those deposits to make loans.
    • Owned by individuals and stockholders.
  • Credit Unions
    • Non-profit bank.
    • Members can borrow from pooled deposits at low-interest rates.
    • Any profit they make they give back to their customers in lower fees.
    • Members elect board of directors.
    • Community oriented.

How Financial Institutions Make a Profit

  • Fees
  • Interest on loans

Advantages of Checking Accounts

  • Debit Card Use
  • Direct Deposit
  • Can Track Money Online
  • Can Earn Interest
  • Online Bill Pay

Opening an Account - Necessary Items

  • Identification – student ID, driver's license
  • Money to deposit
  • A social security number

Writing Checks - Important Reminders

  • Always use pen
  • Write legibly. Keep numbers and letters clear and distinct.
  • Sign name as you did on your signature card when you opened the account.
  • HAVE ENOUGH MONEY – you must deposit money into your account.

Making Deposits

  • Deposit Slip includes:
    • Checking or Savings selection.
    • Today's Date
    • Cash amount
    • Check amount(s)
    • Customer Name
    • Customer Address
    • Subtotal
    • Less Cash Received (if applicable, sign by the X)
    • Account #
    • Total

Endorsements

  • Blank —sign your name in pen
  • Restrictive—
    • Write ”For Deposit Only”
    • Sign your name in pen
  • Third-Party (special)
    • Write “Pay to the Order of”
    • Write Name of new person
    • Sign your name in pen

Debit Card

  • Looks like a credit card
  • Money comes out of your checking account
  • Use a PIN to authorize transactions
  • Debit Cards vs. Credit Cards

Debit Cards - Advantages

  • You don’t pay interest like credit cards
  • Can keep you from overspending if you are good about monitoring your balance
  • Don’t have to carry cash

Debit Cards - Disadvantages

  • A fee for using it (ATM or other businesses)
  • Can cause you to overspend (easy access to money)
  • Checkbook balancing (must remember to record in check register)

Electronic Banking

  • EFT = Electronic funds transfer
  • ATM = Automated teller machine

ATM Functions

  • Make deposits
  • Make withdrawals
  • Transfer money from one account to another
  • To use the ATM, you must have a PIN #.
  • PIN # = A secret number that identifies you at the ATM.

Automatic Withdrawal

  • You give a creditor permission to automatically withdraw money from your checking to pay a bill.

Direct Deposit

  • Your employer deposits your paycheck directly into your account at the bank.
  • The safest way to deposit your paycheck.

Using a Check Register

  1. Enter the check number or transaction type, such as Debit Card or ATM.
  2. Enter the date of the transaction.
  3. Enter a description of the transaction, such as business name or deposit.
  4. Enter the amount of the Check, Debit Card, ATM, or other withdrawals.
  5. Draw a check mark once you see the transaction recorded on your bank statement.
  6. Enter the amount of any deposits.
  7. Keep a running total of your balance.

Why Use a Check Register?

Other Banking Terms & Services

NSF – Nonsufficient Funds aka - Overdrawn

  • If you spend money you don’t have in your account, you are charged an NSF charge (aka Overdraft Fee) by your bank.
  • The person/business where you spent money will also charge you a fee.

Avoid Being Overdrawn

  • When you open your account, you will be asked to opt-in or out of overdraft coverage. Opting in for this coverage means the bank will process your transaction even if you don’t have the money in your account. You are charged an NSF overdraft fee.

Canceled/Cleared Check

  • What we call a check the bank received and paid (cleared).

Voided Check

  • The word “VOID” is written across the check, which means the check should not be accepted for payment.
  • NOTE: An employer might ask for a voided check to set up direct deposit for your paychecks. Also, when you mess up on a check, you should write VOID across it and/or tear it up.

Reconciling Your Account

  • Steps
    • 1) In your check register, check (√) off all transactions that appear on the bank statement
    • Do the math: Bank’s Ending Balance + Outstanding Deposits – Outstanding Withdrawals = Your check register balance
      • Outstanding Withdrawals – withdrawals the bank hasn’t processed yet and have not shown on a bank statement as cleared