banking study guide

Fill in the blanks: Direct deposit typically refers to your ______ sending your ______ electronically to your bank account.

• parents, allowance

• employer, bills

• employer, paycheck

• state government, taxes

Juan saved $1,000 from his summer job cleaning pools. Which of these account types would work best for him if he doesn't need access to the money for a number of years AND wants to earn the highest interest rate?

• Checking account

• Certificate of Deposit

• Money Market account

• Regular savings account

Experts recommend that you accumulate enough to cover 3 to 6 __________________ of expenses in your emergency fund.

• Years

• Days

• Weeks

• Months

Jocelyn gets a text alert from the bank that her account balance has dropped below $100 after a series of $20 ATM withdrawals. She has not used her ATM in over a week and wonders what she should do. What would you recommend?

• Check her wallet to be sure her debit card has not been stolen.  If she still has it, then she should not worry.

• Contact her bank immediately as it appears that her account may have been hacked

• Wait until her monthly statement arrives so she can check to see if those withdrawals are still there

• Wait a week as it is fairly common for the bank to catch mistakes like this

FDIC Insurance is...

• Optional coverage consumers can purchase so that their bank deposits remain safe

• Protection for bank customers’ deposits up to $250,000, guaranteeing their money is still available if the bank goes out of business

• Required if you want to do online or mobile banking

• Insurance bank branches can buy to protect their business against fraud and scams

You are at the checkout counter at the local supermarket and use your debit card to pay for your groceries. Where does the money for this purchase come from?

• It is deducted directly from your savings account

• Your credit card company provides you with a cash advance to cover the cost

• Your credit card company covers the cost

• It is deducted directly from your checking account

Which of the following statements is an advantage of online banking?

• You can only shop online if your bank account has online banking features

• Once you set up online banking, your bank will waive overdraft, ATM, and monthly fees

• Using online banking, you can request transfers, pay bills and automate your savings without visiting the bank branch

• Using online banking allows you to earn a higher interest rate

Which of the following is an effective strategy for personal saving?

• Take out a payday loan so you can save before you receive your paycheck

• Cover all of your wants and needs and save whatever is left over

• Wait until the end of the month and save whatever is left in your checking account

• Save a certain percentage of each paycheck and deposit it directly into a savings account

All of the following are downsides of being unbanked EXCEPT:

• Lack of fees associated with banks

• Difficulty making cashless purchases

• Lost time paying bills

• Lack of access to credit

Which of these lists ranks the savings options from highest expected interest rate to lowest expected interest rate?

• Online savings account, 5-year CD, Savings account at traditional bank, 10-year CD

• Savings account at traditional bank, online savings account, 10-year CD, 5-year CD

• Savings account at traditional bank, online savings account, 5-year CD, 10-year CD

• 10-year CD, 5-year CD, Online savings account, Savings account at traditional bank