Using a Checking Account

Check: A written order to a bank to pay the stated amount to the person or business (payee)named on the check.

Canceled check: A check that bears the bank’s stamp, indicating that is has been cleared.

Overdraft: A check written for more money than your account contains.

Floating a check: Writing a check knowing you do not have sufficient funds in your account.

Terms

Complete a checking account application

You must fill out a signature authorization form.

Opening a Checking Account

1. Check Number2. ABA Number (American Bankers

Association): Top half of the fraction identifies the location and district of the bank. Bottom half helps in routing the check to the specific area in which the check is drawn.

3. Maker’s pre-printed name and address

4. Date

Parts of a check

5. Payee: the person to whom the check is made payable.

6. Numeric amount7. Written amount8. Drawer or maker: the person

authorized to write the checks on the account.

9. Account number: consists of 3 different sets of numbers.First set: Bank’s identification codeSecond set: Account number of the makerThird set: Pre-printed check number

10. Memo

Writing a Check

Making Deposits

Using a Checkbook Register

Reconciling your Checking Account

Blank endorsement: The signature of the payee written exactly as his or her name appears on the front of the check.

Special endorsement: Transfers the right to cash the check to someone else. Consists of the words “Pay to the order of (new payee’s name)” and the original payee’s signature.

Restrictive endorsement: Restricts or limits the use of the check. “For deposit only in the account of John Smith”

Endorsing Checks

Blank Endorsement

Special Endorsement

Restrictive Endorsement