8th grade banking unit review

1. All of the following statements about bank accounts are true, EXCEPT…

• 1. Your money is safe up to $250,000 in a FDIC insured bank

• 1. Savings accounts typically pay interest on deposits

• 1. Savings accounts pay higher interest than Certificates of Deposits.

• 1. Money can be withdrawn from checking accounts through ATM, debit card or checks.

1. Which statement best describes a savings account? 

• 1. Savings accounts pay interest to deposit holders.

• 1. Savings accounts usually allow an unlimited number of transactions per month

• 1. Debit card purchases are deducted from your savings account.

• 1. Savings accounts are used to pay bills and access cash from an ATM

1. You are at the checkout counter at The Gap and use your debit card to pay for your new shirt. Where does the money for this purchase come from?

• 1. Your credit card company covers the cost

• 1. Your credit card company provides you with a cash advance to cover the cost

• 1. It is deducted directly from your checking account

• 1. It is deducted directly from your savings account

1. Shelley gets a text alert from the bank that her account balance has dropped below $100 after a series of $20 ATM withdrawals. She has not used her ATM in over a week. What would you recommend that Shelley do?

• 2. Wait at least two weeks before contacting the bank

• 1. Wait until her bank statement arrives in the mail to check her withdrawals column

• 1. Contact her bank immediately as it appears that her account may have been hacked

• 1. Call her credit card company and ask them to cover the charges

1. Which of the following transactions will REDUCE your checking account balance immediately?

• 1. Using your debit card to pay for household supplies at Target

• 1. Writing a check to your brother which you will give to him next week

• Using your credit card to pay for your new boots

• 1. Use a Barnes and Noble gift card to purchase a new book

1. FDIC Insurance is...

• 1. Similar to homeowners insurance but includes renters

• Very expensive, but it is recommended that all consumers purchase it

• 1. Insurance that banks can buy to protect their business armed robbery

• 2. Protection for bank customers’ deposits up to $250,000, guaranteeing their money is still available if the bank goes out of business

1. When signing up for a new checking account, you answer "Yes" to receive overdraft protection. On this day, you have $20 in your account and go out and use your debit card to buy brunch for $22, a concert ticket for $12 and coffee and dessert for $15. What is likely to be the outcome resulting from these transactions?

• 1. The FBI will visit your home

• 1. You will likely be charged an overdraft fee for one or more of the transactions and also will need to repay the bank for the amount overdrawn

• 1. Since you requested overdraft protection, the bank will not allow you to overdraw your account so your debit card will be denied

• 1. The bank manager will ask you to come in for a meeting

3. All of the following are reasons to use a checking account rather than a savings account EXCEPT?

• 1. Easy access to funds for daily transactions

• 1. Unlimited check writing privileges 

• 1. Higher interest rates on deposits

• 1. Access to money through ATM

1. When signing up for a new checking account you answer "No" and opt out of overdraft protection. On this day, you have $20 in your account and go out and use your debit card to buy brunch for $22, a theater ticket for $12 and coffee and dessert for $15. What is likely to be the outcome resulting from these transactions?

• 2. You will be fired from your job

• 1. The bank will allow you two weeks to add cash to your account to cover the overdraft and no fees will be due

• 1. The bank will automatically open a loan for you at 15% interest.

• 1. You do not have overdraft protection, therefore the bank will not allow the transactions and your debit card will be declined.

1. All of the following are benefits of using a checking account EXCEPT…

• 2. Checking accounts are good for savings money for retirement

• 1. Check writing privileges

• 1. Can use ATMs to withdraw cash

• 1. Your money is protected by FDIC insurance