Checking accounts and more Flashcards
What is the purpose of a checking account?
A checking account allows you to write checks to make payments
It is a demand deposit account.
What is a check?
A written order to a bank to pay the amount stated to the person or business named on it.
What does the payee do with a check?
The payee cashes the check.
What happens after the payee cashes a check?
The payee’s bank returns the check to your bank.
What is a canceled check?
A check that cleared your account.
What is an overdraft?
A check written for more money than your account contains.
What will a bank do if a check bounces due to insufficient funds?
Stamp the check with ‘not sufficient funds’ (NSF) and return it to the payee’s bank.
What is ‘floating a check’?
Writing a check and hoping to deposit money to cover it before the check clears.
True or False: Floating a check is legal in most states.
False.
What are some advantages of checking accounts?
- Convenience
- Safety
- Built-in record keeping system
- Access to bank services.
What is required to endorse a check?
The payee must sign the top of the back of the check in ink.
What are the three major types of endorsements?
- Blank endorsement
- Restrictive endorsement
- Special endorsement.
What is a blank endorsement?
The signature of the payee written exactly as their name appears on the front of the check.
What does a restrictive endorsement do?
Restricts or limits the use of a check.
What is a special endorsement?
An endorsement that transfers the right to cash the check to someone else.
What is a debit card?
A plastic card that deducts money from a checking account at the time of purchase.
What is bank reconciliation?
The process of matching your checkbook register with the bank statement.
What is a full-service bank?
A bank that offers every possible kind of service from savings and checking accounts to credit cards, loans, and ATMs.
What does the FDIC do?
Protects the deposits of customers against loss up to $250,000 per account.
What do you need to use an ATM?
- A card that is electronically coded
- Know your personal identification number (PIN).
What is overdraft protection?
A service that covers checks even if your account has insufficient funds.
What is a stop payment order?
A request that the bank not honor a specific check.
What items are commonly kept in a safe deposit box?
- Birth, marriage, and death certificates
- Deeds and mortgage papers
- Stocks and bonds
- Jewelry
- Coin collections.
What are some common bank fees?
- Check cashing fees
- Monthly service fees
- Overdraft fees
- NSF check charges.
What is a money order?
Like a check, except that it can never bounce.
What is a certified check?
A personal check that the bank guarantees or certifies to be good.
What is a cashier’s check?
A check written by a bank on its own funds.
What are traveler’s checks?
Check forms in specific denominations used instead of cash while traveling.
