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 paying-in 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 that 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 2013 Topic 6 Page 55
Award in Personal Finance 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 that people 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)? Page 56 Topic 6 ifs School of Finance 2013
Principles of Money 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 the counter that is, the 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 into that account. 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. ifs School of Finance 2013 Topic 6 Page 57
Award in Personal Finance 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 in 50p coins or 5 in 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. Page 58 Topic 6 ifs School of Finance 2013
Principles of Money 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 Number of cheques Sort (or sorting) code Account number Cash denominations 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. 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 sort (or sorting) 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. 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. ifs School of Finance 2013 Topic 6 Page 59
Award in Personal Finance 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. Page 60 Topic 6 ifs School of Finance 2013
Principles of Money This paying-in slip shows that Sarah: paid the money into her account on 9 April 2013; 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 the blank paying-in slip overleaf for Sarah using the following information. a) The date on which she is paying in the money is 14 April 2013. b) She is paying in: one x 10 note; three x 5 notes; two x 1 coins; six x 20p coins; seven x 10p coins six x 5p coins; eight x 2p coins; and a cheque from her Gran for 25. ifs School of Finance 2013 Topic 6 Page 61
Award in Personal Finance Making a payment when you do not have a preprinted paying-in slip Banks and building societies also offer people blank paying-in slips (that is, slips that are not personalised to a particular customer) to deposit their money if they do not have any preprinted slips with them. An example is shown below. 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 Page 62 Topic 6 ifs School of Finance 2013
Principles of Money 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. Activity 6c Anthony wants to pay in the following cash. He has no cheques to deposit. Complete 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 ifs School of Finance 2013 Topic 6 Page 63
Award in Personal Finance Checking the cash and cheques When the cashier takes the cash and cheques from the person paying the money into the account, they have to check that the amount is accurate and matches that 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 signed? 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? Other ways of paying in Apart from completing a paying-in slip, there are other ways of paying money into an account. It is possible to present the chip and PIN card associated with the account at the counter and it is also possible to transfer money into one account from another using online or telephone banking. (In this case, the account holder will need to use their password and memorable information for security purposes.) Credits are also often received directly into a current account from the account holder s employer or from the accounts of other people. Page 64 Topic 6 ifs School of Finance 2013
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 high-street bank? 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? 8. Assume that today is 4 March 2013. David wants to pay the following money into his account. He has filled in part of the paying-in slip already (see overleaf). Complete the rest for him. David is paying in: one x 5 note; three x 1 coins; one x 50p coin; 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; a cheque for 22.50 from his gran; and a cheque for 11.20 repaying money that he loaned to his brother. ifs School of Finance 2013 Topic 6 Page 65
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Principles of Money Learning activities Internet Review the information about bank accounts available online on the Money Advice Service website. Go to www.moneyadviceservice.org.uk and search for Bank accounts. Choose Basic bank accounts and review the information that you find there. 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 2013 Topic 6 Page 67
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 68 Topic 6 ifs School of Finance 2013