Questions and Answers
What is direct deposit?
A method of payment in which money is transferred to the payee's account without the use of checks or cash.
Who is a shareholder?
An owner of shares in a company.
What does FDIC stand for?
Federal Deposit Insurance Corporation
What is a credit card?
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What is a debit card?
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What does NCUA stand for?
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What is an early withdrawal?
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What is interest?
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What is compound interest?
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What is a brokerage firm?
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What is a routing number?
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What is an account number?
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What is a check number?
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What are deposit slips used for?
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What is liquidity?
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What is overdraft protection?
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What is a PIN?
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What is a maturity date?
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Who is a payee?
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What is a drawer in banking?
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What is automatic payroll?
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What is principal in terms of loans?
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What is a savings account?
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What is a CD?
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What are Money Market Funds?
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What are credit unions?
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Study Notes
Banking Terms and Definitions
- Direct Deposit: Transfers money directly to a payee's bank account, eliminating checks or cash.
- Shareholder: An individual or entity that owns shares in a company, holding a stake in its assets and earnings.
- FDIC: Federal Deposit Insurance Corporation; insures deposits in U.S. banks against failure, promoting financial stability.
- Credit Card: Allows purchases to be charged to a line of credit, requiring later repayment.
- Debit Card: Withdraws funds directly from the user's checking account at the point of transaction.
- NCUA: National Credit Union Administration; oversees federal credit unions and insures deposits using taxpayer funds.
- Early Withdrawal: The act of removing funds from bank accounts or savings plans before the scheduled maturity.
- Interest: The cost of borrowing money, typically expressed as a percentage of the principal.
- Compound Interest: Interest calculated on both the initial principal and the accumulated interest, leading to exponential growth.
- Brokerage Firm: A company that facilitates buying and selling of financial assets, earning through commissions.
Banking Operations
- Routing Number: A unique nine-digit code identifying financial institutions in the U.S., crucial for transactions.
- Account Number: A distinct identifier for a bank account, may include letters or numbers.
- Check Number: Serves as a unique identifier for checks, assisting in error detection.
- Deposit Slips: Forms used to deposit funds into a bank account, specifying amount and account details.
- Liquidity: Describes how easily assets can be converted into cash without loss of value.
Financial Services
- Overdraft Protection: A service enabling account holders to make purchases even without enough funds, up to a specified limit.
- Automatic Payroll: Employer deposits salary directly into employee’s bank accounts, ensuring timely payment.
- Principal: The original sum of money borrowed or invested, separate from any interest accrued.
Savings and Investment Options
- Savings Account: Interest-earning account that helps grow savings, though susceptible to hacking.
- Certificate of Deposit (CD): Time deposit with a fixed term and interest rate, typically higher than savings accounts.
- Money Market Funds: Investment funds that invest in highly liquid assets with short maturities, appealing for cash management.
- Credit Unions: Member-owned financial cooperatives offering low-interest loans and higher savings rates.
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Description
Test your knowledge of essential banking terms and concepts with this quiz. From direct deposits to interest calculations, explore the terminology that governs financial transactions. Challenge yourself and enhance your understanding of banking principles.