Banking Terms Quiz

What is an Account Agreement in banking terms?

• A form for cash and other funds that a customer presents to the bank for credit to his or her account.

• The legal proceedings by which the affairs of a bankrupt person are turned over to a trustee or receiver.

• The contract governing your open-end credit account, providing information on changes that may occur to the account.

• A machine that can process a variety of banking transactions, including deposits and loan payments.

Answer explanation

An Account Agreement is a contract that governs your open-end credit account and provides information on changes that may occur to the account.

What does the Annual Percentage Rate (APR) represent?

• The balance of an account less any hold, uncollected funds, and restrictions against the account.

• A check drawn on the funds of the bank, not against the funds in a depositor's account.

• The cost of credit on a yearly basis, expressed as a percentage.

• A payment that is electronically deposited into an individual's account at a depository institution.

Answer explanation

The Annual Percentage Rate (APR) represents the cost of credit on a yearly basis, expressed as a percentage.

What is the purpose of a Bank Statement?

• To show all deposits made, checks paid, and other debits posted during the period (usually one month), as well as the current balance.

• To provide a form for cash and other funds that a customer presents to the bank for credit to his or her account.

• To issue an approval for a credit card transaction.

• To process a variety of banking transactions, such as deposits and loan payments.

Answer explanation

The purpose of a Bank Statement is to show all deposits made, checks paid, and other debits posted during the period, as well as the current balance.

What is the difference between a Cashier's Check and a regular check?

• A Cashier's Check is drawn on the funds of the bank, not against the funds in a depositor's account.

• A Cashier's Check is a form for cash and other funds that a customer presents to the bank for credit to his or her account.

• A Cashier's Check is a payment that is electronically deposited into an individual's account.

• A Cashier's Check allows the account owner to access their funds electronically.

Answer explanation

A Cashier's Check is drawn on the bank's funds, not against a depositor's account.

What is an Electronic Funds Transfer (EFT)?

• A type of safe located inside a bank vault.

• The transfer of money between accounts by consumer electronic systems.

• A government corporation that insures deposits of banks.

• A charge assessed by a bank for processing transactions.

Answer explanation

An Electronic Funds Transfer (EFT) refers to the transfer of money between accounts using consumer electronic systems.

What does FDIC stand for?

• Federal Deposit Insurance Corporation

• Federal Direct Investment Corporation

• Financial Deposit Insurance Company

• Fiscal Deposit International Corporation

Answer explanation

FDIC stands for Federal Deposit Insurance Corporation. It is a government agency that provides deposit insurance to depositors in US banks.

What is an overdraft?

• A type of bank account for two or more persons.

• A secret code used by cardholders to access their accounts.

• When the amount of money withdrawn is greater than what is available in the account.

• A charge for processing transactions by a bank.

Answer explanation

An overdraft occurs when the amount of money withdrawn exceeds the available balance in the account.

What is a Safety Deposit Box used for?

• Transferring funds electronically.

• Storing valuable items in a bank vault.

• Insuring deposits of all national and state banks.

• Signing to identify depositors and customers of a bank.

Answer explanation

A Safety Deposit Box is used for storing valuable items in a bank vault.

What is a signature card?

• A card that allows electronic funds transfers.

• A card that provides insurance for bank deposits.

• A card signed for identification by depositors and customers of a bank.

• A card that orders not to pay a check that has been issued.

Answer explanation

A signature card is a card signed for identification by depositors and customers of a bank.

What is a stop payment?

• A service to transfer funds between accounts.

• A service to rent a safety deposit box.

• An order not to pay a check that has been issued.

• A secret code given to cardholders.

Answer explanation

A stop payment is an order not to pay a check that has been issued.