Guide to Checking Accounts
Opening and using your own checking account is fundamental in learning how to
manage your money. And, it's really easy to do once you know the basics.
Basic training: what is a checking account?
A checking account, or demand account is an account held at a bank or other
financial institution for the purpose of securely and quickly providing access
to funds "on demand." Money in a checking account is insured up to 100 thousand
dollars through the FDIC. Money can be easily withdrawn by writing checks,
using a debit card, or visiting an ATM.
What are the Rules?
- You must have enough money in your checking account to cover purchases made
with a check or debit card. Spending more than you have available in your
checking account will result in an "overdraft fee."
- Check your statements regularly to ensure that all the transactions and your
balance is correct.
- Deposit checks right away-most checks cannot be cashed after three months.
- Stick to your financial institution's ATMs. Using other ATMs may be convenient,
but are often expensive due to the extra fees they carry.
- Keep accurate records of all the checks you have written and debit card
purchases made. Make sure you sign for all debit card purchases and keep
How to Write a Check
Here's a sample check with an explanation of each field.
- Date - Write in the date of the check in standard month/day/year format, or write it out, "July 15, 2007."
- Pay to the order of. - Fill in the name of the person or organization (payee). In this case, "Barb's Flower Barn."
- Dollar Amount. - Write the full amount in standard dollars and cents format in the Dollar Box to the right of the payee.
- Amount ($). - Write the full amount of the check out in long hand and draw a line to fill in space if needed. This line keeps anyone from altering the amount of your check. Writing the amount helps to verify the amount in the dollar box and vice-versa.
- Signature. - Sign your name! This shows you approve the amount on the check to be paid.
- Memo. - Write the purpose of the check, such as "July rent" or "June cell phone."
Here's a sample check register
- Check #: Track the check numbers in this column.
- Date: The date of the transaction or the date the check was written.
- Description: A brief description of the transaction is recorded here.
- Amount: The amount of the debit (money out) to the account goes here.
- Deposit: The amount of any deposit (money in) is in this column.
- Balance: The current available account balance, adjusted for any debits or deposits, is logged here.
Best practices for writing checks
Make sure your signature is the last thing you fill out on any check. If you
lose a check that's already signed, anyone can fill in your name and cash it.
Never make a check out to "Cash," this allows anyone to cash it if it's lost
or stolen. Instead, always name a specific person or business on the pay to
the order of section of the check.
- If your checks are lost or stolen, report it immediately to your financial
institution and the police.
- Record all the checks you write in your checkbook register.
- When filling out a check always use a pen.
- Fill in every word and number of the check, leaving no room for anyone to
write in something else. This will prevent someone from adding numbers to
make the check a larger amount or altering the payee's name.
- If you need to correct a mistake on a check, tear it up and start a new one
instead of crossing out errors or writing over numbers. Remember to enter it
as "void" in your checkbook register.
Banking 101 Glossary
Banking can be confusing! To make it easier, Higher One has compiled this list of
common banking terms and definitions along with common terminology associated with
Higher One and your OneAccount.
General Banking Terms
ACH: an abbreviation for Automated Clearing House; an electronic network
for financial transactions in the United States. ACH is responsible for processing
large volumes of both credit and debit transactions between financial institutions.
Its rules and regulations are governed by The Electronic Payments Association and
the Federal Reserve.
Electronic payments on utilities, loans, and other types of bills are all examples
of ACH debit transactions. Specific to Higher One, a student who opts to have their
refund deposited directly into an existing bank account would constitute an ACH.
In accordance with the rules and regulations governing ACH, no financial institution
may simply issue an ACH transaction (whether it be debit or credit) towards an account
without prior authorization from the account holder known as the Receiver.
Automated Teller Machine (ATM): A machine that allows the customer to get cash
withdrawals, check balances and transfer funds. ATMs are generally accessible 24
hours a day, 7 days a week.
Bank Routing Number: Your bank's unique identification number. Also known as a
"routing transit number" or RTN. Your routing number is the nine numbers preceding your
account number at the bottom left of your check.
Check: A negotiable instrument instructing a financial institution to pay a
specific amount of currency from an account.
Bank Statement: A record of all transactions and debit/ credit entries in
the form of cash, check, or transfer.
Cashiers Check: A check guaranteed by a bank. Cashiers checks are usually
treated like cash since most banks clear them instantly.
Credit Card: A plastic card that can be used by the holder to make purchases
or obtain cash advances using a line of credit from the card-issuing financial institution.
Debit Card: A plastic card designed to allow a customer access to funds in his/her
checking account to purchase goods, obtain cash, or transfer funds from one account to
another. Debit cards are accepted wherever you see the Visa or MasterCard logo.
Direct Deposit: A pre-authorized payment automatically deposited to a
customer's checking account.
EFT (Electronic Funds Transfer): The computer-based systems used to perform
financial transactions electronically. The term EFT is used to describe a number of
different concepts including:
- Cardholder initiated transactions in which a cardholder makes use of a
credit or debit card.
- Electronic payments by businesses.
- Electronic check clearing.
FDIC-Insured: Federally insured deposits protected by the Federal Deposit Insurance
Corporation (FDIC) for up to $100,000 per person.
Fee Schedules: List of fees charged for various banking services including: wire
transfers, overdrafts and foreign ATM activity.
Insufficient Funds: Account status when the accountholder's available balance is lower
than an amount being debited against the account.
Overdraft: When withdrawals from a bank account exceed the available balance, giving
the account a negative balance.
Personal Identification Number (PIN): A code used by the account holder to authorize
a transaction or obtain information regarding his or her account.
Stop Payment: A customer's legal right to give instruction to the bank for stopping
payment of a check before it has been presented for payment. A fee may be charged for
Uncollected Funds: Funds deposited or cashed against an account with a check that
has not yet cleared. Financial Institutions typically place a temporary hold on customers'
uncollected funds, making those funds unavailable for withdrawal until the time period of
the hold expires.
Wire Transfer: The electronic transfer of funds from one financial institution
Higher One Specific Terms
Add Money: The transferring of funds from an outside bank account to
Available Balance: The amount of funds available minus any amount on
hold. This includes all activity-deposits, credits, withdrawals or debits.
Note: A temporary hold is placed on your account almost immediately to
Example: The beginning balance on your OneAccount is $2000. After purchasing
two computer monitors online for $500, your available balance is now $1500.
Automatic Bill Pay: An electronic payment scheduled by the cardholder
with a service provider or merchant (also known as the "Payee") that accepts
CIP: (customer identification program): Verification process that must
be completed after an account is created. Federal banking regulations require
all financial institutions to obtain, verify and record the identity of their
account holders. Higher One complies with this federal directive by requesting
a legible copy of any government issued identification. Note: In all cases,
Higher One pledges the protection and confidentiality of your personal information.
EasyHelpSM: OneAccount online help available through Higher
One 24 hours a day, 7 days a week.
Same Day Deposit to a Higher One Checking AccountSM:
Your fastest refund option, with funds available the same day they are released from your college or university.
Funding Account: The bank account used to add money or "fund' your
OneAccount. The funding account is directly linked to your OneAccount.
OneAccount: The checking account linked to your Higher One Debit
MasterCard® (actual card name is specific to the school you attend).
The OneAccount offers free checking with no minimum balance or monthly fees.
Online Bill Pay: The ability for an account holder to pay bills online.
Note: This feature is set up through your OneAccount.
Payee/Payer: Payee-the party at the receiving end of a payment. Payer-the
individual or entity making the payment.
Pending Transaction: Once your card is swiped at a merchant's card terminal,
the transaction total is "held" for three (3) business days, allowing the merchant
enough time to debit your OneAccount.
Refund Preference: The selection of how you'd like to receive any refund
owed to you from your school.
Send Money: The transferring of funds from your OneAccount or outside bank
account to another OneAccount.
Sign for it: Phrases used to promote signature based transactions with the
OneAccount. When using your card for purchases, you can authorize a purchase by
using your PIN or by signing the receipt. Note: signing the receipt means you may be better protected.
Higher One offers you peace of mind by providing the MasterCard® Zero Liability policy when you make
signature based purchases with your Debit MasterCard. Zero Liability means you are eligible for protection
against fraudulent purchases made with your card. Be sure to always safeguard your card and report a card theft
promptly. Learn more
about terms and details of the Zero Liability policy provided by Higher One.