CHECKING ACCOUNTS (Usually have to be 18 years old to open & get ATM or debit card)

Free or No Minimum Checking

A simple checking account in which you do not need to maintain a minimum balance

Receive a monthly statement, you’re responsible to balance checkbook with statement

Have checks to write out Can get an ATM or a Debit card (usually with

Visa or Mastercard logo...can be used to make purchases and at ATM)

If account is overdrawn, there is usually a fee (ex. $35 - $40 fee)

Minimum Balance Checking

A checking account that you have to keep a minimum balance (usually $100) in at all times to avoid a fee

Receive a monthly statement, you’re responsible to balance checkbook with statement

Have checks to write out Can get an ATM or a Debit card (usually with Visa

or Mastercard logo & can be used to make purchases and at ATM)

If account overdrawn, there is usually a fee (ex. $35 - $40 fee)

Usually no interest earned on this account

Interest Checking

A checking that earns interest Minimum balance (ex. $500 -$1000), to avoid

the fee Receive a monthly statement, you’re

responsible to balance checkbook with statement

Have checks to write out Can get an ATM or a Debit card (usually with

Visa or Mastercard logo & can be used to make purchases and at ATM)

If account overdrawn, there is usually a fee (ex. $35 - $40 fee)

Advantages to using checks

Safety - only the payee can cash Safe to send in the mail

Convenient for large sums

Records transactions - can view cashed checks online

Checks can be stopped by calling the bank

Parts of a check

Endorsing Checks

Endorsement - signature on the back of the check It’s a message to the

bank to deposit, transfer, or cash

1. Blank Endorsement - signature only check turns to “cash”

2. Restrictive Endorsement-sign and write “for deposit only”

3. Full Endorsement- sign and write “pay to the order of… (a third party)

Cashing Checks

You can write a check out to yourself or to Cash If you write it to cash anyone can cash it!

You can only cash a check if you have enough money in your account to cover the check

Checks must “clear”- the bank sends an electronic image to the other person’s bank Takes 1-3 days

Security features of a check

Printed on invisible fluorescent threads Erasure Protection - turns white Chemically resistant to lifting ink Void appears when copied

Checking Terms

Cancelled check - check that has been cashed Outstanding check - check that hasn’t been cashed Certified checks - Guaranteed personal check

stamped by bank (fee $5-20) Cashier’s checks - bank check that the bank signs

after you have paid the bank (fee $25+) Money orders - Guaranteed check from an

institution (Bank, Rutter’s…) instead of a personal check or cash. (fee $.49-3: may have to pay in cash)

Traveler’s checks - pay for in advance (bank, travel agency) -if lost/stolen can be replaced

Electronic Funds Transfer

Movement of money by phone or computer Don’t need check or cash Deduct from one account and add to another Quicker and cheaper for banks Safer and less mistakes Ex: ATM’s, pay pal, direct deposit, debit cards,

automatic bill payments, online banking

ATM - Automatic Teller Machine Make deposits, withdraw cash, transfer money

between checking and savings accounts, check balances, pay loan from that bank

use anytime of day Given a pin number for security

Direct Deposit - pay check is directly deposited into your bank account, you still get a pay stub which shows your tax deductions

Debit Cards - electronic check card Money comes directly out of your account

IMMEDIATELY Some banks charge user fees

Automatic Bill payments/withdrawals

EFT Act

Congress made a law that banks and Credit Card companies MUST inform you of all fees

The bank must offer you a receipt to verify every electronic transaction

Act also requires consumers to use EFT’s responsibly If you lose your ATM card you must report in

within 2 days and only responsible for $50 after 2 days responsible for up to $500 after 60 days responsible for all losses