CHAPTER 23 1© Thomson/South-Western Slide

BANKING AND CREDITBANKING AND CREDIT

23.1 Financial Institutions

23.2 Checking Accounts

23.3 Credit and Its Use

Chapter 23

CHAPTER 23 2© Thomson/South-Western Slide

FINANCIAL INSTITUTIONSFINANCIAL INSTITUTIONS

Name and describe the four major types of financial institutions

Discuss how electronic banking may change money management

ObjectivesObjectives

Lesson 23.1

CHAPTER 23 3© Thomson/South-Western Slide

TYPES OF INSTITUTIONSTYPES OF INSTITUTIONSAND SERVICESAND SERVICES

Commercial banks Full-service banks offer many financial

conveniences and services. Automated teller machines (ATMs) are

electronic terminals in which customers can insert a plastic card to withdraw cash, make deposits, or transfer funds to another account.

Mutual savings banks Savings and loan associations Credit unions

Lesson 23.1

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ELECTRONIC BANKINGELECTRONIC BANKING

Electronic banking is a broad term used to describe various types of electronic fund transfers (EFTs). Automated teller machines (ATMs) Telephone banking systems Computer banking systems Direct deposits or withdrawals Point-of-sale transfers

Lesson 23.1

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DEBIT CARDDEBIT CARD

A debit card is a plastic card used to immediately transfer funds for a purchase from a bank account to a seller.

Lesson 23.1

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CHECKING ACCOUNTSCHECKING ACCOUNTS

Describe types of checking accounts and how to open an account

Illustrate how to write and endorse a check, maintain a check register, make a deposit, and reconcile a bank statement

ObjectivesObjectives

Lesson 23.2

CHAPTER 23 7© Thomson/South-Western Slide

UNDERSTANDINGUNDERSTANDINGCHECKING ACCOUNTSCHECKING ACCOUNTS

Checks provide a safe and convenient way to pay bills.

Checks can be used as freely as cash. Using checks makes it easier to keep

good financial records.

Lesson 23.2

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TYPES OF TYPES OF CHECKING ACCOUNTSCHECKING ACCOUNTS

Regular checking account Special checking account Negotiable order of withdrawal (NOW)

account Share draft account

Lesson 23.2

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SAMPLE CHECK Lesson 23.2

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OPENING A OPENING A CHECKING ACCOUNTCHECKING ACCOUNT

A signature card is a form that is completed when opening a checking account.

Lesson 23.2

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WRITING A CHECKWRITING A CHECK

Date Postdating is dating a check ahead of time.

Payee The person or institution that you write the check to

is the payee. Numerical amount Written amount Purpose or account number Signature

Lesson 23.2

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A CORRECTLY WRITTEN CHECKA CORRECTLY WRITTEN CHECK Lesson 23.2

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KEEPING A CHECK REGISTERKEEPING A CHECK REGISTER

A check register is used to record checks written, deposits made, and other transactions.

Lesson 23.2

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SAMPLE CHECK REGISTERSAMPLE CHECK REGISTER

ONE-LINE ENTRYONE-LINE ENTRY

TWO-LINE ENTRYTWO-LINE ENTRY

Lesson 23.2

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ENDORSING A CHECKENDORSING A CHECK

An endorsement is your signature, sometimes with a brief message, on the back/left side of a check. Blank endorsement Restrictive endorsement Full endorsement

Lesson 23.2

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FORMS OF ENDORSEMENTFORMS OF ENDORSEMENT

Blank EndorsementBlank Endorsement

Restrictive EndorsementRestrictive Endorsement

Full EndorsementFull Endorsement

Lesson 23.2

CHAPTER 23 17© Thomson/South-Western Slide

RULES FOR RULES FOR ENDORSING ENDORSING CHECKS AND CHECKS AND WITHDRAWING WITHDRAWING DEPOSITSDEPOSITS

Lesson 23.2

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MAKING A DEPOSITMAKING A DEPOSIT

The process of putting money into a checking account is known as making a deposit.

A deposit ticket is a preprinted form used to make a deposit into a checking account.

Lesson 23.2

CHAPTER 23 19© Thomson/South-Western Slide

SAMPLE DEPOSIT TICKET Lesson 23.2

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STATEMENT OF ACCOUNTSTATEMENT OF ACCOUNT

A statement of account is a summary of all transactions completed in a checking account for a given time period.

The summary includes: Amount of each check and the date the bank

received it Deposits you made Any service charges Any interest earned Beginning and ending balances

Lesson 23.2

CHAPTER 23 21© Thomson/South-Western Slide

STATEMENT STATEMENT OF ACCOUNT OF ACCOUNT

Lesson 23.2

CHAPTER 23 22© Thomson/South-Western Slide

BALANCING A CHECKBOOKBALANCING A CHECKBOOK

Comparing the bank statement with your check register is known as balancing (or reconciling) a checkbook.

Balancing a checkbook ensures that both you and your bank have recorded all the activity on your account accurately.

Instructions on how to balance your account are usually printed on the back of the statement.

Lesson 23.2

CHAPTER 23 23© Thomson/South-Western Slide

FORM FOR FORM FOR BALANCING BALANCING A CHECKBOOKA CHECKBOOK

Lesson 23.2

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CREDIT AND ITS USECREDIT AND ITS USE

Name and describe the two basic types of credit

Calculate the cost of credit

Lesson 23.3

ObjectivesObjectives

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CREDITCREDIT

Credit refers to the receipt of money, goods, or services in exchange for a promise to pay.

Lesson 23.3

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TYPES OF CREDITTYPES OF CREDIT

Loan credit Sales credit

Lesson 23.3

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THE COST OF CREDITTHE COST OF CREDIT

The finance charge is the total dollar amount you pay for using credit.

The annual percentage rate (APR) is the percentage cost of credit on a yearly basis.

Lesson 23.3