Banking Basics Quiz

Banking Terminology

• In the USA, a 'current account' is commonly known as a 'checking account'.

Banking Status

• 'In the red' signifies that an account has a negative balance, meaning the account holder has overdraft.

Mortgage Loans

• A 'mortgage loan' is a loan used to purchase a property, with the property itself serving as collateral.

Loan Defaults

• When a borrower 'defaults on a loan', they fail to make scheduled payments, resulting in the lender taking action to recover the loan amount.

Credit and Debit Cards

• The main difference between a credit card and a debit card is that a credit card allows borrowing, while a debit card deducts funds directly from the account holder's balance.

Loan Interest

• When interest 'accrues', it means that the borrower is charged additional interest on the outstanding loan amount, increasing the total amount owed.

Arrears and Debt

• 'Arrears' refers to the unpaid amount of a loan, while 'debt' refers to the total amount owed, including interest and fees.

Loan Repayment

• Step 8 of the text outlines the process of contacting the lender to discuss alternatives if payments cannot be made on time.

Loan Interest Rates

• A fixed interest rate loan has a constant interest rate throughout the loan term, while a variable interest rate loan has an interest rate that may change over time.

Managing Loan Payments

• If you can't make payments on time, you should contact the lender to discuss alternative arrangements to avoid defaulting on the loan.

Test your knowledge of basic banking terms and account types with this quiz. Explore the definitions of current accounts, savings accounts, business accounts, and overdraft facilities.