lesson six banking services overheads

(1)

lesson six

banking services

(2)

beware of these high-cost financial services

www.practicalmoneyskills.com banking services overhead 6-A

pawn shops

charge very high interest for loans based on the

value of tangible assets (such as jewelry or other valuable items).

rent-to-own programs

offer an opportunity to obtain home

entertainment systems or appliances for a small weekly fee.

However, the amount paid for the item usually far exceeds the

cost if the item were bought on credit.

check-cashing outlets

charge high fees (sometimes 2 or 3

percent) just to have a paycheck or government check cashed.

rapid-refund tax services

provide “instant refunds” when you

pay to have your federal tax return prepared. However, this “instant

refund” is a loan with interest rates as high as 120 percent.

(3)

comparing checking accounts

www.practicalmoneyskills.com banking services overhead 6-B

location

branch offices; hours of operation; availability of ATMs

fees

monthly fees; per check fees; printing of checks; balance

inquiry fees; ATM fees

other charges

overdraft charge; stop-payment fees; certified check fees

interest

rate earned; minimum deposit to earn interest; compounding

method; fee charged for falling below necessary balance

restrictions

minimum balance; deposit insurance; holding period for

deposited checks

special features

(4)

opening a checking account

www.practicalmoneyskills.com banking services overhead 6-C

Your

First

Bank

S I G N A T U R E A U T H O R I Z A T I O N C A R D ACCOUNT NUMBER DATE NAME ADDRESS PHONE

SOCIAL SECURITY NO.

YOU ARE HEREBY AUTHORIZED TO RECOGNIZE ANY * OF THE SIGNATURES SUBSCRIBED HERE IN THE PAYMENT OF FUNDS OR THE TRANSACTION OF ANY BUSINESS FOR THIS ACCOUNT. IT IS AGREED THAT ALL TRANSACTIONS BETWEEN THE BANK AND THE DEPOSITOR SHALL BE GOVERNED BY THE CONTRACT PRINTED ON THE REVERSE SIDE OF THIS CARD.

TYPE OF ACCOUNT Individual Joint Business Partnership

* If you wish to use two signatures, sign both signatures on the form.

(5)

making a deposit

www.practicalmoneyskills.com banking services overhead 6-D

1. Write the date you are

making the deposit in

this field.

2. If you are depositing currency

(paper bills), write the total

amount here.

3. If you are depositing coins,

write the total amount here.

4. If you are depositing a check,

write the bank transit

number here, which is the

top portion of the two-part

number printed in the

upper corner of the check.

5. Write the amount of the

check here.

6. If you are depositing more

checks than can be listed on

the front, continue to list

them on the back, and

write the total amount of

the checks on back here.

7. Write the total amount you

are depositing here.

8. If you are making a deposit

inside a bank with a teller

and you want to receive

cash back from your deposit,

write the amount you want

in this field.

9. Write the total amount (less

cash back) of your deposit in

this field.

SIGN HERE IN TELLER'S PRESENCE FOR CASH RECEIVED

1 2 3 4 5 6 7 8 9 322-21 1610

Your

First

Bank

Anytown, USA

(6)

endorsing a check

www.practicalmoneyskills.com banking services overhead 6-E

322-21 1610 Anytown. USA DOLLARS $ 19 #127 322-21 1610 Anytown. USA DOLLARS $ 19 #127 322-21 1610 Anytown. USA DOLLARS $ 19 #127

For deposit only Acc# 0417-678

Pay to the order of Jane Smith

blank

endorsement

Anyone can

cash check

restrictive

endorsement

More secure than

blank endorsement

(7)

writing a check

www.practicalmoneyskills.com banking services overhead 6-F

1. Date

Enter the date you are

writing the check.

2. Payee

Enter the name of the

person or the company you are

going to give the check to.

3. Amount of check in numerals

Enter the amount of the check, in

numbers. Don’t leave any space

between the pre-printed dollar

symbol ($) and the numbers

indicating the amount of the check;

there should be no room for

someone to add in extra numbers.

4. Amount of check in words

Enter the amount of the check in

words. Start writing at the far left

side of the line. Follow the dollar

amount by the word “and,” then

write the amount of cents over

the number 100. Draw a line

from the end of the 100 to the

end of the line.

5. Name

Your personal

informa-tion is printed here. Never list

your Social Security number on

your printed check.

6. Signature

Sign your check

exactly the way you signed your

name on the signature card you

filled out when you opened your

account.

7. Memo

Use this space to note

why you wrote the check. If

you are paying a bill, this is a

good place to put information

requested by the company.

8. Identification numbers

These numbers are used to

identify the bank, your account

number, and the check number.

They are printed in a special

magnetic ink that machines

can read.

PAY TO THE ORDER OF 1 2 3 4 6 7 8 322-21 1610

1

Your

First

Bank

Anytown, USA

(8)

keeping a running balance

www.practicalmoneyskills.com banking services overhead 6-G

(a) Keeping a Running Balance:

Check Transaction

(b) Keeping a Running Balance:

ATM Cards

(c) Keeping a Running Balance:

Check Cards

CHECK NO.

DATE DESCRIPTION TRANSACTION

AMOUNT DEPOSIT AMOUNT BALANCE 366 97 161 6/4 Sound Out 216 30 216 30 new tape deck 150 67

CHECK NO.

AMOUNT DEPOSIT AMOUNT BALANCE 366 97 161 6/4 Sound Out 216 30 216 30 new tape deck 150 67 ATM 6/18 withdrawal 35 00 35 00 spending money 115 67

CHECK NO.

(9)

reading a bank statement

www.practicalmoneyskills.com banking services overhead 6-H

Your

First

Bank

T H A N K Y O U F O R B A N K I N G W I T H Your F irst Bank STATEMENT FOR Jane Doe 4 Primrose Lane Anytown, USA CHECKING ACCOUNT 0471-678

Previous Statement Balance On 12/19/99 612.04 Total of 3 Deposits For 1,980.68 + Total of 10 Withdrawals For 1,705.25 -Total Service Charges 3.50

-New Balance 883.97 +

THIS STATEMENT COVERS 12/20/99 through 1/18/00

CHECKS AND OTHER DEBITS

CHECK DATE PAID AMOUNT CHECK DATE PAID AMOUNT

181 12/24 15.00 184 12/17 1232.27 182 1/04 17.00 186 12/31 54.47 183 12/26 217.54 187 1/03 53.97 Monthly Maintenance Charge 1/18 3.50 Withdrawal #00281 at ATM #423A 12/24 40.00 Withdrawal #02628 at ATM #423A 12/31 20.00 Withdrawal #08744 at ATM #430E 1/15 20.00 Withdrawal #02456 Check Card 1/16 35.00

DATE POSTED AMOUNT

Transfer from 4039-557 at ATM #423C 12/27 1200.00 Customer Deposit at ATM#423A on 1/12 1/14 521.78 Direct Deposit from #05323 on 1/17 1/18 258.90 DEPOSITS AND

OTHER CREDITS

ATM LOCATIONS USED

423A: 2500 Centre Plaza, Anytown, USA 423C: 2500 Centre Plaza, Anytown, USA 430E: 945 Hamilton Ave., Big City, USA

(10)

reconciling a checking account

www.practicalmoneyskills.com banking services overhead 6-I

step 1:

Obtain the current balance from your bank statement.

step 2:

Add any deposits that you have recorded in your check

register but that are not on this statement.

step 3:

Subtract any outstanding checks (checks you have written

but that have not yet cleared the banking system).

step 4:

Compare the result with the current balance in your

check register.

Note:

(11)

electronic banking services

www.practicalmoneyskills.com banking services overhead 6-J

direct deposit…

earnings (or government payments) automatically

deposited into bank accounts, saving time, effort, and money.

automatic payments…

utility companies, loan payments, and

other businesses use an automatic payment system with bills paid

through direct withdrawal from a bank account.

automatic teller machines…

allow customers to obtain cash and

conduct banking transactions; some ATMs sell bus passes, postage

stamps, gift certificates, and mutual funds.

point-of-sale transactions…

acceptance of ATM/check cards at

retail stores and restaurants for payment of goods and services.

(12)

smart cards

www.practicalmoneyskills.com banking services overhead 6-K

smart cards,

sometimes called “electronic wallets,” look like

ATM cards; however, they also include a microchip.

■

_{This minicomputer stores prepaid amounts for buying}

goods and services.

■

A smart card can also store data about a person’s account

balances, transaction records, insurance information, and

medical history.

(13)

lesson six

banking services

(14)

choosing a checking account

name of bank:

branch information:

■ _{Branch nearest your home:} ■ _{Branch nearest your work:} ■ _{Number of branches:}

number of ATMs: bank hours:

are your funds insured? types of accounts: fees:

■ _{Must maintain a minimum daily balance of:} ■ _{Must maintain an average daily balance of:} ■ _{Monthly maintenance charge:}

interest:

■ _{How much interest do you earn on your account?} ■ _{How is it calculated?}

charges:

checks: balance inquiries:

Printing checks At teller window

Bouncing checks At ATMs

Stopping checks By phone

Certifying checks

withdrawals at: special services

Teller window Fund transfer by phone Bank-owned ATMs Pre-authorized bill payment Regional network ATMs Signature guarantee

National network ATMs Bill payment by phone International network ATMs Check card

deposits:

www.practicalmoneyskills.com banking services activity 6-1

(15)

keeping a running balance

record deposits and keep a running balance in the checkbook register below.

1. On May 26, your balance is $527.96.

2. On May 27, you write check #107 to your landlord, Mrs. Wilson, for $226.00. 3. On May 28, you use your check card at Foodland for $22.52.

4. On June 1, you write a check for $156.32 to Bank of Illinois for your car payment. 5. On June 1, you realize your check to the Bank of Illinois should have been for $165.23,

so you void the first check and write a new check for $165.23. 6. On June 2, you write a check to Interstate Phone Service for $62.77. 7. On June 2, you use your ATM card to withdraw $20.00.

8. On June 15, your paycheck for $425.00 is automatically deposited.

9. On June 15, you use your check card at Gifts Plus to buy a $18.99 birthday present for your mother.

10. On June 15, you write a check for $246.45 to State Ranch to cover your insurance premium.

11. On June 22, you transfer $100.00 online from your checking account to your savings account.

12. On June 24, you use your check card at Gas Up to fill up your car. You spend $12.88. 13. On June 28, you use your ATM card to withdraw $30.00 from your checking account.

www.practicalmoneyskills.com banking services activity 6-2a

name:____________________________________________________________ date: ______________________

CHECK NO.

AMOUNT

DEPOSIT AMOUNT

(16)

keeping a running balance

(continued)

activity 6-2b www.practicalmoneyskills.com banking services

use the check register you just completed to answer the following questions:

1. What was your account balance on May 30?

2. Could you have paid your car insurance payment on June 1 instead of June 15? If not, why?

3. The love of your life has been in a bad mood lately, and you think an expensive present might help. You’ve found a leather jacket on sale for $189.00. Can you afford to buy the jacket on June 8? What will your account balance be if you do?

4. The hottest new band in town has just released a CD. It costs $21.99. Can you afford to buy the CD on June 2? What will your account balance be if you do?

5. What was your account balance after you withdrew $30.00 on June 28?

6. What was the amount of check #111, to whom did you write it, and for what?

CHECK NO.

AMOUNT

DEPOSIT AMOUNT

(17)

keeping a running balance

answer key