PRODUCTS OF BANKING

Endorsements• Before you cash, deposit, or transfer a check to someone else, you

must first endorse the check.

• Endorse: to sign your name on the back of the left end of the check.

• Endorsement: written evidence that you received payment or that you transferred your right of receiving payment to someone else.

• Purpose of Endorsements:• 1. Allows the recipient of the check to cash, deposit or transfer to

someone else.• 2. Serve as legal evidence that the receiver cashed or transferred the

check to someone else.

Endorsements• When you make a deposit with checks, your money is not

available right away.• Any checks that you deposit, must ‘clear’ the bank of the

person that wrote the check.• The funds are then transferred from the bank of the person

who wrote the check to you.

• Federal Government has guidelines that say your money you deposit must be made available to you in a certain amount of time.

• Float: the time between the receipt of the deposit by the bank and the availability to the depositor.

Endorsements – 3 Types

1. Blank Endorsement – an endorsement that consists of only the endorser’s name. • Makes a check payable to anyone who has the check• The endorsement may be used at any time the check is to

be transferred.

How to blank endorse a check:• 1. Sign your name in ink, exactly as it written on the face

(front) of the check.

Endorsements – 3 Types

2. Restrictive Endorsement – limits the use of the check to the purpose given in the endorsement. • Most common restrictive endorsement is “For Deposit

Only” and underneath this is the signature of to whom the check is written.

• This ensures that the money is deposited only.• Most businesses use this type of endorsement to prevent

loss.

Endorsements – 3 Types• 3. Special Endorsement – includes the name of the

person to whom the check has been transferred.• A special endorsement will not allow just anyone to cash it

– only the person that you have transferred it to.• To do this, you would sign the back of the check the

following way: “Pay to the order of _________• Then you would sign your name, as it appears on the front

of the check.

Check Writing – Parts of a Check1: Check Number- every check has a number. They are in numerical order. Same as Item #11

2: Date: Always use the CURRENT date.

4: Payee: To whom the check is being written to.

5: Dollar Amount written in numbers.

6: Dollar Amount written in Words

Check Writing – Parts of a Check

7: Memo: Place to put a reminder of what the check is for.

8: Signature: Your signature (in cursive) goes here. Only the account holder can sign the check, otherwise it’s forgery!

Check Writing – Parts of a Check

9: Routing Number: Helps to route check to your financial institution.

10: Account Number: The account number for your checking account

11: Check Number- every check has a number. They are in numerical order. Same as Item #1

Tips for Good Check Writing • 1. Write checks in ink - To prevent someone from changing the amount of

the check.

• 2. Only write checks if you have money in your account to cover them.• Overdrawing – writing a check for more than you have in your account.• The bank may not pay the check, will return the check to the depositor with

‘insufficient funds’ or ‘non-sufficient funds’ (NSF)

• 3. Use the current date - Postdated checks – checks written for a date later than the date the check was actually written. Example: Date on the check says April 2nd even though you actually wrote it on March 30th. This is used when one does not have enough money in the account on March 30th, but will on April 2nd. Unwise – most banks will not look at the date and hold it until the postdate.

• 4. Avoid making checks payable to cash or to bearer • If the check is made out to ‘Cash’, anyone can now cash the check. • A better practice is to make the check out to yourself.

Tips for Good Check Writing • 5. Always fill in the amount - If you leave it blank, you will be responsible for any

amounts filled in by others.

• 6. Void checks on which you make errors - Do not try to erase or retrace writing on a check. Do not cross out if mistakes are made.

• Those handling your check will not know if the changes were made by you or by someone else.

• Write the word ‘VOID’ in large letters across the face of the check. • Write the check number and VOID in the check register to show that the check was

not used.

 • 7. Record EVERY payment from your checking account, whether the payment

is by check or EFT or debit card.• Write every transaction in the check register, including deposits.

 • 8. Stopping Payment on a Check • Instructing the bank not to pay a check that you have written.• Banks charge a substantial fee for stopping payment.• Make sure that the payment of a check should be stopped only for a good reason.

Checkbook – What is it? • A folder or small book containing preprinted paper

instruments issued to checking account holders and used to pay for goods or services.

• A checkbook contains sequentially numbered checks that account holders can use as a bill of exchange. The checks are usually preprinted with the account holder's name, address and other identifying information.

Balancing the Checkbook – Bank Statement

• Bank statement – a status of your bank account that the bank sends you monthly.

• Information Contained in the Bank Statement:• 1. The balance at the beginning of the month.• 2. The deposits made during the month.• 3. The checks paid by the bank during the month.

Canceled checks are checks paid by the bank and proof of payment.

• 4. Any ATM transactions made during the month.• 5. Any Debit card transactions made during the month.• 6. Any EFT payments/online payments• 7. Service charges for the month, including charges for returned checks.• 8. Any interest earned on the account.• 9. The balance at the end of the month. 

• Bank Reconciliation: bringing into agreement the balance in your check register vs. the ending balance on your bank statement.

Balancing the Checkbook• Reconcile - Balance the checkbook register each month

to the balance shown on the statement• Do this every month to ensure the correct balance in the

checkbook Knowing the correct balance can help to avoid bouncing checks

• The amount online may not be accurate – so you should do this every month.

Steps to Balancing the Checkbook1. Make sure every transaction listed on the statement

matches the check register. Place a check next to each item once it has been double-checked between the statement and register• Do this for both withdrawals and deposits

2. Identify any outstanding transactions in the check register

• Items which have not cleared through the financial institution and are not listed on the statement

3. Start with checking account balance on the statement• Add any outstanding deposits• Subtract any outstanding withdrawals

4. Compare this result with the current balance in the check register -- They should be the same

Reasons Why the Checkbook May Not Balance

• 1. Some of the checks you wrote and subtracted from the balance in your check register may not have been paid by the bank at the time the statement was printed.

• Outstanding Checks: checks written, but not yet paid by the bank.

• 2. You may have forgotten to record a payment in your check register.

• 3. A service charge that the bank charges you is on the statement but not recorded in your check register.

• 4. Deposits may not have been posted and available at the time the bank statement was printed. • 5. If you earn interest on your checking account, this will show on the statement but has not been recorded in your check register.

• 6. You may have recorded the amount of the check, deposit or ATM/debit card transaction incorrectly.

• 7. You may have added/subtracted incorrectly.