Banking: How to Manage Your Money Flashcards
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Questions and Answers

Which of these is an advantage unique to checking accounts?

  • Checking accounts allow used checks to act as receipts. (correct)
  • Checking accounts use debit cards for easy access to money.
  • Checking accounts are set up to earn more interest if used more.
  • Checking accounts enable the transfer of money electronically.

When Seb reconciles his accounts, what is the first step he should take?

  • Check receipts to make sure all transaction amounts are correct.
  • Confirm his records are accurate and include all transactions. (correct)
  • Examine his statement to check for errors.
  • Compare his records and his statement.

Which of these can be used to access money in a checking account?

  • Debit card (correct)
  • Passbook
  • Credit card
  • Certificate of deposit

Which of these is a characteristic of certificates of deposit (CDs)?

<p>They last for a set period of time. (C)</p> Signup and view all the answers

What is the best reason for Nina to maintain up-to-date and accurate records of her bank accounts?

<p>To know how much money she has for budgeting. (C)</p> Signup and view all the answers

Where do banks get money to lend to borrowers?

<p>Their depositors (C)</p> Signup and view all the answers

In which situation would a certificate of deposit (CD) be the best banking choice?

<p>Hafsa wants a guaranteed return and won't need the money for several years. (B)</p> Signup and view all the answers

In addition to being charged a fee, what is another possible consequence of an overdraft?

<p>The merchant who received his check will expect repayment and a penalty fee. (B)</p> Signup and view all the answers

What is one benefit of purchasing saving bonds?

<p>Saving bonds are purchased from the government and guaranteed to increase in value. (C)</p> Signup and view all the answers

What is the best reason for Jacinta to have a savings account in addition to a checking account?

<p>A savings account keeps her savings separate from her spending money. (C)</p> Signup and view all the answers

In which situation would a savings bond be the best investment to earn interest?

<p>If you are putting aside a chunk of money to purchase a house in five years. (D)</p> Signup and view all the answers

Which type of banking institution is most suitable for Glenn and Maggie's business?

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

According to the checkbook ledger, what is Omar's bank balance?

<p>$761.25 (A)</p> Signup and view all the answers

What does reconciling an account involve?

<p>Checking one's financial records against the bank's. (C)</p> Signup and view all the answers

What will Sara need to open a bank account? Check all that apply.

<p>Identification card (A), Proof of address (B), Money to start the account (C)</p> Signup and view all the answers

Which of these is a disadvantage of banking with national retail banks?

<p>They charge fees for many services. (B)</p> Signup and view all the answers

What is a major difference between retail banks and credit unions?

<p>Retail banks operate in order to earn profit, while credit unions are nonprofit. (D)</p> Signup and view all the answers

Which of these is an advantage of checking accounts?

<p>Checking accounts allow convenient ways to deposit or withdraw funds. (B)</p> Signup and view all the answers

How should the columns be labeled in a checkbook ledger?

<p>Check Number, Description, Balance (A)</p> Signup and view all the answers

Flashcards

Checking Account

A type of bank account that allows for electronic money transfers and easy access using debit cards.

Account Reconciliation

The process of comparing personal financial records with bank statements to ensure accuracy.

Debit Card

A plastic card used to access funds in a checking account. It's a convenient way to make payments.

Certificate of Deposit (CD)

A type of deposit account that earns interest over a set period of time. It's typically used for savings.

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Savings Account

A type of deposit account designed for saving money and typically offers a lower interest rate compared to CDs.

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Overdraft

The act of exceeding the available funds in a bank account, resulting in penalties from both the bank and merchants.

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Savings Bond

Bonds issued by the government that guarantee an increase in value over time.

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Bank Funding Sources

Banks obtain funds primarily from deposits made by their customers.

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CDs for Investing

CDs are suitable for individuals who want to lock in their money for a long period and benefit from guaranteed returns.

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Investing in Savings Bonds

Savings bonds are a safe investment option and are ideal for long-term goals, such as purchasing a house in the future.

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Business Banking Needs

Commercial banks are best suited for businesses like Glenn & Maggie's juice bars, primarily for loans needed for expansion.

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Account Balance

The amount of money present in a bank account at a specific point in time. Tracking it accurately is crucial for financial management.

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Reconciling Accounts

The process of ensuring the accuracy of banking records by comparing them to personal financial records.

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Requirements for Opening Accounts

Identification card, proof of address, and initial deposit funds are commonly required for opening a new bank account.

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National Retail Banks

Banks that operate nationally and often charge fees for various services. They may not be the most cost-effective option.

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Differences Between Banking Entities

The main difference between retail banks and credit unions is that credit unions are nonprofit institutions focused on member services, while retail banks strive to earn profit.

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Convenience of Checking Accounts

One of the main benefits of checking accounts is their convenience in facilitating deposits and withdrawals.

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Transaction Record Maintenance

A ledger for tracking transactions should include columns like Check Number, Description, and Balance for organized record-keeping.

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Study Notes

Checking Accounts

  • Checking accounts enable electronic money transfers and provide easy access through debit cards.
  • Used checks serve as receipts for transactions, making them a beneficial tool for tracking expenses.

Account Reconciliation

  • The first step in reconciling accounts is confirming that personal records accurately reflect all transactions.

Accessing Checking Accounts

  • Debit cards are commonly used for accessing funds in checking accounts, offering convenience over other bank products.

Certificates of Deposit (CDs)

  • CDs last for a predetermined period and typically offer fixed interest rates during that time.

Financial Record-Keeping

  • Maintaining up-to-date bank records is crucial for effective budgeting and financial planning.

Bank Funding Sources

  • Banks obtain funds to lend from depositors, who provide the capital necessary for loans.

Investment Choices

  • Certificates of Deposit are ideal for individuals seeking guaranteed returns without needing access to funds for a considerable duration.

Consequences of Overdrawing

  • Overdrafts can result in fees and penalties from both the bank and merchants due to bounced checks.

Savings Bonds

  • Savings bonds can only be purchased from the government and are guaranteed to increase in value, making them a secure investment.

Benefits of Savings Accounts

  • Savings accounts help in separating savings from spending, enabling better financial management and budget planning.

Investing in Savings Bonds

  • Savings bonds are most beneficial when saving for long-term goals, such as purchasing a house in the future.

Business Banking Needs

  • Commercial banks are most suitable for businesses like Glenn and Maggie’s juice bars, particularly for loans needed for expansion.

Account Balance

  • Specific figures, such as Omar's bank balance, need careful tracking to maintain accurate financial records.

Reconciling Accounts

  • Reconciling involves cross-verifying personal financial records against bank statements to ensure accuracy.

Requirements for Opening Accounts

  • To open a bank account, individuals typically need an identification card, proof of address, and initial deposit funds.

National Retail Banks

  • National retail banks often charge fees for various services, which can be a disadvantage compared to other banking options.

Differences Between Banking Entities

  • A key distinction is that retail banks aim to earn profits, while credit unions operate as nonprofit institutions, focusing on member services.

Convenience of Checking Accounts

  • A major advantage of checking accounts is their ability to facilitate convenient deposits and withdrawals.

Transaction Record Maintenance

  • Essential column headings for transaction ledgers include Check Number, Description, and Balance, which help in organized record-keeping.

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Test your knowledge on banking and money management with these flashcards. Focus on checking accounts and their unique advantages. Perfect for anyone looking to enhance their financial literacy.

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