Banking

Why might a person need to have a copy of a check written in the past that was cashed?

• To find bank errors

• It is mandated by law

• To prove that a bill was paid

• It is a bank requirement

Answer explanation

Seeing a copy of a check written in the past by going onto the online checking account, allows a person to verify and have proof that a bill was paid.

Maria is selling her car through a newspaper advertisement. When she finds a buyer, she wants to be sure that the form of payment is guaranteed to be good. Which form of payment should she AVOID?

• Cash

• Bank check

• Cashiers check

• Personal check

Answer explanation

Personal checks should be avoided since they are not guaranteed by the bank and a person can place a stop payment on the check.

Financial services and products offered by most banks and credit unions generally include?

• real estate listings

• savings accounts and personal loans

• legal and accounting services

• business plans

Answer explanation

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

What is the process of putting money into a bank account called?

• Verifying the account

• Balancing the account

• Making a withdrawal

• Making a deposit

Answer explanation

Putting money into a bank account is making a deposit, and taking money out of an account is making a withdrawal.

How does having a savings account help a person's financial wellbeing?

• It enables a person to save for major purchases

• It improves a person's resume

• It increases the balance on a person's credit card

• It reduces the person's taxable income each year

Answer explanation

Money deposited in a savings account will earn interest. The account will grow in value over time, thus providing funds that can be used for major purchases, gifts, and emergencies.

A certificate of deposit (CD) from a bank could be best described as a -

• retirement plan with benefits similar to a Traditional Individual Retirement Account

• cash deposit in a bank account that earns interest

• restricted savings account that requires the money remain in the bank for a fixed period of time

• guarantee that fifty percent of the deposited funds are insured

Answer explanation

A certificate of deposit (CD) is a savings instrument that requires a minimum deposit for a certain period of time. During this period the saver cannot withdraw money without having to pay a penalty. Usually CDs pay more interest than savings accounts.

By moving money from a checking account that doesn't make interest to a certificate of deposit (CD) a person is sacrificing some -

• liquidity for higher earnings

• earnings for increased safety

• safety for more liquidity

• dividends for increase safety

Answer explanation

This person is sacrificing liquidity because a checking account is more liquid than a certificate of deposit. This is because there are less restrictions on withdrawing money from a checking account than a certificate of deposit. However, certificate of deposits earn interest which leads to higher earnings.

Which financial product has the MOST predictable income?

• Stock

• Real estate

• Certificate of deposit

• Adjustable rate mortgage

Answer explanation

Certificates of deposit are issued with an interest rate that is fixed at a specified rate for the entire term of the certificate. They pay a higher rate of interest than a savings account and the rate is predictable.

In order to make a deposit into a personal bank account, a person can do all of the following EXCEPT?

• use a bank ATM to deposit the check

• use a smart phone app to scan and electronically deposit the check

• have his employer directly deposit the paycheck into the account

• use a check cashing store

Answer explanation

Check cashing stores do not offer bank accounts and can only be used to receive cash. Deposits into an account can be made by using a bank teller, using an ATM machine, having direct deposit, or using apps to deposit checks.

Banks and credit unions may use money deposited in customer accounts to -

• pay employees a bonus at the end of the year

• offer different kinds of loans to customers

• pay interest on deposits

• open new bank branches

Answer explanation

Banks and credit unions use the money from deposits to make loans to their customers.