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A customer writes a check for $150 but only has $120 in their checking account. What fee will they most likely incur?
Overdraft fee
What is the most important requirement you should look for when opening a bank account?
The bank must be a member of FDIC
What is the key difference between a commercial bank and a credit union?
Credit unions are not for profit, and commercial banks are for-profit
If an ATM charges a $3 fee each time you use it, and you use it 8 times per month, how does this impact your financial planning compared to using your bank's ATM network?
You lose $24 per month that could be saved or invested
What is the difference between a certificate of deposit (CD) compared to a regular savings account?
CDs require you to lock your money away, while a savings account is liquid
What factor should you prioritize when comparing loans from different financial institutions?
Annual Percentage Rate (APR)
A student maintains a check register to track their checking account transactions. Why is this practice very important?
It helps them monitor their spending
Why might someone choose to open both a checking account and a savings account rather than just one or the other?
Checking account provides money for daily expenses while a savings account earns interest
What is the current FDIC coverage maximum?
$250,000 per depositor
Describe compound interest?
Earning interest on your interest
When the inflation rate increases, why does keeping money in a low-interest savings account become less attractive as a long-term strategy?
Because purchasing power of your money decreases faster than your savings account interest can compensate
Why might a person with limited income choose to open an account at a credit union rather than a commercial bank?
Credit unions are member-owned and may offer lower fees and higher savings rates
A person compares two loan offers: Loan A has a 5% annual percentage rate, and Loan B has a 7% annual percentage rate. Over a 5-year period, how does this difference impact the total amount paid?
Loan B will cost significantly more in interest
A certificate of deposit (CD) locks your money away for a set period, while a savings account allows withdrawals anytime. What is the primary reason banks offer higher interest rates on CDs?
Banks can invest the locked-in funds for longer periods
A debit card and a check both draw money from your checking account, but they differ in important ways. Describe a key advantage of using a debit card over writing checks?
Debit card transactions are processed immediately, providing real-time balance updates