Midterm Review: Checking Accounts

While scholarships, grants, and loans are covering his tuition and room & board, Sam wants access to the money he earned last summer to cover any miscellaneous expenses he has while away at college. Which type of financial asset would be most useful to meet his needs?

• Certificate of Deposit
• Investment in stocks
• Credit card
• Checking account with debit card

Your friend Tammy just got a part-time job to cover gas when she borrows her mom's car and going out with her friends, but she also wants to save for college. She tells you that she has a habit of spending money when she knows it is in her checking account. What is your recommendation?

• Direct deposit her paycheck into her checking account
• Direct deposit her paycheck into a savings account
• Request a cash check since direct deposit is not a reliable method to transfer money
• Direct deposit a portion of her paycheck into a savings account and a portion into her checking account

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?

• Your credit card company covers the cost
• It is deducted directly from your checking account
• Your credit card company provides you with a cash advance to cover the cost
• It is deducted from your credit card account

Which of the following are ways to access money in your checking account?

• Taking out cash using your debit card at an ATM machine
• Using your debit card to pay for groceries at a Point-of-Sale (POS) terminal
• Writing a check to pay the rent on your apartment
• All of the above

Which of the following transactions will REDUCE your checking account balance immediately?

• Writing your monthly rent check which you will mail tomorrow.
• Using your debit card to pay for groceries at the supermarket
• Using your credit card to pay for your school books
• Depositing a check at a local bank branch

What is NOT an advantage of having a checking account?

• It provides you with a variety of ways to access your money
• If your bank account is drained due to identity theft, the bank will cover all losses in excess of $50
• A bank statement is helpful in tracking your spending
• You generally will earn higher interest rates on checking accounts compared to savings accounts

Which of the following transactions may not be reflected on your account balance if you go online to check your balances?

• ATM cash withdrawal from yesterday
• Check that you mailed to your cousin for his birthday today
• Automatic payment for your car loan paid two days ago
• Debit card transaction from purchasing snacks a local convenience store today

Which of these is NOT a scenario in which a person-to-person payment could be used?

• Tina pays her neighbor $200 for breaking his window with a softball.
• Rafael writes the whole monthly rent check to the landlord, and Valerie and Carlos need to pay Rafael for their shares.
• Ahmed's soccer coach pays the team's registration fee for a big tournament, and each player then owes him $35 for their share.
• Mia pays Randy the delivery driver from Cheesy Pizza Co. for a pizza she orders for her Spanish study group.

The largest source of fees for banks when it comes to checking accounts is...

• Overdraft Fees
• Wire Transfer Fees
• Check Printing Fees
• Interest Expenses

Checking accounts should be used for ...

• everyday transactions.
• emergency funds.
• short-term goals.
• long-term goals.