5.1 - Checking Accounts

Question 0

A written order to a bank to pay the states amount to the person/business named on the check from an account.

Answer 0

Check

Question 1

A demand deposit account in a bank.

Answer 1

Checking Account

Question 2

A federal government agency that helps promote public confidence in the US financial system.

Insures accounts for up to $250,000 per depositor per bank.

Answer 2

FDIC (Federal Deposit Insurance Corporation)

Question 3

A card that provides an official signature that the bank can compare to the signature written on checks.

Answer 3

Signature Card.

Question 4

A tool that can be used to track checking account transactions.

Answer 4

Checkbook Register

Question 5

A check with error(s).

Answer 5

Voided Check

Question 6

A check that has been cashed; Serves as proof of payment.

Answer 6

Cancelled Check

Question 7

A card that allows the account holder to withdraw cash from an account at an ATM.

Answer 7

Debit Card

Question 8

Money is deducted from your account t and transferred to another party.

Answer 8

Automatic Withdrawal

Question 9

Like a debit card; Can be used to get cash/enter money into an account at an ATM - However, it cannot make purchases.

Answer 9

ATM Card

Question 10

When someone signs another person’s name (on a check).

Answer 10

Forgery

Question 11

A password that gives access to the account.

Answer 11

PIN (Personal Identification Number)

Question 12

When making a deposit, these things must be included…

Answer 12

Current date, amount of cash, check numbers and amounts, total amount of cash and checks, cash amount received (if any) and your signature, and the net deposit amount.

Question 13

Deposit not show on bank statement.

Record the deposit in the check register.

Answer 13

Deposit in Transit.

Question 14

A signature on instructions written on the back of a check.

Answer 14

Endorsement.

Question 15

A statement that lists checks, other withdrawals, and deposits made to the account.

Answer 15

Bank Statement

Question 16

Comparing your checkbook register transactions to those on the bank statement.

Answer 16

Reconciling

Question 17

Purpose is to accumulate money in a safe place for the future.

Typically pays interest (low rate).
Money is usually known as having liquidity (easy access).

Answer 17

Savings Account

Question 18

Interest is computed on the principal (sum of money) in a certain time period. Interest (I) = Principal (P) x Rate (R) x Time (T)

Answer 18

Simple Interest

Question 19

Interest is earned on principal plus interest that was earned in a certain time period.

Answer 19

Compound Interest

Question 20

Secure container located in the bank vault (costs $35-$100)

-A bank service.

Answer 20

Safe Deposit Box

Question 21

Bank Loans

Answer 21

Bank Service

Question 22

A check issued against bank funds.

Money comes from your account to pay the bank.
More secure than a personal check (money has been set aside).

Answer 22

Cashier’s Checks

Question 23

NSF (bounced) checks will be paid rather than be bounced.

Answer 23

Overdraft Protection

Question 24

A type of check where money is guaranteed.

Answer 24

Money Order

Question 25

The bank has instructed to not honor a check you wrote/lost (costs $25+).

Answer 25

Stop Payment

Question 26

Bank Cards

Answer 26

Bank Service

Question 27

Refers to actions of the Fed to influence money and credit conditions in the economy.

-Role of the Fed

Answer 27

Monetary Policy

Question 28

Rate that banks have to pay to borrow money from the Fed.

-Type of interest rate

Answer 28

Discount Rate

Question 29

Rate at which banks can borrow from the excess reserves at other banks.

-Type of interest rate

Answer 29

Federal Funds Rate

Question 30

Rate banks charge to creditworthy customers (often 3% higher than discount rate).

-Type of interest rate

Answer 30

Prime Rate

Question 31

The Fed plays a major role in operating the country’s payment systems.
•Print new bills as they get old and worn. •Reserve banks act as a clearinghouse for checks. •Checks may be deducted from your account in a single business day.

-Role of the Fed

Answer 31

Provides Financial Services

Question 32

All banks are subject to the rules and regulations of the Fed.

-Role of the Fed

Answer 32

The Fed Regulates the Banking Industry

Question 33

• Supervises banks to help ensure the banking is safe and sound.
• Promotes consumer confidence.

-Role of the Fed.

Answer 33

Maintains Stability

Question 34

An endorsement check with your signature only.

Answer 34

Blank Endorsement

Question 35

An endorsement check that says “For Deposit Only” and has your signature.

Answer 35

Restrictive Endorsement

Question 36

An endorsement check that says “Pay to the Order of” with the person’s name, and your signature.

Answer 36

Special Endorsement

Question 37

• Businesses that charge a fee to cash a check.
• They charge fees that vary by state and by the type of check being cashed.
• May also make payday loans.

Answer 37

Check Cashing Services

Question 38

Money deposited in a savings account typically earns a set rate of interest.

Answer 38

Computing Interest

Question 39

A time deposit meaning that the money you deposit is set aside for a fixed amount of time.
•Subject to early withdrawal penalties.

-Saving Option

Answer 39

Certificates of Deposits

Question 40

Pays the market rate of interest on the money deposited.
•Minimum balance of $1,000-$5,000 may be required.

-Saving Option

Answer 40

Money Market Accounts

Question 41

A discount bond issued by the federal government.

-Saving Option

Answer 41

US Saving Bonds

Question 42

Allows individuals to deposit money into an account during their working years.
*See Rule of 72 transparency.

-Saving Option

Answer 42

IRA (Individual Retirement Account)