W!SE - Banking Review

If a person makes a deposit of $10,000 or more into a bank account, the bank must notify the:

• US Treasury Department.

• Federal Deposit Insurance Corporation. (FDIC).

• State Banking Commission.

• Federal Reserve Board.

The best reason for depositing money in a bank or credit union savings account instead of keeping your money "under the mattress" is that:

• Money deposited in savings accounts are F.D.I.C. insured

• Most savings accounts earn a guaranteed rate of interest

• Most savings accounts come with a free credit card

• Money in a savings account can be accessed any time during the day or night

A person is depositing $20 in cash and a check for $50. On the checking account deposit slip, the person should

• include the reason that both cash and a check are being deposited.

• indicate what bank issued the check that is being deposited.

• indicate the amount of money that is currently in the checking account as well as in a savings account to cover the check.

• list the cash deposit separately from the check as well as the total of the deposit.

Answer explanation

Deposit slips have columns for the depositor to list cash and each check that is being deposited separately. Aside from this information, the depositor lists the total of the deposits, the date and the account number (if it is not a preprinted slip taken from the individual?s check book) on the deposit slip.

The National Credit Union Administration (NCUA) insures accounts in:

• Credit unions

• Commercial banks

• Brokerage firms

• Savings banks

A bank Certificate of Deposit is a:

• Savings instrument that requires a deposit for a period of time during which the saver can withdraw money from the plan at any time without a penalty

• Savings instrument that requires a deposit for a period of time during which there is a penalty for withdrawals

• Cash deposit in a savings account that earns interest

• Certificate for deposits that are issued for half the face value

Answer explanation

A certificate of deposit (CD) is a savings instrument that requires a deposit for a period of time (term) during which the saver cannot withdraw money from the plan without a penalty. CDs are issued with terms from 31 days up to eight years. The longer the consumer agrees to loan the money to the bank or credit union, generally the higher the interest rate. It is considered a form of savings because the consumer is paid interest based on the dollar amount and term of the CD. If the consumer does not collect his/her money at the end of the term, the money may be rolled over into another CD.

When a person is reconciling a checking account and notices that the balance in the checkbook does not match the balance on the statement from the bank, which action is it appropriate for the person to take first?

• Determine that checks already written have cleared.

• Deposit sufficient funds to adjust the balance in the checkbook to match the bank's balance.

• Adjust the balance in the checkbook so it is the same as the bank's balance.

• Notify the bank in writing to adjust the statement.

Answer explanation

Quite often, the balance reported on a checking account?s bank statement differs from the balance in the person?s checkbook. Reasons for that difference may be due to checks that have been written, and therefore are in the checkbook's register, but that have not been cleared (returned to the bank for payment). Therefore, first, the person must looked at the bank?s statement and compare it to his/her checkbook register to see that all checks written have cleared.

Employees prefer direct deposits because:

• There is a small fee for the service

• The danger of losing a paycheck is slightly reduced

• The money is generally deposited in their checking account sooner than it would be if they had to deposit it in person

• Direct deposits earn a higher rate of interest

Answer explanation

 Instead of a negotiable check, the wage earner receives a pay stub which lists the amount that was directly deposited and the amounts withheld for taxes, health insurance, etc. Through direct deposit, earnings are transferred electronically into the recipient's bank account. Direct deposit is more convenient, safer, and usually faster than receiving and manually depositing a paycheck.

You have a checking account balance of $100 and you deposit a personal $200 check from your brother in your checking account. When will you be able to withdraw $150 in cash?

• The same day as the $200 deposit

• 3 to 7 days later, depending on your bank's check clearance policy

• After receiving a checking account statement at the end of the month

• On the day you make your next deposit

The best suggestion you gave a friend who is writing a check for the first time is:

• Date the check because it is usually proof of payment

• Use pencil to permit changes

• Make the check payable to cash

• Use the checkbook stub or register to keep a record of the date you write the check

Answer explanation

 Date the check because checks are proof of payment. Checks written in pencil or erasable ink can be changed to pay a different payee or amount than the check writer intended to pay. Keep a record of the check written in the checkbook register or stub and deduct the amount from your checkbook balance so you know how much money you have left and you can reconcile your checking account against the bank statement. In addition, it is harder for a forger to change the dollar amount if, on the second line, it is printed rather than written in cursive.

Financial services and products generally offered by banks and credit unions include:

• Real estate listings

• Savings and loans

• Legal services

• Business plans

Answer explanation

 The basic financial functions offered by banks and credit unions are checking accounts, savings accounts, and personal and business loans