Topic 6: Understand how to pay money into a bank account After completing this topic, you will be able to: explain the meaning of credit ; explain the meaning of deposit ; list the methods of paying into an account; and accurately complete a deposit slip at a branch. Money put into an account In the language that banks use, credit has two meanings: it can mean money put into a bank account; and it can mean money that is lent to a person. In this topic, we are going to look only at the first meaning. When you pay money into your bank or building society account, the bank or building society will call the amount a credit. The following are some examples of how the word credit can be used when talking about bank accounts. I have credited your account with 25. This means I have paid 25 into your account. ifs School of Finance 2010 Topic 6 Page 50
Principles of Money Please credit my account with 100. This means please put 100 into my account. My credit balance is 500. This means I have 500 in my account. The word deposit can also be used to mean money put into an account. For example: I have deposited 47 into your bank account. I have made a deposit of 120 into the bank account. You might say: I have deposited 200 for the credit of your account. What do you think is the meaning of deposited and credit in this sentence? Activity 6a a) Suppose people were to give you money for your birthday. What are the different ways in which they might give this money to you (for example, as a cheque)? b) Think about what happens when a customer goes into a bank to pay in some money. They will give the money (cash, cheques, postal orders, etc) to the member of staff sitting at ifs School of Finance 2010 Topic 6 Page 51
Award in Personal Finance the counter that is, to a cashier. What details do you think the cashier will need to know to make sure that they pay this money into the correct account? Paying-in slips Paying-in slips are paper forms that account holders fill in with details about their bank account and the amount being paid in. An example is shown below. Paying-in slips can be used to deposit money into any account. An account holder hands this slip of paper to the bank cashier, along with the money that they want to pay in. The cashier types the account details into the counter terminal and checks the amount of money against the quantity written on the slip. Most paying-in slips are already printed with the customer s account details and are sent to customers as a paying-in book or at the back of the chequebook. Blank paying-in slips are also available in bank branches. Page 52 Topic 6 ifs School of Finance 2010
Principles of Money People who have a large number of coins to deposit need to put them into plastic coin bags. Coins of only one denomination, such as 10p or 50p, should go into any one bag. Instructions written on the outside of the bags explain how many coins can be put into the bag for example, 10 worth of 50p coins or 5 worth of 10p coins. When the account holder deposits the coins, the cashier weighs the coin bags to check that they have the correct number of coins in them. Case study Sarah has a current account with XYZ Bank. There are paying-in slips at the back of her chequebook that look as follows. ifs School of Finance 2010 Topic 6 Page 53
Award in Personal Finance Why do you think there is a space for the cashier s stamp and initials on the paying-in slip as well as the stub? What the items on a paying-in slip mean Stub (also known as a counterfoil ) Date Bank and branch name Account Paid in by The stub is the part of the paying-in slip to the left of the perforations. This part of the slip stays in the chequebook when the account holder tears out the slip. In this case, Sarah will complete the stub so that she has a record of what she has paid into her account. The bank cashier uses a rubber stamp to put the bank s name and date on this stub. The cashier also initials the stub. The cashier s stamp and initials prove that the bank has accepted the deposit on a certain day. There are two places in which the account holder writes the date on which they pay in the money: one is on the top of the stub and the other is on top of the paying-in slip. In this case, Sarah banks at XYZ Bank plc, the address of which is 30 High Street, Seaville, SO21 6TH. This address is already printed on the paying-in slip, so the bank knows where Sarah s account is held. This is the name on the account and helps to make sure that the money is paid into the right account. In this case, this is shown as Ms Sarah Holmes. When the account holder pays money into their account, they should sign their name in this box. Someone else can pay the money in for the account holder using this form; whoever is making the payment should then sign in this box. Number cheques Sorting sort) code Account number of (or The account holder will write the number of cheques that they are depositing in this box. This is a six-digit number that is unique to the bank branch that holds the account. The sorting (or sort) code appears twice on the paying-in slip: in the box labelled Sorting Code Number and at the bottom of the slip in digits that a computer can read. In this case, the sort code is shown as 76 54 32. This is a number that is unique to the account at the relevant bank branch. In Sarah s case, this is shown as 12345678. Cash denominations The table on the right side of the paying-in slip is for the amounts of cash and the total value of cheques being paid into the account. Denominations of cash greater in value than 10p are listed separately on this paying-in slip. The account holder needs to fill in the total value of each denomination that they are paying in. Page 54 Topic 6 ifs School of Finance 2010
Principles of Money For example, if Sarah has two 5 notes, she will need to write 10 (ie 5 x 2 = 10) in the box for 5 Notes. The bank cashier will count the cash and tick off each entry in this table to confirm that it is correct. If the account holder has made a mistake, the bank cashier will be able to find it and ask them to correct it. Total cash Cheques, POs, etc Box at bottom of table Please do not write or mark below this line or fold this voucher The account holder writes the total value of the cash that they are paying into their account in this box. The total figure should be the same as all of the cash denomination values added together. The account holder writes the total value of the cheques and postal orders that they are paying in here. They should also list the cheque numbers on the back of the paying-in slip. This is where the account holder writes the total amount that they are paying in that is, the value of all of the cash plus the value of all of the cheques, etc. The numbers below this line are written in a way that computers can read. Banks ask customers not to write in this area because such marks could make it difficult for the computer to read the information provided by the bank. The preprinted slip has the account holder s account number and sorting code already written in this area. To process the payment, a computer operator adds the amount of the payment in digits that the computer can read. This gives the computer all of the information that it needs to process the payment correctly. Case study The below is a paying-in slip that Sarah has already filled in. ifs School of Finance 2010 Topic 6 Page 55
Award in Personal Finance This paying-in slip shows that Sarah: paid the money into her account on 9 December 2005; paid in 31.87 in cash and one cheque for 17.99; paid in cash in the following denominations: two x 10 notes = 20; one x 5 note; four x 1 coins = 4; three x 50p coins = 1.50; one x 20p coin (you will notice that Sarah has put a zero in the pounds column to make it clear that she is paying in only 20p); 10p and 5p coins with a total value of 1.05; 2p and 1p coins with a total value of 12p (again, Sarah puts a zero in the pounds column so that it is clear that the amount is only 12p); paid in 49.86 in total. Activity 6b Complete another paying-in slip for Sarah using the blank slip from your teacher and the following information. a) The date on which she is paying in the money is 14 December 201X. b) She is paying in: one x 10 note; three x 5 notes; two x 1 coins; six x 20p coins; five x 5p coins; eight x 2p coins; and a cheque from her Gran for 25. Making a payment when you do not have a preprinted paying-in slip Banks and building societies also offer people blank (that is, not personalised to a particular customer) paying-in slips to deposit their money if they do not have any preprinted slips with them. An example is below. Page 56 Topic 6 ifs School of Finance 2010
Principles of Money The account holder needs to fill in their account details, as well as details about the money that they are paying into the account. How to complete a blank paying-in slip Case study Anthony Nesbitt wants to pay in some money, but he does not have any paying-in slips left in his chequebook. He goes to a branch of his bank ABC Bank plc and uses one of the blank paying-in slips that are available at the counter. Because Anthony has his chequebook with him, he knows his account details. He fills in the date and his account details from his chequebook. ifs School of Finance 2010 Topic 6 Page 57
Award in Personal Finance Activity 6c Anthony wants to pay in the following cash. He has no cheques to deposit. Complete the rest of the paying-in slip for him. One x 20 note Two x 10 notes One x 5 note Two x 50p coins One x 20p coin One x 10p coin Checking the cash and cheques Is it signed? When the cashier takes the cash and cheques from the person paying the money into the account, they have to check that it is accurate and matches the amount shown on the paying-in slip. The coins will be counted or weighed, and the notes will either be counted by hand or by a special machine that is programmed to count notes accurately. When checking cheques, the cashier will look for a number of things, as follows. Is it dated? (It cannot be a date in the future and it cannot be more than six months old.) Does the amount in words match the amount in figures? The writer of the cheque should have signed next to any mistakes or corrections. Does the name on the payee line (that is, the person to whom the cheque is made out) match the name on the account into which it is being paid? Page 58 Topic 6 ifs School of Finance 2010
Principles of Money Review questions 1. Why do people use paying-in slips when depositing money into their accounts? 2. Can account holders pay money into their accounts at any bank in the high street? 3. What are the three items of information that banks need to know so that they can credit a specified amount of money to a particular account? 4. Do account holders have to visit their branch to pay money between their own accounts? 5. Why do banks and building societies ask the people who are making deposits to sign the paying-in slip? 6. Tanya wants to pay the contents of her piggy bank into her account. She has a large number of coins. What should Tanya do to make it easier for the bank cashier to check the value of the coins that she is depositing? 7. Can account holders make a deposit when they have run out of preprinted paying-in slips? 9. Assume that today is 4 January 201X. David wants to pay the following money into his account. He has filled in part of the paying-in slip already (see the next page). Complete the rest for him. David is paying in: one x 5 note; three x 1 coins; one x 50p coins; 11 x 20p coins; six x 10p coins; nine x 5p coins; 12 x 2p coins; six x 1p coins; and a cheque for 15 from his uncle. ifs School of Finance 2010 Topic 6 Page 59
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Principles of Money Learning activities Internet Visit www.fsa.gov.uk, select Consumer information and Products explained: Bank accounts. Review the information about paying into an account. Group Collect paying-in slips from providers in your area. Compare the different designs and decide which are easiest for customers to complete. Then design your own paying-in slip for a fictitious provider called Dolphin Bank. Make sure that you include all of the information that the bank will need to process a payment correctly. Divide into two groups. Using imaginary money, one group will complete paying-in slips for deposits and hand these to the other group, which is acting as cashiers. The cashiers check the deposits against the paying-in slips and accept them if they are correct. The first group might, however, want to make deliberate errors for the second group to find. Individual If you have an account, make sure that you know the different ways in which you can pay money into it. If you do not have an account yet, decide which paying-in methods sound easiest to you. ifs School of Finance 2010 Topic 6 Page 61
Award in Personal Finance Key points for Topic 6 You should now understand: the meaning of credit and deposit ; the two methods of paying into an account; how to complete a paying-in slip accurately; the main features of a paying-in slip; how to pay into your account if you do not have a preprinted paying-in slip. Page 62 Topic 6 ifs School of Finance 2010