Personal Finance- Banking Unit 2 Test Review

Personal finance banking

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 checking account

Which TWO of the following statements are advantages of online banking?

B & C

FDIC Insurance is...

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

Which factor is NOT important in selecting a checking account?

1. Monthly Fees

2. ATM Fees

3. FDIC Insurance

4. Frequent Flyer Miles

D. Frequent Flyer Miles

What three words can be an effective slogan to encourage personal savings?

Pay Yourself First

What is an advantage of paying your bills using the online bill pay feature with your checking account?

It saves time and paper.

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

Employer, Paycheck

What is the largest and most common checking account fee?

Overdraft Fees.

Which of the following actions is least effectively done using mobile banking?

1. Opening and closing your checking account

2. Locate your nearest branch or ATM

3. View your current balance

4. Deposit a check

1. Opening and closing your checking account

Juan saved $1,000 from his summer job cleaning pools.  What savings vehicle 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?

Certificate of Deposit (CD)

Describe a strong and effective strategy for personal savings. (Hint: each paycheck…)

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

What account type allows you to write checks that are withdrawn directly from the account?

Checking Accounts & Money Market Accounts

What does it mean when someone is “living paycheck to paycheck”?

Someone does not have enough money saved, so every paycheck just barely covers monthly expenses. Every dollar from every paycheck is spent. 

What form of payment am I?  I am used less and less frequently these days.  I am a physical form of payment and in order for me to be valid, I must have a written signature, a date, a payee and a dollar amount.  Who am I?

A Check. 

What savings account tool requires you to keep your money deposited for a fixed amount of time?

1. Checking account

2. Certificate of Deposit

3. Savings Account

4. Money Market Account

B. Certificate of Deposit

A savings tool where retirement savings funded by regular contributions from the employee and possibly the employer.

401k

What payment type am I?  I am accepted almost everywhere.  Unfortunately, when you use me for a purchase you often forget to track your spending.  Research shows that if you use me as form of payment you will likely spend less than if you use my "plastic" relatives.  If you lose me, you are out of luck.  No one is going to reimburse you for your loss.

Cash.

What two items do you need to reconcile your checking account?

Check register & Monthly bank statement

When writing a check for a payment of $145.09, what is the correct way to write this value on the line for payment amount?

One Hundred Forty-Five and 09/100

Mary is investing her money into an account that gives here an interest rate of 4%.  How many years will it take her money to double?

18 Years.

72 / 4 = 18

Complete this sentence:  Compound interest is interest earned on ........

The interest you receive.

What is the 9-digit number on the bottom of the check that identifies the accounts financial institution.

Routing Number.

 What provides the account holder's record of deposits, checks, ATM transactions, and transfers made over a certain period of time?

A bank statement.

A check written but not yet cashed.

Outstanding check.

A signature on the back of the check which transfers ownership of the check.

Endorsement.

Money placed in an account that has been made but is not listed on the current bank statement.

Outstanding deposit.

A sum of money placed in an account in a financial institution.

Deposit.

The term for a check that cannot be processed because the account on which it is drawn has insufficient funds.

Bounced Check.

True or False: With checking accounts, both interest rates and fees are subject to change by the banks

True.

What is something that is not an advantage of using a Credit Union?

Credit unions are very selective when choosing members.

True or False: It is good check writing practice to use a pencil so that you can quickly erase any errors without having to throw any checks away.

False

A checking account may:

1. Pay interest

2. Require a minimum balance

3. Have a service fees

All real awnsers.

Which of these accounts usually pays the lowest interest rate?

1. Checking account

2. Savings account

3. Certificate of deposit (CD)

4. Money market account

1. Checking account

You make an initial deposit of $46.82 in a checking account.  In addition, you deposit your paycheck of $78.36 at the end of the week.  You write checks for $16.93, $26.25, $9.27, $12.58.  Your bank service charge is $6.95 per month.   How much will you have in your account at the end of the month?

$53.20

You deposit $1,750 at a rate of 2.5% compounded annually.  What amount will you have at the end of 4 years?

$1,931.66

You make a deposit of $375 into a savings account and leave it for one year.  How much interest will you earn in one year if the simple interest rate is 2.5%?

$9.38

You receive a check for $50 from your Aunt Jane for your birthday.  You go to an ATM to deposit the check into your checking account.  How should you endorse the check?

Sign your name and write "For Deposit Only" and your checking account number on the back of the check.

(Restrictive Endorsement)

Sam wrote thirty-five checks last month and made eight online transactions.  Her lowest balance was $195.37.  How much does she owe in fees?

$4.00

Sam made four ATM withdrawals in one month.  One of them was at an ATM that was not part of her bank's network.  She also made fourteen online transactions.  How much will Sam’s bank charge in fees?

$2.70

Sam was overdrawn on her checking account for the second time in six months.  Since she wrote an overdraft, she also went below the minimum balance.  How much will the bank charge her?

$38.00