7.2 use your checking account goals: ◦understand the purpose of a checking account. ◦demonstrate...

7.2 Use Your Checking AccountGoals:

◦Understand the purpose of a checking account.◦Demonstrate how to write, endorse, record, and

deposit checks.◦Identify types of checking accounts and

checking account fees.

What is a personal checking

account?

Personal checking accountA bank account that allows depositors to

write checks to make payments is a checking account.

How old do you need to be to open a checking account on your own?

18 years oldYou can open one between the ages of 13-

17 but you must have a custodial account

How to open a checking account

Try to think of the four things you will need to do at the bank:1. Complete an application2. Sign a signature card3. Provide valid identification4. Make an initial deposit

Checking Account Costs

Two types of Checking Account Fees:1. Monthly maintenance fee- this is a flat fee to cover

the costs of maintaining your account regardless of the number of checks you write.

2. Service charge for each check you write. (usually between 15 and 25 cents per check)

• Be sure to investigate the fees charged by competing banks to find the best deal for your financial situation.

Making a deposit• You may deposit cash into your checking

accountYou may deposit all or part of a check into

your account.

Sample Check

1. Date you write the check2. Your name and address3. Payee4. Your signature5. Amount of check in numbers6. Amount of check in words7. Check number8. Bank the check is drawn on9. Routing number & account number

How to write a check

When writing a check you MUST fill out the following parts:

1. The date you write the check2. The name of the payee3. The amount of the check, written in

numbers and words4. Your signature

Rules to writing a checkAlways fill out checks in ink.Write clearly.When writing the amount in words show

cents as a fraction.Start writing at the left of the amount

space, so no one can alter your check, then fill that space with a line.

Use the memo to write yourself a brief description of what the check is for.

Recording your checks in your register.

Checks come with a booklet called a check register, for recording your transactions.

1. Record each transaction2. Record fees3. Record interest4. Calculate your new balance-

Your account balance is the total amount in account at a specific date.

5. Record check numbers. This is the most effective way to keep from overdrawing on your account.

Overdrawing means writing a check for more than you have in your account.

When the bank receives a request to pay a check for which you have insufficient funds, it may refuse to pay and charge you a fee of $35 or more.

Bouncing a check

Advantages of using checks1. Safety- the greatest advantage of using

a check is safety! 2. Convenience

• Don’t want to carry large sums of cash, bulky etc.

• Can mail checks of any amount.

3. Records of your Transactions• Checks automatically serve as records for your

transactions. Banks send you a statement, or it is available on-line, which is a record of all your transactions.

How to cash checkTo cash a check:

1. Take it to your bank2. Sign your name on the back of the check in

the designated space- endorsement. An endorsement acknowledges that you received the money or transferred your right to the money to someone else

3. Have ID ready

The check clearing process• In order for you to have access to the

money, the check has to “clear” first.

• This process can occur electronically overnight or used to take a week depending how far away the bank is located.

Banking Service7.2 Use Your Checking Account