Book Opener

Checking Accountsl How to describe theprocess of openinga checking accountand some of thedepositor’s rightsl How to explain theproper way to write acheck and discussproblems associatedwith checkingaccountsl How to summarize theprocedure forbalancing a checkbookKnowing about checkingaccounts and writingchecks will help you useyour money wisely.l stale checkl outstanding checksl bad checkl forgeryl utteringUsing a Checking AccountThe check is the most common kind of negotiable instrument in usetoday. Checks are a safe method for sending funds through the mail,and they provide convenient receipts for the people who write them.Opening a Checking AccountYou open a checking account by depositing money in a bank andsigning a signature card. The bank agrees to pay money out, up to theamount you have deposited when you write a check.If your bank refused to cash your check when sufficient funds wereon deposit, this would be a breach of the bank’s contract. You couldbring a claim against the bank for any damages suffered as a result. Onlythe depositor has the right to bring a claim against the bank for failingto pay a check. The bank’s agreement to cash checks is with the depositoronly. An exception to this rule occurs with certified checks, whichare discussed later in this chapter.A bank may refuse to pay a check that is more than six months oldwithout incurring liability. Such a check is known as a stale check . Abank also has the rightto refuse to pay a checkif it is submitted 10 daysafter the death of thedrawer. The bank is notliable, however, for payinga check of a deceasedperson if it doesnot have notice of thedrawer’s death or incompetence.PAYING BILLSMany people pay monthlybills by check. Others preferthat automatic paymentsbe made electronically bytheir banks. Which methodwould you choose? Why?522 Unit 5: Using Your Purchasing Power