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Check in With Checking Accounts

There are many reasons to open a checking account, or share draft account. Maybe you don’t feel safe walking around with a lot of cash and want a safe place that offers easy access to your money. Or maybe you just know that cash in your pocket is too easily spent! Whatever the reason, many people like to use a checking account to manage their day-to-day finances.

Like a savings account, you simply take cash or a check made out to the credit union to open an account and make your first deposit. And remember to take your Social Security number and two forms of identification – at least one of which is a state-issued picture ID. Again, you’ll have to fill out a few forms with some basic information. Once you open the account, you’ll receive a box of checks in the mail, preprinted with your name and address, along with a check register to record your transactions. You’ll also begin getting monthly statements.

Writing a check is like creating a mini-contract between you and the person or business you’re paying. When you sign at the bottom of the check, you’re agreeing to pay the person, named on the “Pay to the Order of” line, the amount you specified, on demand. On demand means that your financial institution must honor your check by paying the specified amount to the payee (the person or business to whom you wrote the check) when she or he cashes it as long you have enough money in your account to cover it. Get into the habit of recording each check you write into your checkbook register, along with your deposits and withdrawals.

When you receive a check, the aforementioned process works in reverse. You take the check to your financial institution and sign (or endorse) it on the back. Your financial institution will cash the check or credit your account for that amount, and the funds will be transferred from the payer’s financial institution over to yours. Sometimes, if the check is for a large amount or from an out-of-state bank, your deposit may be held a few days before you can have access to your money. In this way, your financial institution has time to verify that the payer actually has enough money to cover the check.

There are many benefits to using a checking account:

  • Convenience. If you use checks, you don’t always have to have cash before making a purchase. And you shouldn’t send cash through the mail, just checks, to pay bills. Also, you can usually access your checking account by using your debit card at an ATM.
  • Safety. You don’t have to carry a big wad of cash when you go shopping. Also, stolen checks can be replaced. Lost or stolen cash cannot—it is, simply, gone.
  • Easier Budgeting. A checking account can also help you budget your money. When you use your check register to record whom you wrote checks to, you’re automatically keeping track of where your money is going—making it easier to evaluate your spending habits.
  • Proof of Payment. Checks provide written proof that you made a payment to someone or a business. Each time you write a check that ultimately clears your account (when the money is taken from your account and added to the payee’s account), there will be several records of it—making it easier to prove that you did in fact make a payment, should anyone ever challenge you about it.

Setting Up Your Checkbook

Your first order of checks will come with 2 pads of free checks (50 total) and will include both checks and a check register. For your convenience, Superior offers duplicate checks with a carbonless copy to keep for your records. This duplicate check’s second sheet records specific information about the check transaction.

When setting up your checkbook, place the check pad with the lowest number inside your checkbook’s protective cover. Place the check register in the opposite pocket. Place the clear plastic divider underneath the first check and its duplicate copy in the check pad. This prevents what you write from filtering through to the remaining duplicates.

After you write your check, remove only the check and place the divider under the next check-duplicate set. The duplicate is your record and serves as the reminder if you do not record the transaction in your register immediately.

Check Writing

There are five pieces of information that are essential when writing a check:

  1. Complete the “Date” line.
  2. Write or print the name of the person or company you are paying on the “Pay to the order of” line.
  3. Enter the dollar amount in numbers – e.g. $85.26 or $200.00 – in the dollar box next to the “Pay to the order of” line.
  4. Write the legal amount in words on the next line, beginning as far to the left as possible. Write amounts of dollars and fractions of dollars – e.g. Ten and zero/100 (for $10.00) or One hundred twenty-eight and 15/100 (for $128.15). Draw a line through any remaining space to the right of the fraction to prevent tampering.
  5. Sign your name on the signature line exactly as you signed the signature card when you opened your account.
  6. (Optional) Complete the “Memo” line, i.e. Car Insurance, or Clothes.
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Helpful Hints

  • Use permanent ink so nothing you write can be changed or altered.
  • Write clearly and legibly.
  • Fill in all blank lines with the proper information.
  • Be prepared to show photo ID if asked.
  • Never sign a check unless all information on it is complete.
  • When a mistake does occur:
    • Write “VOID” in big letters across the front of the check.
    • Write “VOID” by the check number in your register or stub.
    • Destroy the incorrect check and write a new one.

Check Endorsing

A check must be endorsed before it is deposited into your account. There are three different types of endorsements:

  1. Blank Endorsement: On the back of the check, sign your name. Once you sign your name, anyone can cash it. For security reasons, only endorse a check this way when you are ready to cash or deposit it.
  2. Restrictive Endorsement: To restrict a check for deposit only, write For Deposit Only above your endorsement. Only the payee can write a restrictive endorsement. Use this endorsement when mailing a check for deposit, or if someone else deposits your checks.
  3. Special Endorsement: This makes the check payable to a third party and prevents others from cashing it. Write Pay to the order of and the person’s name, and then sign your name below.

Helpful Hints:

  • Sign your name exactly as it is written on the front of the check.
  • If your name is spelled incorrectly, sign it incorrectly, and then provide the correct spelling below.
  • Remember that you are responsible for payment on any check that you write.

Balancing Your Checking Account

Balancing your checking account requires several elements. The checkbook register is the record of all transactions – debit or credit – affecting your account. A debit is any transaction that subtracts funds from your account, i.e. cleared check, ATM withdrawal, debit card purchase. A credit is any transaction that adds funds to your account, i.e. check or cash deposit, direct deposit from employer. Remember to record any electronic transactions in your checkbook register on the dates that they occur.

ITEM NO.

DATE

DESCRIPTION OF TRANSACTION OR WITHDRAWAL

(-)
PAYMENT, WITHDRAWAL, OR FEE AMOUNT

(+)
AMOUNT OF DEPOSIT OR INTEREST

BALANCE

 

 

 
3551 11/30 Bob's Bait Store 12 18       -12 18
                487 82
  11/30 ATM Withdrawal 20 00       -20 00
                467 82
  12/1 Deposit       687 22 687 22
                1155 40
3552   VOID              
                1155 40
3553 12/3 ABC Grocery 85 11       -85 11
                1069 93
                   

Your checking account statement has two purposes:

  1. It provides you with your financial institution’s official record of your account activity.
  2. It helps in checking account balancing.

You need to keep a record of all checking account credit and debit transactions. It’s a good idea to keep it up-to-date so you always know your balance. With a balanced checking account, you will be much less susceptible to an NSF occurrence (“bouncing” a check) because you will have a clear indication of your balance at all times. Never simply use the balance shown on a receipt (from a deposit or withdrawal) as your checkbook balance – you need to allow for items that have been written but not cleared your account yet.

When preparing to balance your checking account, you need to have on hand your checkbook register, account statement, the previous month’s account statement and any ATM or debit card receipts that you have collected during the statement period. Using the reconciliation worksheet from the back of your previous month’s account statement, verify that the outstanding checks and deposits actually cleared on your current statement, and cleared for the correct amount. Unfortunately, items occasionally get posted for an incorrect amount. Record any checks that haven’t cleared as outstanding on your current checking account reconciliation worksheet found on the back of your statement.

Next, compare your current statement with your register to identify and note debits and credits to your account that aren’t recorded in your register. You will need these amounts when balancing your checkbook. When balancing your checkbook, you need to follow these steps:

  1. Record the balance from your statement.
  2. List deposits not credited to your account as of the statement’s posting date.
  3. Add the outstanding deposits listed in Step 2 to the balance in Step 1 for a subtotal.
  4. Subtract the total of all outstanding checks that have not yet been debited from your account.
  5. The resulting figure is your ending balance – which should equal the ending balance you have listed in your register.

Checkbook Out of Balance?

If your checking account is out of balance, try these suggestions to balance your account. If you try these suggestions and your account remains out of balance, please call Member Services at 419-223-9746, or stop into any Superior branch for assistance.

  • Did you enter all ATM and other electronic transactions in your register?
  • Did you write checks around the statement date that have not yet cleared?
  • Did you make deposits around the statement date that have not yet posted?
  • Did you deduct any service charges?
  • Did you forget to record any checks or deposits?
  • Do all check and deposit figures match those in your statement?
  • Did you forget to deduct any cash you received back on deposits?
  • Did you double-check your addition and subtraction?
  • Did you accurately carry forward correct balances after each transaction?

Follow the Bouncing Check

David wrote a check for $65 to a clothing store, figuring he would cover the purchase by depositing his paycheck the next day. But when the store deposited David’s check into its account, instead of receiving payment from David’s financial institution, his check “bounced” back to the clothing store due to insufficient funds in his account. The store then sent David a notice stating that he still needs to pay the $65, plus another $25 for writing a bad check. Additionally, David’s financial institution deducted an insufficient funds fee of $30 from his account, drawing it down to only $20.

But David was on a spending spree. He wrote another check to an auto parts store that same day for $25. So that check bounced, and the auto parts store sent him a notice stating that he still needs to pay the $25, plus another $25 for writing a bad check. And David’s financial institution deducted another insufficient funds fee of $30 from his account, drawing it down to –$10.

Prior to all this happening, had David written any check that had not yet cleared, it too would bounce, and he’d rack up more rounds of bad check and insufficient funds fees. But even if nothing else happens, David will have written two bad checks totaling $90, paid $110 in penalties, for a total cash outlay of $200!

Check Misuse

Of course, you’re responsible for making sure your account information and checks are stored in a safe place. And while everyone makes an occasional mistake, it is your responsibility to keep track of your balance and make sure you have enough money in your account when you write a check.

The consequences of misusing a checking account can be far greater than just paying fees. If you have an excessive number of overdrafts, Superior will first require your attendance in a Superior “Saturday School” checking account education session, and if the problems persist, may ultimately close your checking account. This closure could be reported to Chex Systems and/or the credit bureaus. A history of checking account abuse can prevent you from obtaining another checking account and damage your credit history. This becomes a problem because many employers now require direct deposit of your paycheck into a checking account. And intentionally writing checks without enough funds to cover them is considered check fraud—a serious crime.

Some other things to consider when you open a checking account:

  • Is the location convenient for you? Will you be able to get there during the hours it’s open if need be? Does it have ATM locations in neighborhoods you frequent? Does it let you use other financial institutions ATMs free of charge, several times a month?
  • Does it offer other services you’re interested in, such as online banking?
  • Do you meet the institution’s age requirement for a checking account? If not, you’ll need an adult co-signer to open an account.

Along with these account responsibilities come your rights. You can get your money whenever you ask. Your deposits are insured for up to $100,000 by the NCUA. And, you can expect to be notified of any changes in fees or terms of your account.

If you find a mistake when you check your monthly statement—say, a withdrawal you didn’t make, a duplicate purchase, or an incorrect deposit amount—you have the right to ask your financial institution to investigate the error. And if we find an error, you have the right to have your account corrected.

It is definitely safer to carry checks than cash, but of course, you still have to be careful. People who find blank checks you’ve lost can try to alter them or forge your signature. So it’s smart to take a few precautions:

  • Always write checks in ink.
  • Once you endorse a check (sign the back of it), anyone can cash it. So don’t endorse checks you plan on depositing until you get to the bank or credit union. As an added measure of security, some people like to write “For Deposit Only” and their account number underneath their endorsement.
  • Keep unused checks in a safe place.
  • Never sign blank checks in advance. Always fully complete a check before signing it.
  • Check your statement every month to make sure there are no withdrawals you didn’t authorize and that your activity matches what you recorded in your checkbook register.

The DNA of Debit Cards

Debit cards, sometimes called “check cards,” have credit card logos on them but are very different. Instead of drawing on a line of credit, debit cards act like a check, deducting the amount of your purchase from your checking account. The good news is there’s usually no interest associated with your debit card purchases because you’re not actually borrowing money (you’re drawing down your checking account instead).

When you flip over a debit card, the first thing you’ll probably notice is the black magnetic strip. That’s basically the intelligence center of the card. It stores data such as your name, account number, personal identification number (PIN), and financial limits. So you should be careful to protect it! If you accidentally wash the card, place it too close to a magnet, or scratch the strip, your card may not work anymore.

When you’re at a store buying something with a debit card, you usually have to choose one of two options: to use it as a credit card—including having to sign for your purchase—or to use it as a debit card. In both cases, you or the cashier will have to swipe your card through an electronic terminal. But if you choose to use it as a debit card, you’ll be prompted to enter your PIN. You may be asked if you want to get cash back - a handy way of making a withdrawal along with your purchase. The terminal will then indicate whether the transaction was approved. If it was not, you must find another way to pay for your items.

Debit cards offer many of the conveniences of a credit card. They’re particularly useful to people who don’t like to carry a lot of cash and don’t want to be tempted into accumulating too much debt. Compared with checks, there’s less to carry, and checkout transactions usually go faster. But if you’re not diligent about recording your debit card purchases and withdrawals in your checkbook register, you can end up with too little money to pay bills or a bounced check. And of course, someone who steals your debit card can use it to wipe out your account before you even know it’s gone.

So how do you get a debit card? You will usually be asked if you want one when you open your checking account. But you’ll have to wait until you receive the card in the mail before you can actually use it (approximately 7-10 days). For security purposes, you’ll receive your PIN in a separate letter. Never give your PIN to another person. Once you get your debit card, you can use it at any Superior ATM to withdraw money. Simply swipe the card, enter your PIN, and follow the instructions on the ATM screen.

But remember—accurate record keeping is key. So whether you use the card to deposit, withdraw, or make purchases, make sure you record what the transaction was and how much it was for.

There is no additional charge to get a debit card for your account. But there may be charges for using it. Always read the terms of the debit card agreement carefully to find out what kinds of charges you might be assessed and for how much. However, fees vary widely, so it pays to do your homework to find out the least expensive ways to use your debit card.

Your rights and responsibilities with a debit card are virtually identical to those of a checking account, with the added responsibility of immediately reporting a lost or stolen debit card. Even without your PIN, someone can steal and use your debit card as if it were a stack of blank checks. As you can imagine, this wreaks havoc on your checking account if you don’t notice the theft right away—wiping out all the money you’ve earned to pay for bills and life’s little necessities.

Unfortunately, you have less protection against fraud with a debit card than with a credit card. If you report a missing card within two business days after you realize that it’s missing, you’ll only be responsible for up to $50 of unauthorized charges. Wait longer than that, though, and you could lose up to $500. And if you see an unauthorized transaction on your monthly statement and wait more than 60 days to report it, you could be liable for the entire amount.

In short, if you do lose your debit card or find unauthorized uses on your monthly statement, it is critical to report them to the card issuer right away.

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9 Signs of Smart Debit Card Use

  1. Memorizing and protecting your PIN (don’t choose something obvious like your house address, phone number, or birthday) and not carrying it in your purse, wallet, or pocket. Remember, theft of your PIN can wipe out your account and leave you with overdraft fees.
  2. Immediately recording purchases and withdrawals in your check register.
  3. When using your card for a point-of-sale (POS) transaction, always select “Credit” and sign for your purchase – selecting “Debit” will result in a $0.50 fee per transaction. If the POS terminal you swipe your card in automatically goes to the PIN pad, select “Cancel” and the terminal will switch to the “Credit” option for your signature.
  4. Signing the back of your card to make it harder for others to use.
  5. Never giving your debit card to another person, friend, or family member.
  6. Keeping receipts to check against your statement.
  7. Using Superior ATM machines to avoid fees.
  8. Being aware of your surroundings when you use your debit card, especially at an ATM at night.
  9. Immediately reporting lost or stolen cards. Call Member Services at 419-223-9746.

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