Banking Terms and Definitions Quiz

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?

A payment card that charges purchases to a line of credit. Signup and view all the answers

What is a debit card?

A card that deducts money directly from a person's checking account. Signup and view all the answers

What does NCUA stand for?

National Credit Union Administration Signup and view all the answers

What is an early withdrawal?

Removing funds from a bank account or savings plan before maturity. Signup and view all the answers

What is interest?

The charge for the privilege of borrowing money. Signup and view all the answers

What is compound interest?

Interest that generates earnings from previous interest. Signup and view all the answers

What is a brokerage firm?

A business that facilitates the buying and selling of financial securities. Signup and view all the answers

What is a routing number?

A nine-digit numerical code used to identify a banking institution. Signup and view all the answers

What is an account number?

A unique identifier for a bank account. Signup and view all the answers

What is a check number?

A number that helps in error detection and identification of checks. Signup and view all the answers

What are deposit slips used for?

To deposit funds into a bank account. Signup and view all the answers

What is liquidity?

How easily assets can be converted into cash. Signup and view all the answers

What is overdraft protection?

A service that allows checking account holders to make purchases even with insufficient funds. Signup and view all the answers

What is a PIN?

A numerical code used for electronic financial transactions. Signup and view all the answers

What is a maturity date?

The final payment date of a loan when the principal is due. Signup and view all the answers

Who is a payee?

A person or organization that receives a payment. Signup and view all the answers

What is a drawer in banking?

The maker or writer of a bill exchange who directs payment. Signup and view all the answers

What is automatic payroll?

When your paycheck goes directly into your bank account. Signup and view all the answers

What is principal in terms of loans?

The amount of money you borrowed. Signup and view all the answers

What is a savings account?

A bank account that earns interest. Signup and view all the answers

What is a CD?

A certificate of deposit provided by a bank for a specified length of time. Signup and view all the answers

What are Money Market Funds?

Investment funds that focus on short-term debt securities. Signup and view all the answers

What are credit unions?

A financial institution that offers low-interest loans to its members. Signup and view all the answers

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.