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Using Checks


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Personal Finance - Banking Unit

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Using Checks

  1. 1. Personal Finance Using Checks & Other Payment Methods
  2. 2. Check-Writing Procedures <ul><li>Keep record of transactions </li></ul><ul><li>in a check register </li></ul><ul><ul><li>Separate book, usually same size as checkbook </li></ul></ul><ul><ul><li>Provides blanks to fill in information about checks </li></ul></ul><ul><li>on check stubs </li></ul><ul><ul><li>Form attached to the check by a perforated line </li></ul></ul><ul><ul><li>After check is written, it is torn off at the line and the stub remains in the checkbook </li></ul></ul><ul><li>When writing a check, always fill in register or stub first . </li></ul>
  3. 3. Writing a Check <ul><li>Write checks in order by number. </li></ul><ul><li>Write the date in the proper space. </li></ul><ul><li>Write the payee’s name </li></ul><ul><li>Write the amount of check in figures. </li></ul><ul><ul><li>Write close to the dollar sign </li></ul></ul><ul><ul><li>Write cents close to the dollar figure </li></ul></ul><ul><li>5. Write amount of dollars in words. </li></ul>
  4. 4. Writing a Check (Cont.) <ul><li>Write amount of dollars in words. </li></ul><ul><ul><li>Write the cents in figures as a fraction </li></ul></ul><ul><ul><li>Begin writing at the far left end of the line </li></ul></ul><ul><ul><li>Draw a line from the fraction to the printed word Dollars </li></ul></ul><ul><li>Write the purpose of the check. </li></ul><ul><li>Sign your check. </li></ul>
  5. 5. <ul><li>The bank may subtract only amounts of checks and EFT transactions that the depositor has authorized. </li></ul><ul><li>Bank may be responsible if it cashes a checked signed by someone who had no right to use the depositor’s signature. </li></ul><ul><li>Forgery – Writing another person’s signature on a check without his/her authority. It’s a crime. </li></ul>
  6. 6. Tips for Good Check Writing <ul><li>Write checks only on the forms provided by your bank. </li></ul><ul><ul><li>*MICR – Magnetic Ink Character Recognition </li></ul></ul><ul><li>Write checks in ink. </li></ul><ul><li>Only write checks if you have money in your account to cover them. </li></ul><ul><li>Use the current date. </li></ul>
  7. 7. <ul><li>Avoid making checks payable to Cash or to Bearer. </li></ul><ul><li>Always fill in the amount. </li></ul><ul><li>Void checks on which you make errors. Do not try to erase or retrace your writing. </li></ul><ul><li>Record every payment from your checking account, whether payment is by check or EFT. </li></ul>
  8. 8. Stopping Payment on a Check <ul><li>Fill out a stop-payment order – written notice from the drawer telling the bank not to pay a certain check. </li></ul><ul><ul><li>You need date, check number, amount, payee, and drawer’s signature. </li></ul></ul><ul><ul><li>Bank charges fee for this service. </li></ul></ul>
  9. 9. Accepting & Cashing Checks <ul><li>Legally, no one has to accept your checks. </li></ul><ul><li>You may be asked for valid identification. </li></ul><ul><li>--Driver’s license </li></ul><ul><li>--School ID card </li></ul><ul><li>--Picture Debit/Credit Card </li></ul>
  10. 10. Other Types of Checks <ul><li>Certified Check – personal check for which a bank has guaranteed payment </li></ul><ul><ul><li>Certification is stamped on the face of the check and signed by bank officer. </li></ul></ul><ul><ul><li>Amount is immediately withdrawn from account. </li></ul></ul><ul><li>Cashier’s Checks – check that a bank draws on its own in-house funds. </li></ul>
  11. 11. Other Types (Cont.) <ul><li>Traveler’s Checks – Special forms designed for the traveler to use in making payments. </li></ul><ul><ul><li>May be purchased at banks, express companies, credit unions. </li></ul></ul><ul><ul><li>Sold in $10, $20, $50, and $100. </li></ul></ul><ul><ul><li>Sometimes a charge (1-2%) </li></ul></ul><ul><ul><li>Can be replaced if lost or stolen. </li></ul></ul>
  12. 12. Sources of Money Orders <ul><li>Money Order – form of payment that orders the issuing agency to pay the amount printed on the form to another party. </li></ul><ul><ul><li>Bank Money Order </li></ul></ul><ul><ul><li>Postal Money Order </li></ul></ul><ul><ul><li>Express Money Order. </li></ul></ul><ul><ul><ul><li>Sold by American Express Company, Traveler’s Express Company, supermarkets, etc. </li></ul></ul></ul><ul><ul><li>Telegraphic Money Orders </li></ul></ul><ul><ul><ul><li>Mainly used in emergency situations. Money is “wired” to another individual. </li></ul></ul></ul>
  13. 13. <ul><li>EFT – Electronic Fund Transfer </li></ul><ul><ul><li>Moving funds via a computer (ATM machine) </li></ul></ul><ul><ul><li>Bills automatically deducted from your account each month. </li></ul></ul><ul><ul><li>Using debit cards for purchases. </li></ul></ul><ul><ul><li>On-line banking to pay bills. </li></ul></ul><ul><ul><li>Direct Deposits – paychecks deposited by employer electronically. </li></ul></ul>The End!