Banking: How to Manage Your Money Flashcards

Questions and Answers

Which of these is an advantage unique to checking accounts?

Checking accounts enable the transfer of money electronically.

Checking accounts are set up to earn more interest if used more.

Checking accounts allow used checks to act as receipts. (correct)

Checking accounts use debit cards for easy access to money.

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

Examine his statement to check for errors.

Check receipts to make sure all transaction amounts are correct.

Compare his records and his statement.

Confirm his records are accurate and include all transactions. (correct)

Many checking accounts offer multiple ways of accessing money in addition to checks. Which of these can be used to access money in a checking account?

Certificate of deposit

Passbook

Credit card

Debit card (correct)

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

They last for a set period of time. Signup and view all the answers

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

To know how much money she has for budgeting Signup and view all the answers

Where do banks get money to lend to borrowers?

Their depositors Signup and view all the answers

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

Hafsa wants a guaranteed return, and won't need the money for several years. Signup and view all the answers

Alex has not been keeping his banking records up to date. In addition to his being charged a fee, which of these is another possible consequence of an overdraft?

The merchant who received his check will expect repayment and a penalty fee. Signup and view all the answers

What is one benefit of purchasing saving bonds?

Saving bonds are purchased from the government and guaranteed to increase in value. Signup and view all the answers

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

A savings account keeps her savings separate from her spending money. Signup and view all the answers

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

If you are putting aside a chunk of money to purchase a house in five years Signup and view all the answers

Glenn and Maggie own a regional chain of juice bars and are looking to expand in the coming year. Which type of banking institution is most suitable for their business?

A commercial bank Signup and view all the answers

Study Notes

Checking Accounts

Checking accounts enable electronic money transfers and allow checks to serve as receipts.
Accessible via debit cards, providing an easy way to withdraw funds.

Account Reconciliation

First step in account reconciliation is confirming records are accurate and include all transactions.

Accessing Checking Accounts

Debit cards are the primary means to access money in checking accounts.

Certificates of Deposit (CDs)

CDs have a fixed duration and are not offered at variable rates or with immediate access without penalties.

Financial Record Keeping

Up-to-date records help individuals budget effectively and manage finances without errors.

Bank Funding Sources

Banks primarily obtain funds for lending from their depositors.

Investment Choices

Certificates of Deposit are best for long-term savings when guaranteed returns are desired and funds won’t be needed for several years.

Overdraft Consequences

In the event of an overdraft, merchants expect repayment and may apply a penalty fee.

Saving Bonds

Government-backed saving bonds are guaranteed to appreciate in value over time.

Importance of Savings Accounts

Savings accounts separate funds meant for saving from those used for daily expenses.

Interest-Earning Investments

Savings bonds are ideal for saving towards a significant purchase, such as a house, planned for several years ahead.

Suitable Banking Institutions

For business expansion needing significant capital, a commercial bank is the best fit.

Description

This quiz focuses on key concepts related to managing money and understanding banking, particularly checking accounts. It covers advantages and usage of checking accounts to enhance financial literacy. Prepare to test your knowledge and improve your money management skills!