Understanding Banks
What type of account is primarily used for frequent transactions?
Checking
Which feature is most commonly associated with a checking account?
Debit Card
What should be written in the Memo field of a check?
A quick summary of the purpose of the check
Which account type typically has the highest interest rate?
CDs
What is the primary purpose of a bank statement?
Outline all account transactions in a given month
What is one primary role of banks?
To store and safeguard deposits
What is a benefit of using a debit card?
Direct access to funds without carrying cash
Which field on a check indicates the individual or organization to whom the check is paid?
The “Pay to the order of” field
What is a benefit of FDIC insurance on deposit accounts?
Protection of deposits up to the legal limit
What does NSF stand for in banking terms?
Non-sufficient funds
Which type of bank is responsible for implementing monetary policy?
Central bank
What is liquidity?
Ease and speed by which an asset can be converted into cash
What information is found at the bottom left corner of a check?
The routing number
What is a key feature of a Money Market Account (MMA) that differentiates it from a traditional savings account?
Unlimited withdrawals and credit card capabilities
How does a bank reconciliation help an account holder?
By ensuring bank records match transaction records
What is a major benefit of credit unions compared to retail banks?
Higher interest rates on deposits
What fee is charged when an account holder spends more than is available in their account?
Overdraft
What is the primary risk of using a blank endorsement?
The check can be cashed by anyone if lost or stolen
Why might a bank offer higher interest rates on deposits during periods of economic growth?
Due to higher demand for loans
Name the 4 fundamental elements of a bank statement.
Starting balance, withdrawals, deposits, ending balance
What service is NOT typically provided by retail banks?
Investment banking
What is the purpose of the check number on a check?
To indicate the sequence of checks used
What information is crucial for processing direct deposits, wire transfers, and ACH payments?
The routing and account number
What is a key feature of a Money Market Account (MMA) that differentiates it from a traditional savings account?
Check writing and debit card capabilities
What is meant by "Deposits in Transit"?
Deposits have been recorded by not cleared by the bank