Banking and Cost of Money

The best reason for depositing your money in a bank or credit union savings account rather than "under your mattress" is that:

• Most savings accounts come with a free credit card

• Most savings accounts earn more interest than certificates of deposit

• Money in a savings account can be access any time during day and night

• Money deposited in savings accounts are FDIC insured

True or False: When banks require a minimum balance, a certain amount of money must be kept in the account at all times.

• True

• False

When Alex received his paycheck, he planned to cash it at a check cashing store. You would advise him to cash it at his own bank if possible because:

• They typically charge high fees

• They generally require a co-signer

• There is likely to be a ceiling on the size of the check he can cash

• They typically require a two-day waiting period before giving cash

Common bank fees include: monthly maintenance, overdraft and ATM transaction fees.

• True

• False

Which will most benefit you financially?

• A savings account that compounds interest yearly

• A savings account that compounds interest monthly

• A savings account that does not compound interest

• A savings account that compound interest daily

When you invest in a Certificate of Deposit, there is no penalty to withdrawing funds early.

• True

• False

Answer explanation

Because you are investing your $ for a certain amount of time, there is a penalty for taking out your money early from a CD or Certificate of Deposit.

A blank endorsement on a check:

• Cancels the check

• Creates a check that can be cashed by anyone

• Has no effect on the check

• Restricts the use of the check

Answer explanation

A blank endorsement does not specify if the check is for cashing or deposit. If you sign your name and lose the check, anyone can change it to be able to be cashed by them or deposit it into their account.

Interest is:

• The amount added into your savings when you open a bank account

• A charge for the convenience of accessing money stored in your bank account

• The amount owed for borrowing money from a bank or other lender

• The money you owe the bank when they borrow your money

Answer explanation

You earn interest when the bank borrows the money you have deposited. You only owe the bank money when you borrow money from them.

Which of the following typically have the highest fees?

• Online bank

• Credit Union

• Payday lender

• Retail bank

The purpose of a budget is to:

• Increase the balance of your savings account

• Tell you how much you owe the government in taxes

• Help you spend more money

• Help you plan how you will spend the money you earn or receive

Answer explanation

When you plan how you will spend your money, you will eventually be able to save more.