Checking accounts for banking dummies

[brownpau]

I'm considering opening a checking account in the next few weeks or so, but there are still details about checking that I'm not clear on. Here's what I've been wondering about. Please don't laugh at my naivete. :teehee:

· What is "balancing" a checkbook? Why do you need to do it?

· Everytime you issue a check, what else do you need to do in terms of accountability to your bank? Is there some other form that you need to fill out in your checkbook or elsewhere to correspond to the check issued? Or is the check enough?

· What if I accidentally (or maliciously?) over-issue checks beyond the amount in my checking account?

I'll post other questions as they pop into my head. Any other banking beginners with concerns about checking accounts?

[KuyaDanny]

Originally posted by brownpau

· What is "balancing" a checkbook? Why do you need to do it?


The more common term is "reconciling" your checkbook. Every owner of a checking account should also keep a register of his transactions. This is a list of additions and deductions to the balance of his account. Deposits to the account are additions, and checks issued are subtractions. At the front of each checkbook there are forms for this purpose.

Every month you will receive a statement from your bank. Typically the balance on the statement and the balance on your register will not be the same. That's why you have to reconcile to make sure both the register and the statement take into account the same transactions. I can go into this in detail, but basically reconciliation involves:

a) Checking that the amounts of the additions and deductions on both records are the same, and if there are differences, corrections should be made on one of the records;

b) After checking for the recordkeeping differences, you take the:

Statement Balance
Add deposits recorded in the register but not in the statement
Add charges recorded in the statement but not in the register
Deduct checks issued recorded in the register but not in the statement
Deduct interest and "credits" recorded in the statement but not in the register
The result should equal

Register Balance (your checkbook is reconciled)

Periodic reconciliation ensures that the balance you have on your register is reliable and prevents you from overdrawing your account.

[aticus]

· What is "balancing" a checkbook? Why do you need to do it?
It's merely the act of keeping accurate records of all your transactions and knowing EXACTLY HOW MUCH you have left in your account. This is impt. bec. if you issue a check for more than your balance, you will not only get a bounced check, but will pay serious penalties, or may even go to jail for it.

· Everytime you issue a check, what else do you need to do in terms of accountability to your bank? Is there some other form that you need to fill out in your checkbook or elsewhere to correspond to the check issued? Or is the check enough?

The check is enough, but you really do need to keep your own records, if only for your peace of mind. :)

· What if I accidentally (or maliciously?) over-issue checks beyond the amount in my checking account?

Like I said, you get a penalty charge (dependent on the amount of the check itself, though there is a minimum charge of over P1,000). If it's proven to be malicious, or if you really can't pay for it, you may even be sent to jail.

[KuyaDanny]

· What if I accidentally (or maliciously?) over-issue checks beyond the amount in my checking account?


It depends on your bank and the branch manager. Some banks are nice enough to call you and say you have overdrawn, and will give you several hours to fund your overdraft.

Others will bounce your check, leaving you to deal with service charges, embarrassment, and maybe legal action from your payees.

Still others will bounce your check and unceremoniously close your account, saying goodbye to your relationship forever. Life is tough.

[kamehameha]

Isn't there any form of protection being offered by Phil banks like linking your checking account to your savings account and in case of overdraft situations, your savings account will provide the needed fund to your checking account?

[KuyaDanny]

Yes, such arrangements exist. They do not stop many checking account owners from overdrawing. Those who overdraw usually do it intentionally, or because they fail to track their balances.

[nailbiter]

Is there such a thing as a joint and/or checking account? Where any of the accountholders can sign checks on a single checkbook?

[KuyaDanny]

Yes, there is such a thing. The most popular holders of this account type are husband-and-wife couples. If both parties tend to write checks against the account, it is best that the parties always check with the others to avoid overdrafts.

[mac_bolan00]

and if you have unused checks for an account that's cancelled, dispose of them correctly. shred them fine or burn them. some paper hangers can be very creative. you'll be surprised at what they can do with an old check.

[KuyaDanny]

Thanks, mac. That is excellent advice. Only some banks ask for your unused checks when you close a checking account, when all of them should.

[mac_bolan00]

i don't know how but old issued checks somehow find their way to unscrupulous hands.

case 1:

a woman opened an account and deposited via overnight envelope a check to her issued by a certain mac_bolan00. the woman's name was Carmelita Monasteryo. The amount was 25000.

on opening the envelope, the teller thought the check looked funny. it turns out that, several months back, mac_bolan00 donated Php 2500 to the Carmelite Monastery but the check was never encashed. someone got the check and altered both the name and the number.

Carmelita Monasteryo remains at large.

[aticus]

Wow. Never thought I'd see this thread again. :)

[ikari77]

i just opened a checking account throught bpi direct (phone & internet bank), and now i have a checkbook with 50 checks, without my name pre-printed on it. they say i have to use up all these checks first, then i can order a checkbook with my name pre-printed on it.

is this the same procedure with other banks?

[ako si..]

yes, because the check that they gave you have pre-generated account numbers.

pre-generated meaning they have already ordered this so that upon opening of a checking account, you will immediately receive your checkbook.

checkbook re-orders usually take 3-4 weeks, so the bank should have "stocks" of these.

the next time you order, make sure you check the small box the says "with printed name" on the order slip so that the next booklet will be printed with your name.

[muff_puff]

i want to open a checking account but i havent found the time yet to call banks how much do i need to open one..for u guys who already have existing checking accounts in ur respective banks, how much are the minimum amounts required?

thanks :)

[ach_soo]

P 5,000 to P 10,000 opening and maintaining balance usually.

[missfifty]

Robinsons Bank - P5000 - fast approval, within the day applied
Eastwest Bank - P 10000 - with passbook
Prudential Bank - P 5000
RCBC - P5000

There are certain banks na kelangan ka pa mag-antay ng 30 days kasi ichcheck nila *** status mo with other banks.. Or sometimes, kung wala kang savings account sa kanila, matatagalan din *** approval..

[muff_puff]

thanks!!! :)