SS 9.03-9.05

What might happen if the government did not insure bank deposits?

• Banks would be robbed far more often.

• People would lose their savings if their banks went out of business.

• Banks would have to buy safes with extremely thick walls.

• Banks could no longer make loans to their customers.

Which of the following is a TRUE statement about banking?

• Keeping your money at home instead of a bank prevents you from paying the interest fees that banks charge.

• It's generally safer to keep your money in a bank than to keep it home.

• Most new businesses are forced to start without loans from banks.

• Most banks give their customers interest-free loans.

You can withdraw (take out) money from a savings account as many times as you want each month.

• True

• False

Wes wants to get enough money to buy himself a new bicycle. He should probably open a:

• checking account

• credit card account

• savings account

• debit card account

When you borrow money from a bank for a loan, where does that money come from?

• the money other customers have deposited with the bank

• the bank's own business checking account

• a credit card company

• the federal government

What is one way that banks make a profit?

• by charging people interest to borrow money from them

• by charging people interest to keep their money there

• by charging a fee every time a customer writes a check or uses a debit card

• none of the above (banks are nonprofit institutions)

When you use a credit card to make a purchase, you never have to pay the money back.

• True

• False

When you ________ your checking account, that means you have spent more money than you had in your account.

• deposit

• credit

• overdraw

• save

What is the difference between a credit card and a debit card?

• A debit card is issued by a bank, while a credit card is not.

• A debit card can only be used at an ATM, while a credit card can be used to buy things at stores or online.

• A debit card takes money directly from your checking account, while using a credit card is a form of borrowing.

• Debit card users must pay interest to banks, while credit card users collect interest from banks.

Banks charge higher interest rates for loans because they are considered risky.

• True

• False