Banking Basics Quiz

What are the different types of bank accounts? Explain each briefly.

• Savings account, current account, and fixed deposit account

• Checking account, credit card account, and mortgage account

• Business account, joint account, and trust account

• Investment account, retirement account, and student loan account

Explain the difference between a savings account and a checking account.

• A savings account is for saving money and earns interest, while a checking account is for everyday transactions and does not earn interest.

• A savings account and a checking account are the same thing, just with different names.

• A savings account is for everyday transactions and does not earn interest, while a checking account is for saving money and earns interest.

• A savings account is only for wealthy individuals, while a checking account is for everyone else.

What is a certificate of deposit (CD) and how does it work?

• A certificate of deposit (CD) is a type of savings account that has a fixed interest rate and fixed date of withdrawal, known as the maturity date. It works by depositing a certain amount of money for a specific period of time, and in return, the bank pays a higher interest rate than a regular savings account.

• A certificate of deposit (CD) is a type of investment that guarantees high returns with no risk.

• A certificate of deposit (CD) is a type of loan that allows you to withdraw money at any time without penalty.

• A certificate of deposit (CD) is a type of credit card with no interest rate and no fixed date of withdrawal.

Describe the concept of overdraft protection in a bank account.

• It is a service offered by banks to cover transactions that would otherwise be declined due to insufficient funds in the account.

• It is a service offered by banks to provide insurance for the contents of safe deposit boxes.

• It is a service offered by banks to give customers free checks for their accounts.

• It is a service offered by banks to provide extra interest on savings accounts.

What are some common banking services offered by banks? Explain the fees associated with each service.

• Mortgage services with no fees

• Checking and savings accounts, loans, credit cards, and online banking. Fees may include monthly maintenance fees, overdraft fees, ATM fees, and late payment fees.

• Free money transfers with no fees

• Investment services with no fees

What is the purpose of an ATM fee and how does it impact customers?

• To discourage the use of ATMs, impacting customers by making it more convenient to access their money

• To cover the cost of maintaining and servicing ATMs, impacting customers by reducing the amount of money they can withdraw and increasing the overall cost of using the ATM.

• To generate additional revenue for the bank, impacting customers by reducing the overall cost of using the ATM

• To provide customers with a discount on their transactions, impacting customers by saving them money

Explain the concept of an annual fee for a credit card. What are some common reasons for a credit card to have an annual fee?

• To provide additional security for the credit card

• To increase the profit margin for the credit card company

• An annual fee for a credit card is a yearly charge for the use of the card. Some common reasons for a credit card to have an annual fee include offering premium benefits such as travel rewards, cash back, or concierge services, as well as to offset the cost of providing these benefits to cardholders.

• To discourage people from using the credit card

What are the advantages and disadvantages of using a debit card compared to a credit card?

• Advantages of using a credit card include avoiding debt and having easy access to funds, while disadvantages include limited fraud protection and potential overdraft fees.

• Advantages of using a debit card include building credit and better fraud protection, while disadvantages include high interest rates and potential debt.

• Advantages of using a debit card include avoiding debt and having easy access to funds, while disadvantages include limited fraud protection and potential overdraft fees. Advantages of using a credit card include building credit and having better fraud protection, while disadvantages include the potential for debt and high interest rates.

• Advantages of using a debit card include earning rewards and having a higher credit limit, while disadvantages include limited access to funds and potential overdraft fees.

Describe the process of applying for a credit card and the factors that banks consider when approving a credit card application.

• Mother's maiden name, birthplace, and high school mascot

• Favorite color, shoe size, and pet's name

• Credit score, income, employment status, and existing debt

• Number of siblings, favorite food, and height