Section 4.1

Anna is choosing a bank and a checking account. She would be well-advised to consider her personal needs and values in the analysis, not only the bank’s features.

Please select the best answer from the choices provided

• True

• False

• -

• -

Which of the following items may not be a good consideration in selecting a bank?

• The word “FREE” is prominently displayed in the marketing pamphlet.

• Knowledge of personal usage habits and needs.

• Number of ATMs near where you live, shop, work, or travel.

• The table of fees.

Ben is looking at banks for checking and savings accounts. Some offer car loans and others do not. Ben may need a car loan sometime in the next few years. But Ben wonders if he should really ask what kinds of loans the bank makes, because he is getting a checking account, not a car loan. Which statement below gives the best reason for Ben to consider loan availability in choosing a checking account?

• The bank offers $10 to customers who get a pre-approval for a car loan.

• If he needs a car loan in the future, he will have a relationship of trust with the bank.

• The bank provides ATMs that are particularly useful for people who drive.

• Banks that provide car loans can usually charge lower fees.

Yanna works for a hospital that has its own credit union called Health Central Credit Union (HCCU). It offers banking services similar to those of a bank. Observe the following tables of services and fees:

What would be Yanna's total monthly fees for a checking account with direct paycheck deposit, no overdrafts, no 2nd copies of statements, 3 ATM usages in the hospital, and 5 ATM usages outside the hospital?

• $5

• $1

• $6

• $2

You are examining your choices of banks to open a new savings account. Costs include monthly maintenance fees and statement copy fees. Income can come from ___________.

• Overdraft fees

• Debit cards

• Minimum monthly balance

• Interest on deposits

Jan wants to save a $2000 gift from her grandparents, and add $50 per month as emergency funds. She has narrowed her search for a savings account to 2 banks, Bank A and Bank B. Bank A pays a fixed rate of interest, and Bank B pays a variable rate, but both rates are currently the same. What advice would you give Jan about how to choose an account based upon her own needs?

I. The fees and services will make a much bigger difference than the type of interest while your balances are small.

II. The more that you expect to save, the more you should think about what effect the interest rates might have on your finances.

III. Choose the variable rate, because no matter what the fees are, if it goes way up, you could become richer.

• I

• I and II

• I, II, and III

• I and III

Steven is looking at banks for checking and savings accounts. Some offer home loans and others do not. Steven may need a home loan sometime in the next few years. But he wonders if he should really ask what kinds of loans the bank makes, because he is getting a checking account, not a home loan. Which statement below gives the best reason for Steven to consider loan availability in choosing a checking account?

• The bank offers $100 to customers who get a pre-approval for a home loan.

• The bank provides ATMs in all the suburbs where Steve is interested in living.

• Banks that provide home loans can usually charge lower fees on checking accounts.

• If he needs a home loan in the future, he will have a relationship with the bank.

Which of these is not a factor you need to consider when choosing a bank?

• The number of ATM machines

• Branch locations

• How often you need access to your money

• The amount of money you paid in income taxes last year

Jessie wants to open a checking account to pay bills. She wants a starter book of checks, plus free online bill payment services. She analyzes the following statements of fees from Good Bank and Great Bank.

Based upon past experience, Jessie expects to accidentally overdraft the account about 3 times per year, unfortunately all in the same month, due to unexpected charges and miscommunications. She expects no 2nd copies of statements, and to use network ATMs 4 times per month with either bank. Based on the tables of fees, which bank can be reasonably expected to cost Jessie the least amount in fees per year?

• Good Bank will have the least amount in fees per year.

• Great Bank will have the least amount in fees per year.

• Good Bank and Great Bank would have the same costs for Jessie.

• The fees can simply not be estimated in advance, so no decision should be made.