Checking Accounts Open, Manage, and Reconcile
1. What is a checking account? A checking account is opened at a bank or other financial institution. Banks offer several different types of checking accounts. Common checking options: Basic checking account For someone who primarily wants to use checks to pay bills or everyday expenses. To avoid fees, some banks require a low minimum balance. Interest-bearing account Requires a higher balance; interest is usually paid monthly. A minimum deposit is usually required to open this type of account. Joint checking account For two or more people who are usually in the same household.
Checks Write a check to pay for goods and services or to get cash. CHECK a written order instructing your bank to pay money to someone or an entity. Make regular deposits into the account.
To open a checking account Visit the financial institution of your choice to speak with a customer service agent about opening a checking account. Bring with you: Two forms of Identification (including one with a picture) Social Security Number Money for your first deposit (cash or check) Be prepared to fill out information on a signature card that will remain on file at the bank. The bank uses the card to verify the signature on checks that bear your name. Signature cards typically include: Your name Current address and length of time at the address Previous address and length of time at that address Type of account (single, joint) Your signature Once your account is approved, make your first deposit.
2. How do I put money in my account?
Deposit Slip Deposit slip A written order instructing your bank to put funds into your account. You can use a deposit slip to put money into your account. Cash Checks written to you Money orders Endorse or sign any check that had been made payable to you before you deposit it. Special section On back of check
Deposit Slip Deposit slips vary from bank to bank. Here's an example:
To fill out a deposit slip List the amount of money that you want to deposit. Most slips have a separate line for cash and checks. Cash: $30.00 Check: $450.55 (Remember to endorse check) Enter the subtotal. In this example, $470.55 is the subtotal. Enter any amount you want back. In this case, 0. Next enter the Total. In this case, $470.55. Sign the deposit slip if required. Some require signature only with cash back. You give the deposit slip and money to the bank teller. Or, you can make deposits using an ATM if you have an ATM card. You'll learn about using an ATM later in this lesson.
Practice Use the following information to complete the practice deposit slip on your Assignment #1: Checking Accounts Open, Manage, and Reconcile $35.00 Cash $117.00 Check $20.00 Check And you want $50.00 cash back from the deposit
Online deposit Many banks allow online deposits online by uploading a picture of the check you wish to deposit. Mobile deposit is used to describe this type of deposit, which is most commonly made with a mobile device. A special app may be required. Check with your bank to see if this is an option. The bank may charge an additional fee for mobile deposits. Always ask before using.
3. How do I get my money out of my account?
Getting checks for a checking account When you open a checking account, the bank assigns you a unique account number. The bank will provide temporary checks until you order permanent ones. You can order checks from the bank or order from a company. Plain checks are usually cheaper than those with fancy designs. Checks with carbon copies are usually more expensive than single checks. Three sets of numbers will be printed on the bottom of each permanent check: Bank s routing number Your account number Check number Your checking account number is important as you make deposits to and withdrawals from your account. The routing number identifies your bank in the world s banking world.
Writing a check Checks are convenient when you don't want to carry around a lot of cash or when you need to pay bills through the mail. Take a few minutes to review the parts of a check:
To write a check Enter the date at the top of the check. Write the name of the company or person you are paying in the Pay to the order of line. At the end of the Pay to the order of line, write the number amount of the check. For example, $25.00 or $48.28. On the dollars line, write the check amount in words. This confirms the number amount. For example, Forty-eight and 28/100. Write the cents as a fraction. Dollars is already printed on the check so do not write it. If there is any blank space after you write in the amount, draw a line out to the end (stopping before the word Dollars so no one can add to the amount. For example, Forty-eight and 28/100-----------------------Dollars. Write your signature on the line at the lower right corner of your check. In the Memo or For section in the bottom left corner, write what the check is for. For example, "jeans for John" or May 2014 rent."
Practice Using the following information, complete the sample check on your Assignment#1: Checking accounts Open, Manage, and Reconcile: It is July 23 rd and you have just bought a new computer from Computers R Us. You owe Computers R Us $1,489.37
Online checking Today many banks allow you to write electronic checks to make purchases. Check with your bank to see if this is an option for your checking account and if there are any fees associated with this service.
Withdrawal Slip A withdrawal slip is a written order to your bank instructing it to withdraw funds from your account. Withdrawal slips vary from bank to bank. Here's an example:
To fill out a withdrawal slip List the amount of money that you want to withdraw. For example, $50.00. Sign the withdrawal slip. Take the slip to a teller at your bank. Or, you may withdraw money using an ATM.
Practice Use the following information to complete the practice withdrawal slip on Assignment #1: Checking Accounts Open, Manage, and Reconcile: Withdraw $115.00 from your account. Your account number is 12-345-6789.
4. ATM and Debit Cards ATM stands for Automated Teller Machine. An account, an ATM card, and a Personal Identification Number are required. PIN (usually 4 digits). PIN and password required for online banking services. Safeguard PIN and passwords. ATMs are convenient because they are available 24 hours a day at different locations. An ATM card looks like a credit card. Because it is linked to your bank account(s), you can use it to get cash, deposit funds, and check account balances at an ATM A debit card combines the functions of an ATM card and a check. It can be used like a check to make purchases and pay bills. Most banks issue a combination ATM/debit card. A credit card linked to your credit card account may be used at an ATM.
5. Balance a checking account The most basic and important aspect of checking account management is KEEPING enough money in your account to cover ALL your transactions at the time you make them. Keeping your account in good standing is your responsibility. You will use a checking account ledger to ensure that you do not overdraw your account. The checking account ledger is where you record ALL deposits, record ALL withdrawals, and keep a running account balance. REMEMBER to write down online transactions and debit card transactions.
Practice Use the following information to complete the practice withdrawal slip on Assignment #1: Checking Accounts Open, Manage, and Reconcile: July 23 - Opening deposit $500.00 July 25 - Deposit birthday money $1000.00 July 30 - Check #101 to Computers R Us $1489.37 August 2 - Electronic deposit $45.13 August 7 - Deposit $417.00 August 8 - Debit card used for gas at convenience store $47.83 August 9 - ATM withdrawal $25.00
6. Reconcile a checking account You should check your account ledger against a bank statement on a regular basis. This should be done at least once a month. Compare your ledger with a bank statement mailed from the bank or by comparing your ledger with your account online. Write down in your ledger any transactions that are on your statement that you forgot to write down or did not know about. Some checking accounts have fees associated with them. You must subtract those fees in your ledger. Write down on the bank reconciliation statement the deposits, debit transactions, and checks in your ledger but that did not print on the statement. These are outstanding transactions. Using the form that comes with your statement, calculate the adjusted ledger balance and the statement adjusted balance. These two should match. If there continues to be a difference between your ledger balance and the adjusted bank statement balance, you should contact the bank immediately.