Podcast
Questions and Answers
Which type of institution primarily accepts deposits and offers loans?
Which type of institution primarily accepts deposits and offers loans?
What is one primary feature that distinguishes credit unions from payday lenders?
What is one primary feature that distinguishes credit unions from payday lenders?
What is a significant advantage of a certificate of deposit (CD)?
What is a significant advantage of a certificate of deposit (CD)?
Which of the following items is NOT typically found on a bank statement?
Which of the following items is NOT typically found on a bank statement?
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What is the primary purpose of overdraft protection?
What is the primary purpose of overdraft protection?
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Which of the following is NOT a type of financial account where you can earn interest?
Which of the following is NOT a type of financial account where you can earn interest?
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Which method of depositing money into a checking account is generally considered the most secure?
Which method of depositing money into a checking account is generally considered the most secure?
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Which of the following best describes contractual institutions?
Which of the following best describes contractual institutions?
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What must a motorist carry while operating a vehicle in New Jersey?
What must a motorist carry while operating a vehicle in New Jersey?
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When must a motorist report a name change to the MVC?
When must a motorist report a name change to the MVC?
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How long does a motorist with a valid out-of-state license have to apply for a New Jersey license after moving?
How long does a motorist with a valid out-of-state license have to apply for a New Jersey license after moving?
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What is required of operators of commercial vehicles in New Jersey before applying for a CDL?
What is required of operators of commercial vehicles in New Jersey before applying for a CDL?
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What does the MVC’s Graduated Driver License Program target for individuals who have never held a driver license?
What does the MVC’s Graduated Driver License Program target for individuals who have never held a driver license?
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Study Notes
Financial Institutions
- Depository Institutions take deposits and make loans, examples include banks, credit unions, and savings and loan associations.
- Investment Institutions help individuals and businesses invest their money, examples include mutual funds, brokerage firms, and investment banks.
- Contractual Institutions provide financial services based on contracts, examples include insurance companies, pension funds, and finance companies.
Credit Unions, Payday Lenders, and Pawn Lenders
- Credit Unions are member-owned financial institutions, often serving specific groups like employees or communities.
- Payday Lenders provide short-term loans, usually with high interest rates and fees, based on the borrower's paycheck.
- Title Pawn Lenders offer loans secured by the borrower's vehicle title, with high interest rates and the potential for vehicle repossession if payments are not made.
Checking and Savings Accounts
- Checking Accounts are designed for frequent transactions, allowing for easy access to funds via checks or debit cards.
- Savings Accounts are intended for saving money, often earning interest, but may have limits on withdrawals or impose penalties.
Types of Credit and Loans
- Credit Cards allow individuals to borrow money for purchases, with revolving balances and interest payments.
- Personal Loans are unsecured loans for personal needs, often with fixed interest rates and repayment terms.
- Auto Loans are secured loans for purchasing vehicles, with interest rates and terms based on the vehicle's value and the borrower's creditworthiness.
- Mortgages are secured loans for real estate purchases, usually with long repayment terms and varying interest rates.
Why Is Your Money Safer in a Bank Account?
- Banks have security measures to prevent theft, such as vaults, alarms, and surveillance systems.
- Federal Deposit Insurance Corporation (FDIC) insures deposits, protecting account holders against bank failure.
Financial Accounts Earning Interest
- Savings Accounts typically earn interest on your deposits.
- Certificates of Deposit (CDs) offer higher interest rates for fixed terms, limiting access to funds.
- Money Market Accounts offer higher interest rates than savings accounts, but may restrict withdrawals.
Choosing a Bank Account
- Fees: Consider monthly charges, ATM fees, and penalties for insufficient funds.
- Interest Rates: Look for accounts that offer competitive interest rates on savings and CDs.
- Services: Evaluate the convenience of online banking, mobile apps, customer service, and available financial products.
Depositing and Accessing Checking Accounts
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Depositing Money:
- Direct deposit: Automatic deposit of your paycheck into your checking account
- Mobile deposit: Using a mobile app to deposit checks through your phone.
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Accessing Money:
- Checks: Written authorization to withdraw funds from your account
- Debit Card: A card linked to your checking account that allows you to withdraw cash or make purchases.
Writing Checks
- Image: Use the check image provided to write a check to your best friend for $11.60, include all necessary elements, such as date, payee name, amount, and signature.
Bank Statements
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Items Included on a Statement:
- Transaction date
- Transaction details
- Beginning and ending balance
- Fees charged
- Interest earned
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Reconciling a Bank Statement:
- Compare your records: Check your account register for discrepancies with the statement.
- Reconcile differences: Account for any outstanding deposits, checks, or fees.
- Contact your bank: Resolve any remaining discrepancies with your bank.
Overdraft Protection
- Purpose of Overdraft Protection: To prevent checks from bouncing or debit card transactions being declined when insufficient funds are available.
- Downsides: Overdraft protection can be costly, with high fees associated with overdraft charges.
Reconciling Account Balances
- Reconciling account balances can protect you against errors on your statement.
- Maintaining a positive account balance prevents overdraft fees.
Key Terms
- Automated Teller Machine (ATM): A machine allowing customers to access their bank accounts
- Balance: The amount of money in a bank account at a specific time.
- Certificate of Deposit (CD): A time deposit account that offers higher interest for fixed terms.
- Checking Account: An account for frequent transactions using checks or debit cards.
- Contractual Institution: A financial institution offering services based on contracts with customers (e.g., insurance companies, pension funds).
- Credit: The ability to borrow money, based on your creditworthiness.
- Credit Card: A plastic card allowing you to borrow money for purchases, with revolving balances and interest charges.
- Debit Card: A card linked to your checking account, allowing you to withdraw cash or make purchases directly from your account.
- Depository Institutions: Financial institutions accepting deposits and making loans (e.g., banks, credit unions).
- Economy: The system by which a country manages its resources and wealth, including production, consumption, and trade.
- Financial Institution: An organization providing financial services to individuals and businesses (e.g., banks, credit unions, insurance companies).
- Interest: Payment received for lending money, often expressed as a percentage of the principal.
- Investment Institution: An institution helping individuals and businesses invest money (e.g., brokerage firms, mutual funds).
- Loan: A sum of money borrowed, requiring repayment with interest.
- Reconcile: To match your account statement with your personal records, correcting discrepancies.
- Savings Account: An account for storing money designed to earn interest.
New Jersey Driver License Requirements
- Motorists must carry a valid driver license, probationary license, or New Jersey permit while driving in the state.
- Motorists must also carry valid insurance and vehicle registration cards.
- A validated New Jersey driver permit holder must be accompanied by a licensed driver.
- Motorists must report address changes to the MVC within one week.
- Individuals moving out of New Jersey must also update their address with the MVC.
- Motorists changing their names due to marriage, divorce, or court order must report the change within two weeks.
- Individuals moving to New Jersey from another state must apply for a New Jersey license within 60 days of moving.
- Commercial driver license (CDL) holders must apply for a New Jersey license within 30 days of moving.
- The out-of-state license must be surrendered upon receipt of a New Jersey license.
- Individuals with a valid license from another country can drive in New Jersey for up to a year.
- Operators of commercial vehicles must meet stricter testing standards than drivers of cars or motorcycles.
- Commercial vehicle operators must possess a valid New Jersey driver license before applying for a CDL.
- Individuals who have never held a driver license must complete the MVC’s Graduated Driver License (GDL) Program.
- The GDL program introduces driving privileges in phases with a period of supervised driving.
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Description
This quiz delves into various types of financial institutions, including depository, investment, and contractual institutions. It also explores specific services provided by credit unions, payday lenders, and pawn lenders. Test your knowledge on checking and savings accounts to enhance your understanding of financial services.
