Checks and Payment Methods

Chapter 17-3

Convenient Safe Proof of payment Record for financial management

Opening a Checking Account

Two or more people have account together – joint account

When you deposit money into account use a deposit slip

The First Deposit

An endorsement is written evidence that you received payment or that you transferred the right to receive payment

Involves signing your name on the back of the left end of the check

What is an Endorsement

Blank endorsement consists of only the endorser’s name. Sign your name in ink exactly as it is

written on the face of the check Makes the check payable to anyone

who has the check

Types of Endorsements

Full endorsement or Special Allows you to transfer an check to

another person You write the words “Pay to the

order of …..” This is followed by your signature

Types of Endorsements

Restrictive Endorsement Limits the use of the check to the

purpose given in the endorsement “For Deposit Only” above your

signature Restricts the use of the check to

only being deposited in your account

Types of Endorsements

All check contain essentially the same information

Drawer is the owner of the account who signs the front of the check

Payee is the person to whom the check is written

Drawee is the bank or other financial institution that pays the check

Using a Checking Account

A place to record the account activities Check stub is a form attached to

the check by a perforated line Check register is a separate book Duplicate copy of check may also

be automatically created when you write the check

*Always fill out stub or register first then write the check

Check Register

Write checks in order by number so you know which checks have been paid

Write the date in the proper space Write the payee’s name on the line following

“Pay to the Order of “ Write the amount of the check in figures after

the printed $ (Write the amount close to the $ to prevent someone from altering the check and write the cents close to the dollar figures)

Writing a Check

http://www.moneyinstructor.com/wsp/writecheck.asp

Write the dollar amount in words on the line below the payee’s name

Write cents in figures as a fraction of a dollar example: 25/100 is 25¢

Begin writing at the far left end of the line and draw a line from the fraction to the printed “Dollars” to fill all unused space

Write the purpose on the line at the bottom of the check

Sign the check!!!!!

Writing a Check cont.

Write checks only on the forms provided by the bank

Write checks in ink Only write checks if money is available.

Writing checks for more than that will cause an overdrawn account.

Use current date. A postdated check is one that is dated later than the date on which it is written

Proper Check Writing

Avoid making checks payable to cash or bearer

Always fill in the amount Void checks on which you make errors. Do

not try to erase or retrace your writing Record every payment from your checking

account

Proper Check Writing cont.

A written notice that tells the bank not to pay a certain check.

Because banks charge a high fee for stopping payment on a check, use only for good reason.

Stopping Payment

At regular intervals, usually monthly, the bank will send you a report on the status of your account know as a bank statement.

Bank statement includes:1. Balance at the beginning of the month2. Deposits made3. Checks paid by the bank4. ATM transactions5. EFTs6. Service charges7. Interest earned8. Ending balance

Reconciliation Process

The balance per your records with most likely not agree with the banks balance

Some check you have written have not cleared (been paid). These checks are known as outstanding checks.

You may have forgotten to record ATM transactions

Service charges Deposit not reach bank yet interest

Reconciliation Process

Certified Checks – a personal check for which a bank has guaranteed payment

Cashier’s Check – a check that a bank draws on its own funds.

Traveler’s checks –special form designed for making payments when you are away

Money Order – a form of payment that orders the issuing agency to pay the amount printed on the form to another party.

Types of Payments