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Money Power > Chapter 5: The Banking System > Flashcards

Chapter 5: The Banking System Flashcards

1
Q

A person that purchases a $10,000 CD at 10% for 5 years, will receive______ at maturity

A

10000 * .10 * 5 = $5,000 simple interest

10000 + 5000 = $15,000 at maturity

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2
Q

If you save $10,000 this year and invest it in a CD at 3% for one year, you will earn _________ in interest.

A

10000 * .03 * 1 = $300 interest

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3
Q

Typical bank services are:

A

Checking accounts
Savings accounts
Safe Deposit boxes
Cashier’s Checks

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4
Q

What can happen if you bounce a check?

A

You would have Non-Sufficient Funds

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5
Q

What are some advantages of internet banking

A

Balances checked at any time
Transferring money between accounts
Online/electronic bill payments

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6
Q

Banks make money by charging _____ interest rates on loans

A

Higher

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7
Q

The formula to calculate simple interest is

A

I = Principal x Rate x Time

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8
Q

A card issued by your bank that is linked to your bank account that allows you to make purchases in a store or withdraw money at an ATM

A

Debit Card

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9
Q

What insures your money in the bank in the event of bank failure

A

FDIC

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10
Q

A type of bank account that gives a modest interest rate and can be withdrawn fairly easily

A

Savings Account

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11
Q

Fees charged by your bank

A

Service Charges

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12
Q

A type of endorsement that limits the use of a check

A

Restrictive

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13
Q

A type of bank account that is used to make deposits and withdrawals regularly

A

Checking Account

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14
Q

A check that you wrote but it has not appeared on your bank statement yet

A

Outstanding Check

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15
Q

A check written that does not have enough money in the account to cover it is referred to as

A

Bounced Check
Returned Check
Non-Sufficient Funds

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16
Q

A numerical code on the bottom left of a check used to identify the bank

A

Routing Number

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17
Q

The process of making sure your check register and bank statement balance at the end of the month

A

Bank Reconicliation

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18
Q

A tool used to keep a running balance of your account including checks written, withdrawals, deposits and fees

A

Checkbook Register

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19
Q

Money deducted from a checking or savings account

A

Withdrawal

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20
Q

What are the 6 steps to completing a check

A 
Date
Pay to the order of
Amount in numbers
Amount in words
Memo (optional)
Signature
21
Q

A written order to a bank to pay the state amount to the person or business named

A

Check

22
Q

Money added to a checking or savings account

A

Deposit

23
Q

The FDIC insures what types of accounts

A

Checking
Savings
Certificates of Deposit

24
Q

The banks record of an account holders transactions sent every month

A

Bank Statement

25
Q

Why might you open a checking account

A

Checks are safer than cash
Checks serve as proof of payment
Money is FDIC protected

26
Q

A check you have written that has been cashed or deposited into the payee’s account

A

Canceled Check

27
Q

When you make a mistake on a check you can

A

Void it

28
Q

A deposit that you have made to your account that does not appear on your bank statement yet

A

Deposit in Transit

29
Q

A loan that banks offer to protect them when they write a check for an amount more than what is in their account

A

Overdraft Protection

30
Q

Which type of bank account will usually pay the most interest

A

Certificate of Deposit

31
Q

A form of payment for workers so they do not have to physically go to the bank to deposit money

A

Direct Deposit

32
Q

The difference between the amount that the bank gives out on deposited funds and charges on money to borrowers

A

Spread

33
Q

A card that allows you to make purchases in stores and online but must be repaid (similar to a loan)

A

Credit Card

34
Q

A card issued by the bank that only allows you to withdraw money from an automatic teller machine

A

ATM Card

35
Q

The amount of money that a bank charges someone for borrowing money

A

Interest

36
Q

Writing FOR DEPOSIT ONLY on the back of a check is a example of which type of endorsement

A

Restrictive

37
Q

A person who invest their money and receives compound interest will receive _____ money over time

A

More

38
Q

Compound interest is when interest is ______ back onto the principal amount

A

Added

39
Q

The sum of money set aside on which interest is paid

A

Principal

40
Q

According to the Rule of 72 if $100 is invested for 10 years, what interest rate would it need to be invested at?

A

7.2%

41
Q

FDIC stands for

A

Federal Deposit Insurance Corporation

42
Q

If $2,000 is invested at 6% annual interest for 6 months, how much simple interest would you have

A

$60.00

43
Q

The person writing a check is the

A

Drawer

44
Q

According to the Rule of 72 if $100 is invested at 6 percent interest, how long will it take to grow to $100?

A

12 years

45
Q

FDIC insures your money up to

A

$250,000

46
Q

What occurs when someone alters a check by changing its amount to obtain more money from another person’s account?

A

Check fraud

47
Q

A check issued against the bank’s funds is a

A

Cashier’s check

48
Q

When you open an account in a bank what do they make you sign to give them a sample of how you sign your name.

A

Signature Card

Money Power (6 decks)

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