Banking Basics
What is a bank?
A financial institution that accepts deposits from the public and creates credit.
What is the purpose of a budget?
To plan and track income and expenses to manage finances effectively.
What is online banking?
The use of the internet to conduct financial transactions through a bank's website or app.
What is a checking account?
A bank account that allows for deposits and withdrawals, typically used for daily transactions.
How often do customers typically receive a bank statement for their checking account?
Monthly.
What is saving?
The act of setting aside money for future use instead of spending it immediately.
What is a savings account?
A bank account that earns interest on the money deposited and is used for saving money.
What is direct deposit?
An electronic transfer of a payment directly into a bank account.
What is financial literacy?
The ability to understand and effectively use various financial skills, including personal financial management.
What is the importance of setting savings goals?
Setting savings goals helps individuals plan for future expenses and achieve financial stability.
What is a debit card?
A card that allows you to access your bank account to withdraw cash or pay for purchases directly.
What is an emergency fund?
A savings account that is set aside for unexpected expenses or emergencies.
What is mobile banking?
Banking services accessed using a smartphone or tablet app.
What are the differences between debit and credit?
Debit uses funds directly from your bank account, while credit allows borrowing with the obligation to repay.
What is an overdraft?
A situation where withdrawals from a bank account exceed the available balance, leading to negative balance or fees.
What is a credit card?
A card that allows you to borrow money from a bank or financial institution to make purchases.
Fill in the blanks with the correct responses. If you follow the 50-30-20 rule of budgeting, you'll be putting 50% of your monthly income toward ___, 30% of your monthly income toward _, and 20% of your monthly income toward __.
Needs, wants, savings.
What are bank fees?
Charges imposed by banks for various services, such as account maintenance or ATM withdrawals.
What are alternative banking options?
Financial services outside of traditional banks, such as credit unions or online lenders.
Fill in the blank: Direct deposit typically refers to your _____ sending your ______ electronically to your bank account.
Employer, paycheck.
What does "unbanked" mean?
Refers to individuals who do not have a bank account or access to traditional banking services.
What is compound interest?
Interest calculated on the initial principal and also on the accumulated interest from previous periods.
What are the risks of online banking?
Potential risks include hacking, identity theft, and phishing scams.
What are the benefits of being banked?
Access to financial services, safety of funds, ability to earn interest, and easier management of finances.
What are the main types of banks?
Commercial banks and credit unions