Banking Unit

Question 1

Debit Cards

Answer 1

Charges come directly out of your checking account when used

Question 2

Prepaid/Cash

Answer 2

Purchased in advance with a set amount. Use until all money is spent.

Question 3

Credit Cards

Answer 3

Charges accumulate and are billed monthly (pay at least the minimum payment)

Question 4

Store Card (Macy’s)

Answer 4

Like a credit card but from a store. May offer incentives to buy at the store but often at a much higher interest rate

Question 5

Types of Peer to Peer Payment Apps

Answer 5

Venmo, Zelle, Paypal

Question 6

Benefits

Answer 6

Easy access / easy to use, Easy to make payments, Saves time

Question 7

Risks

Answer 7

Requires tech knowledge and access, Concerns about security, Can be more difficult to resolve mistakes / disputes

Question 8

Safety Tips

Answer 8

Secure password, log out of app before closing, only install from known locations, do not send $ to people you don’t know

Question 9

Checking Account

Answer 9

Checking accounts provided quick access to funds for transactions. Use deposited money anytime by: Writing checks, Using a debit card, Withdrawing cash, Electronically transferring money. Most do not earn interest.

Question 10

Savings Account

Answer 10

Savings accounts are used money not intended to be used for daily expenses. Access to money is more limited than a checking account but these earn interest.

Question 11

Explain Compound Interest

Answer 11

Compound interest is when you leave your money in savings untouched and each year it earns interest. So each year you are earning interest on the interest earned from the previous year

Question 12

DEPOSIT TO CHECKING ACCOUNT

Answer 12

Make a cash deposit at your bank
Deposit a check at your bank
Use an ATM to deposit your money
Make a mobile deposit
Use Direct Deposit
Transfer money from another account

Question 13

WITHDRAW MONEY FROM CHECKING ACCOUNT

Answer 13

ATM withdrawal using a debit card
Visit a bank Teller to make a withdrawal
Make a purchase using a debit card
Write a check
Use online bill pay
Transfer money to another account

Question 14

List 2 advantages of having an account at a credit union

Answer 14

Credit Unions typically have LOWER fees and charges
Credit Unions typically give back and support the local community

Question 15

Explain what features / factors are important when selecting a bank or credit union

Answer 15

Type, location, insurance, interest rates, fees, services, features

Question 16

Explain the benefits of online and mobile banking and safety tips for using these banking tools.

Answer 16

Easy access / easy to use, Easy to make payments, Saves time, You are able to easily see all of your historical transactions
Maintain your password safely. Keep your payment apps locked on your phone. Don’t bank on open wifi

Question 17

List some reasons why it is important to read your bank statement:

Answer 17

Make sure there are no errors or questionable charges on your account
Check your balance, debits, credits, transactions and any fees.

Question 18

How much does the FDIC or NCUA insure our bank accounts?

Answer 18

$250,000 per account

Question 19

In what scenarios would a consumer would want high interest rates as opposed to low interest rates

Answer 19

Consumers want HIGH interest rates when they are depositing money into a bank and LOW interest rates when they are borrowing money from the bank

Question 20

Experts recommend that an emergency fund covers __ to __ months of expenses

Answer 20

3-6

Question 21

Monthly Service fee

Answer 21

Fee for having the account, automatically withdrawn each month, WAIVE (NOT CHARGE) if maintain a minimum monthly balance, direct deposit paycheck or certain # of transactions per month. Many banks offer no fee checking accounts

Question 22

ATM Fee

Answer 22

CHARGE for using an ATM that belongs to another depository institution

Question 23

Minimum Balance Fee

Answer 23

Some accounts require you maintain a level of money in your account and charge A FEE if you go below that amount

Question 24

Insufficient Funds Fee

Answer 24

When you don’t have enough money in your account to cover the entire transactions & the bank RETURNS the check/ payment

Question 25

Overdraft Fee

Answer 25

Charged if you withdraw MORE MONEY from your account than is AVAILABLE

Question 26

Explain how to endorse a check

Answer 26

When someone pays you with a check, you must sign the back of it before you can deposit it. Signing the back of it is called “endorsing the check.”

Question 27

Restricted endorsement

Answer 27

The most secure way - write “for deposit only to account # XXX and sign your name - it can only be deposited in that account.

Question 28

Traditional Savings Account

Answer 28

You deposit money in the bank and it earns interest. The banks make money lending your money out. Typically low interest; usually no minimum balance.

Question 29

Online Savings Account

Answer 29

Similar to a traditional savings account but because it is online, the overhead is lower and the interest rates are usually higher. All transactions occur online.

Question 30

Money Market Account

Answer 30

Higher minimum balances. Usually have restrictions on withdrawals They usually offer higher interest rates because they are investment vehicles.

Question 31

Certificate of Deposit

Answer 31

CD is a timed deposit. You agree to keep the money in the bank for a specific amount of time. The bank pays you a higher interest rate in return (ex. $1000 12 month CD with a 5% rate)

Question 32

What does it mean to “Pay Yourself First” and why is it important?

Answer 32

An effective strategy for personal saving is to pay yourself first by taking a percentage of each paycheck and depositing it directly into your account.

Question 33

Blank endorsement

Answer 33

LEAST SECURE - you sign the back of the check and nothing else. As soon as you sign, it is as good as cash.