Banking Basics and Investment Considerations
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Questions and Answers

Which of the following are federally insured financial institutions? (Select all that apply)

  • Credit unions (correct)
  • Banks & thrifts (correct)
  • Insurance companies
  • Mortgage companies

Which of the following is a good reason to use a bank?

  • Money insured
  • Money is safe
  • You can access money quickly
  • All of the above (correct)

Who can cash a check for you?

Bank teller

A savings account is a good place to save for goals such as a car or college tuition.

<p>True (A)</p> Signup and view all the answers

Investments in non-deposit accounts are NOT insured by the FDIC. Which of the following are included?

<p>All of the above (D)</p> Signup and view all the answers

What do you typically need to provide before opening a bank account?

<p>Photo identification &amp; social security number or ITIN number</p> Signup and view all the answers

It does not make sense to shop around before opening a checking or savings account because most financial institutions offer the same services, fees, and interest rates.

<p>False (B)</p> Signup and view all the answers

If Todd receives a $120.00 paycheck and deposits it into his savings account, what is his new balance if his opening balance was $1,000?

<p>$1,120.00</p> Signup and view all the answers

What is Todd's new checking account balance if he starts with $500.00, writes a check for $35.00, and withdraws $20.00?

<p>$445.00</p> Signup and view all the answers

What do you call the fee charged by a bank for bouncing a check?

<p>Overdraft fee</p> Signup and view all the answers

If you receive interest on your checking or savings account, you should add it to your account balance.

<p>True (A)</p> Signup and view all the answers

What deposits can some banks waive the monthly maintenance fee for?

<p>Direct deposit</p> Signup and view all the answers

What can you access with online banking?

<p>View your account balances, conduct transactions, and change account information</p> Signup and view all the answers

You should choose to OPT IN to restrict the amount of personal financial information shared with other financial institutions when you receive a privacy notice.

<p>False (B)</p> Signup and view all the answers

If someone offers you a free weekend trip but asks for your credit card number to get a coupon, what should you do?

<p>No way! They could use my number to commit fraud.</p> Signup and view all the answers

If a customer service representative asks for your SSN to verify your identity, what should you do?

<p>Give it to them.</p> Signup and view all the answers

What is Pharming?

<p>A phishing attack that automatically redirects the user to a fake site.</p> Signup and view all the answers

What is Phishing?

<p>An attack that sends an email or displays a web announcement falsely claiming to be from a legitimate enterprise.</p> Signup and view all the answers

What is Skimming?

<p>When criminals steal debit or credit card information by using a special storage device when processing your card.</p> Signup and view all the answers

If Fees4Cash charges Jasmine $5.00 to cash every paycheck, how much does she pay each month if she is paid 4 times a month?

<p>$20-$25</p> Signup and view all the answers

Aunt Sylvia pays $18.00 per year for her checking account because there are no maintenance fees. The only cost is the box of checks.

<p>True (A)</p> Signup and view all the answers

How much can Jasmine save if she opens a checking account and pays what Aunt Sylvia does?

<p>$242.00</p> Signup and view all the answers

Study Notes

Banking Basics

  • Federally insured financial institutions include banks, thrifts, and credit unions.
  • Reasons to use a bank include money safety, quick access to funds, and insurance coverage.
  • A bank teller is the employee who can cash checks for customers.
  • Savings accounts are suitable for saving towards goals like purchasing a car or paying for college tuition.

Investment and Account Considerations

  • Non-deposit accounts like stocks, mutual funds, and bonds lack FDIC insurance, risking loss of investment.
  • When opening a bank account, customers typically need photo identification and a social security or ITIN number.
  • It's essential to shop around for checking or savings accounts as financial institutions may offer varying services, fees, and interest rates.

Account Balances and Fees

  • Todd’s savings account increased to $1,120.00 after depositing a $120 paycheck from an initial balance of $1,000.
  • After writing a $35 check and withdrawing $20, Todd's checking account balance dropped to $445.00.
  • An overdraft fee, typically charged when a check bounces, can be around $35.00.

Account Management Practices

  • Interest earnings on checking or savings accounts should be added to the account balance.
  • Monthly maintenance fees may be waived through direct deposit arrangements with employers or government agencies.
  • Online banking provides 24/7 access to view balances, conduct transactions, and modify account details.

Privacy and Security

  • Opting in via a privacy notice does not restrict sharing financial information; it’s incorrect to assume it does.
  • Avoid sharing sensitive information like credit card numbers over the phone, especially with unsolicited offers, to prevent fraud.
  • It's acceptable to provide social security numbers in secure situations, like verifying identity with your bank.

Fraud Awareness

  • Pharming refers to phishing attacks that redirect users to counterfeit websites, while phishing involves deceptive emails seeking private information.
  • Skimming involves criminal theft of card information using hidden devices during transactions.

Cost Analysis of Financial Services

  • Using Fees4Cash, Jasmine incurs a charge of $5.00 per paycheck, totaling $20-$25 monthly if paid four times each month.
  • Although Aunt Sylvia faces a $6.00 monthly maintenance fee, she pays only for checks since direct deposit avoids this fee, resulting in an annual expense of $18.00.
  • Jasmine could save $242.00 annually by switching to a checking account instead of continuing her current check-cashing service at Fees4Cash.

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Description

Explore fundamental concepts in banking, including the types of financial institutions, reasons for using banks, and the importance of account balances. This quiz also delves into investment accounts and the considerations that come with managing personal finances. Test your knowledge on savings accounts, fees, and financial security.

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