Banking

Bank errors:

On September 29, the bank deducted a repeat electronic funds transfer fee of $20. This was a mistake, because the transfer was a one-time payment. The bank has since returned this money to his account, so Josh adds this amount to the starting balance.

Reconciling a Bank Account

Step 1: Adjust the balance in the bank statement: When you get your statement, match the transactions in the statement with the ones logged in your register. If you've missed any transactions, add them. Subtract any banking fees, and then add the interest you gained on your account (if necessary).

Mobile Banking

Mobile banking offers many of the same benefits as online banking. However, depending on the mobile device, it may not be easy to type in as much information as is possible with online banking. For example, it may be more difficult to set up a new bill payment requiring the biller's name, address, account code, etc. Mobile apps are better for simple account actions, like viewing. Mobile banking has the same inherent security risk as online banking. Other risks include devices that can be lost or stolen more easily than a computer (smartphone, tablet, etc.).

Step 3: Compare the adjusted balances and check that they're equal:

Now, compare your new current balance with the one on your statement. If they match, your account balances. If they don't, repeat the above steps and try to catch the error.Let's look at what items to check for when making adjustments in each of these steps.

Certificate of Deposit

A certificate of deposit (CD) guarantees that the owner will receive interest. A CD has a maturity date, which is the date the CD will be ready. Maturity dates range from one month to five years. These are some benefits of CDs: insured by the FDIC offer a higher interest rate than a savings account offer a fixed interest rate (it doesn't go up and down) There are some disadvantages or costs associated with CDs: long maturity dates penalty fees and charges if a CD is cashed out early no ATM service no debit card no checks CDs are good for consumers who do not need to have access to their money until the end of the maturity date.

Money Market Deposit Account

A money market deposit account (MMDA), also known as a money market account (MMA), pays interest on the account's money. The interest is based on current money market rates. MMDAs provide key benefits: They pay higher interest rates than savings accounts. The FDIC insures these deposits, so consumers' money is protected. The downside is that MMDAs have a higher minimum balance requirement than savings accounts do.

Savings Account

A savings account is a basic account that offers consumers a safe place to put their money. It is meant as a holding spot to build up savings. These are some benefits a savings account provides: The bank offers interest income on money kept in the account. Savings accounts usually have low minimum balance requirements. The Federal Deposit Insurance Corporation (FDIC) insures savings account deposits up to $250,000. So, if the bank fails, account holders will get their money back up to that amount. A basic savings account is useful for consumers who are just beginning to save money. Consumers can save up for monthly and yearly expenses as well as for emergencies. The disadvantage of a savings account is that accountholders may have limited access to their funds. Some banks will allow you to write checks from the account and to make ATM withdrawals and money transfers. Other banks will penalize you with fees and charges for withdrawals and transfers.

Paperless bank statements

Account holders can view their monthly statements online. The statements show all transactions in each account during that period.

Interest-Bearing Checking Account

An interest-bearing checking account is similar to a savings account in that the bank pays you interest on the money in your account. The key difference between these two account types is that checking account holders have access to checks, debit cards, online bill payments, etc. These are the key benefits of an interest-bearing checking account: The account holder can access all checking account services. The money in the account earns interest. These are some costs or disadvantages of maintaining an interest-bearing checking account: a minimum balance requirement monthly service fees (these may or may not apply, depending on the bank you use) other hidden fees Not all banks offer this type of account, so it's important for informed consumers to ask if it's available.

Bank errors

Check for errors in the bank statement numbers. You may need to increase or decrease the bank statement balance to adjust for these errors. Adjusting a Bank Statement Balance Starting Balance+deposits in transit-outstanding checks+/-bank errors=Adjusted Balance

Starting balance

Josh's bank statement dated September 30 shows that he had $4,500 in the account at the end of that day.

Basic Checking Account

Checking accounts are a holding place for income. Consumers use the money in checking accounts to pay for everyday costs like groceries, transportation fees (bus, train, gas), clothing, food, etc. They also use checking accounts to pay recurring bills, such as rent, loans, utilities, phone bills, and credit card payments. A checking account provides the following benefits: debit card ATM use access to online banking and mobile banking checkbook There are some downsides associated with basic checking accounts to watch out for, such as hidden fees for both online and paper statements restrictions on ATM withdrawal amounts

Online bill payments

Consumers can set up automatic monthly payments for recurring bills, such as rent, car payments, utility bills, and student loans. They can also use this service for one-time transactions, such as a medical bill or magazine subscription.

Starting balance

Determine the balance of the bank statement on the last day of the previous month. This amount is your starting balance.

Outstanding checks:

Josh has written checks worth $790 that are outstanding and therefore don't appear on the bank statement. Josh deducts this amount from the starting balance.

Deposits in transit

The total deposits in transit are worth $530. Josh adds this amount to the starting balance.

Step 2: Adjust the check register balance:

The total you get after performing the above step is your current balance. If any transactions did not appear on your statement, calculate them in your current balance. This includes any recent checks that you wrote.

Outstanding checks

These are checks that you've written, but which the bank hasn't deducted from your account. So, decrease the bank statement balance by the total amount of outstanding checks.

Deposits in transit

These deposits are amounts of money already paid into your account, but which the bank has not yet recorded. So, increase the bank statement balance by the total amount of deposits in transit.

Electronic deposits

These involve money deposits that go directly into bank accounts so consumers don't have to make deposits at a bank.

Online money transfers

This service allows consumers to transfer money from one account to another, such as from a checking account to a savings account.

Traditional Banking

Traditional banking occurs in a physical location where customers can make deposits, withdraw cash, and obtain other services from bank employees. The benefit of traditional banking is that consumers can meet face-to-face with knowledgeable bank employees to address account issues. Customers can also access services that are not available through online or mobile banking, such as the following: notarizing documents opening new accounts discussing account options financial planning services processing cash withdrawals without associated fees The cost of traditional banking is the time consumers have to spend getting to and from the physical location. Most consumers use a combination of online, mobile, and traditional banking services. Now, let's look at different types of bank accounts and their benefits, costs, and limitations.

Overall Benefits of Bank Accounts

Your money is federally insured. If the bank goes bankrupt, you won't lose your money. The government protects it. Managing finances is easier because you can use multiple payment methods. You can set up automatic payments for different vendors. For example, you can set your account to pay for rent automatically on the 15th of every month. Several payment methods are available to you. Consumers can use debit cards for in-store and online payments. They can also write checks out to different organizations. In addition, they can use wire transfers to automatically send money from one account to another. Paying bills is easier too. Consumers can use online bill payments, checks, and automatic withdrawals to set up payments and then forget about them. Borrowing money is easier because banks can access and verify your financial data and credit scores quickly over the Internet.

A disadvantage of online banking

is the security risk of accessing information over the Internet. Hackers, malware, and other hacking software can access your computer and steal your information.