Checking Account & Debit Card Simulation

Checking Account & Debit Card SimulationUnderstanding Checking Accounts and Debit Card Transactions

Family Economics & Financial Education May 2006 Get Ready to Take Charge of Your Finances Checking Account & Debit Card Simulation Slide *Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

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What is a Checking Account?Common financial service used by many consumersFunds are easily accessedCheckATM (automated teller machine)Debit cardTelephoneInternetServices and fees vary depending upon the financial institution


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Why Do People Use Checking Accounts?Reduces the need to carry large amounts of cashConvenience useful for paying billsSpending Plan ToolKeeps a record of where money is spentSafety using checks is safer than carrying cash


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What is a Check?Piece of paper pre-printed with the account holders:NameAddressFinancial institutionIdentification numbers

Used at the time of purchase as the form of payment


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Bouncing a CheckCheck written for an amount over the current balance held in the accountBounces due to insufficient funds, or not enough money in the account to cover the check writtenA fee will be charged to the account holderHarm future opportunities for credit


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Other Checking ComponentsChecking Account RegisterPlace to immediately record all monetary transactions for a checking accountWritten checks, ATM withdrawals, debit card purchases, deposits and additional bank feesCheckbookContains the checks and the register to track monetary transactions


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ATMAutomated teller machine, or a cash machine Can be used to withdraw cash and make depositsAdditional fees may be assessed if the ATM used is not provided by the financial institution sponsoring the card


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Debit CardPlastic card that looks like a credit cardElectronically connected to a bank accountMoney is automatically taken from the bank account when purchases are madeRequires a PIN (personal identification number)Confirms the user is authorized to access the account


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To Use A Debit CardSwipe it through the store machine or put into an ATM Enter the PINComplete transaction


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Pros and Cons - Debit CardsConvenientSmallCan be used like a credit cardAllows a person to carry less cashDoes not allow overspendingCan lose track of balance if transactions are not written downOpens checking account up to credit fraudOthers can gain access to the account if the card is lost and PIN is known Pros Cons


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Endorsing a CheckEndorsementSignature on the back of a check to approve it to be deposited or cashedA check must be endorsed to be depositedThree typesBlankRestrictiveSpecial


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Blank EndorsementReceiver of the check signs his/her nameAnyone can cash or deposit the check after has been signed


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Restrictive EndorsementMore secure than blank endorsementReceiver writes for deposit only and account number above his/her signatureAllows the check to only be deposited


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Special EndorsementReceiver signs and writes pay to the order of (fill in persons name)Allows the check to be transferred to a second partyAlso known as a two-party check


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Worksheet AnswersBlankRestrictiveSpecial


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Making a DepositDeposit slipContains the account holders account number and allows money (cash or check) to be deposited into the correct accountLocated in the back of the checkbookComplete a deposit slip to make a depositDeposited amount must be recorded in the checking account register to keep the balance currentDeposits can be made at an ATM or with a bank teller


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Completing a Deposit SlipDateThe date the deposit is being made


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Completing a Deposit SlipSignature LineSign this line to receive cash back


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Completing a Deposit SlipCashThe total amount of cash being deposited


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Completing a Deposit SlipChecksList each check individuallyIdentify each check on the deposit slip by abbreviating the name of the check writerCASHDollarsCentsCHECKS List Singly

Piggly Wiggly #567815401Total From Other Side

SUBTOTAL

* Less Cash Received

NET DEPOSIT


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Completing a Deposit SlipChecksIf more checks are being deposited than number of spaces on the front, use the backList each checkAdd the total, enter it on the front


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Completing a Deposit SlipTotal from Other SideThe total amount from all checks listed on the back


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Completing a Deposit SlipSubtotalThe total amount of cash and checks


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Completing a Deposit SlipLess Cash ReceivedThe amount of cash back being receivedThis amount is not deposited into account


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Completing a Deposit SlipNet DepositThe amount being deposited into the accountTo calculate the amount, subtract the cash received from the subtotal


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Worksheet Answer


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Writing a CheckTo pay for items using a checking accountA check is given as a form of paymentMust be completed and given to the person or businessPre-printed items on a checkName and address of account holderName and address of financial institutionCheck numberIdentification numbers (account, routing)


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Writing a CheckPersonal InformationAccount holders name and addressMay include a phone number, not requiredDO NOT list a social security number for safety reasons


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Writing a CheckCheck NumberNumbers used to identify checksPrinted chronologically


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Writing a CheckDateThe date the check is written


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Writing a CheckPay to the Order ofThe name of the person or business to whom the check is being written


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Writing a CheckAmount of the Check in NumeralsThe amount of the check written numerically in the boxWrite the cents smaller and underlineWrite the numbers directly next the dollar sign to prevent someone else from adding numbers to change the amount


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Writing a CheckAmount of the Check in WordsThe amount of the check written in words on the second lineStart at the far left of the line, write the amount in words, followed by and, and the amount of cents over 100; draw a line from the end of the words to the word dollars


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Writing a CheckMemoSpace used to identify the reason for writing a check; optionalGood place to write information requested by a company when paying a bill, generally the account number


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Writing a CheckSignatureThe account holders signature agreeing to the transaction


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Writing a CheckIdentification NumbersFirst - routing numbers to identify the accounts financial institutionSecond - account numberThird - check number


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Worksheet Answers


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Worksheet Answers


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Check 21Check Clearing for the 21st Century Act (Check 21)When a check is written, the money is automatically withdrawn from a bank accountMakes bouncing checks difficult


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Debit CardAccount NumberLinks all purchases made with the card to a designated bank accountExpiration Date The debit card is valid and may be used until this dateCardholders Name The cardholders full name is written out and displayed.Magnetic Strip When the debit card is swiped, the magnetic strip automatically withdraws funds from the cardholders account.


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Debit CardAuthorized Signature Sign in the signature box on the back of the debit card to authorize paymentsShould also write, See ID in the signature boxEnsures the person using the card is authorized to do soVerification NumberThis three digit code is located on the back of the card in the signature areaHelp ensure the card is in the cardholders possession when making purchases Prevents unauthorized use


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Checking Account RegisterPlace to record all monetary transactions for a checking accountDeposits, checks, ATM use, debit card purchases, additional bank feesUsed to keep a running balance of the accountRemember Record every transaction!


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Check RegisterDateThe date the check was written or transaction was made


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Check RegisterNumberThe number of the written check; if a debit card or ATM was used, write DC or ATM


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Check RegisterDescription of TransactionThe person/business the check was written to or where the debit card was usedGray line can be used to write the memo


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Check RegisterPayment/Debit(-)Amount of the transactionDeducted from the balance


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Check RegisterDeposit/Credit(+)Amount of the transactionAdded to the balance


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Check Register TA box used to track whether the check has cleared on the monthly bank statement when reconciling at the end of each month


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Check RegisterFee (if any)Any extra fees charged to the accountListed on the bank statement


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Check RegisterBalanceThe running total of the checking accountCalculated by adding or subtracting each transactionKeep this updated


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Monthly Bank StatementLists each monetary transaction and the current account balance for a specified time periodIncludes:DatesIdentification for each transaction (number or type, date, amount)Transaction amounts for withdrawals and/or depositsInterest earned (if applicable)Fees or charges (if applicable)


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Monthly Bank StatementLists each transaction and current account balanceDepositsChecksDebit Card transactionsATM transactionsAdditional fees


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Reconciling a Checking Account ReconcileBalance the checkbook register each month to the balance shown on the statementDo this every month to ensure the correct balance in the checkbookKnowing the correct balance can help to avoid bouncing checks


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Steps for ReconcilingView the monthly bank statement and check register


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Place a check mark in the T column for all transactions that have been cleared and are shown on the bank statement


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Determine the current account balance from the bank statement


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Add any outstanding deposits transactions that have not cleared the bankCalculate the Subtotal


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Subtract any outstanding withdrawals and calculateCompare the total with the checkbook register. If the totals are different, double check the math and make sure all service fees and bank charges are recorded in the check register.


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Checking Account SafetyIf a checkbook, ATM, and/or debit card becomes lost or stolenImmediately report it to the financial institutionFile a report with the policeReported lost/stolen checkbook:Financial institutions generally do not hold the account holder liable for any fraudulent charges


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Safety continuedReported lost/stolen ATM/debit card:Within 2 business daysCardholder is only liable for $50.00Longer than 2 business daysCould be liable for up to $500.00Varies depending upon the financial institutionMay not charge the account holder anything if the correct steps were taken to report the lost/stolen card


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Questions?

Date post:	10-Feb-2016
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Checking Account & Debit Card Simulation

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