Banking Terms
What is a savings account primarily used for?
A) Making loans
B) Storing money safely and earning interest
C) Paying bills only
D) Buying stocks
B) Storing money safely and earning interest
What service allows you to transfer money electronically between accounts?
A) Wire transfer
B) Mobile deposit
C) Check clearing
D) Cash advance
A) Wire transfer
What is the function of a debit card?
A) Borrow money from the bank
B) Transfer money internationally
C) Earn interest on purchases
D) Access funds directly from your checking account
D) Access funds directly from your checking account
What is the principal of a loan?
A) The monthly payment amount
B) The penalty for late payment
C) The original amount borrowed
D) The total amount you will pay in interest
C) The original amount borrowed
What is "amortization"?
A) An interest rate increase
B) The fee for opening a bank account
C) The process of spreading out loan payments over time
D) A type of savings account
C) The process of spreading out loan payments over time
Which item represents money that you put into a bank account?
A) Withdrawal
B) Deposit
C) Loan
D) Check
B) Deposit
What is a "certificate of deposit" (CD)?
A) A savings account with a fixed term and interest rate
B) A debit card
C) A type of loan
D) An overdraft protection
A) A savings account with a fixed term and interest rate
What does it mean to "reconcile" your bank statement?
A) Match your records with the bank’s records
B) Deposit a check
C) Open a new savings account
D) Close your account
A) Match your records with the bank’s records
What is an APR?
A) Automatic Payment Request
B) Account Payment Receipt
C) Annual Percentage Rate — the yearly cost of borrowing
D) Average Payment Rate
C) Annual Percentage Rate — the yearly cost of borrowing
What is the meaning of "liability" in banking?
A) Money the bank owes to customers
B) Bank’s total assets
C) Money a customer owes to the bank
D) A type of investment
C) Money a customer owes to the bank
What does ATM stand for?
A) Account Transaction Manager
B) Advanced Transfer Method
C) Automated Tax Monitor
D) Automatic Teller Machine
D) Automatic Teller Machine
What does "overdraft" mean?
A) Applying for a loan
B) Depositing cash into your account
C) Transferring funds between accounts
D) Withdrawing more money than is in your account
D) Withdrawing more money than is in your account
What is a "stop payment"?
A) A transfer of funds
B) A loan repayment
C) A fee for closing an account
D) A request to prevent a check from being cashed
D) A request to prevent a check from being cashed
What is a "secured loan"?
A) A loan with no interest
B) A loan you can repay anytime without penalty
C) A loan backed by collateral
D) A loan for buying stock
C) A loan backed by collateral
What is a money market account?
A) A type of savings account that typically offers higher interest rates and limited check-writing ability
B) A loan used to purchase stocks
C) A checking account with no fees
D) An investment in government bonds
A) A type of savings account that typically offers higher interest rates and limited check-writing ability
Which is a common banking fee you might pay monthly?
A) Interest fee
B) Deposit fee
C) Maintenance fee
D) Transfer fee
C) Maintenance fee
What is a "credit score"?
A) The amount of money you have in your bank account
B) The interest rate on your savings account
C) The fee for using an ATM
D) A number that shows your creditworthiness
D) A number that shows your creditworthiness
What is a "joint account"?
A) An account with no fees
B) An account for business only
C) A savings account with high interest
D) An account held by two or more people
D) An account held by two or more people
What is "defaulting" on a loan?
A) Paying off the loan early
B) Reapplying for a new loan
C) Failing to repay the loan as agreed
D) Transferring the loan to another person
C) Failing to repay the loan as agreed
What does "fractional reserve banking" mean?
A) Banks hold all deposits as reserves
B) Banks lend money only to businesses
C) Banks keep only a fraction of deposits as reserves and lend out the rest
D) Banks invest only in government bonds
C) Banks keep only a fraction of deposits as reserves and lend out the rest
What does the term "balance" refer to in banking?
A) The amount of money you owe
B) The interest rate on a loan
C) The number of checks written
D) The amount of money in your account
D) The amount of money in your account
What does "FDIC" stand for?
A) Financial Deposit Investment Company
B) Federal Debt Insurance Council
C) Federal Deposit Insurance Corporation
D) Finance Development and Investment Corporation
C) Federal Deposit Insurance Corporation
What does "liquidity" refer to in banking?
A) The amount of loans a bank has
B) The interest rate on savings
C) The number of ATMs in a bank
D) The ease of converting assets to cash
D) The ease of converting assets to cash
What does "credit limit" mean?
A) The maximum amount you can borrow on a credit card
B) The interest rate on a credit card
C) The fee for late payment
D) The minimum payment required
A) The maximum amount you can borrow on a credit card
What does it mean to be "underwater" or "upside down" on a loan?
A) Owing more on the loan than the asset is worth
B) Having a loan with no interest
C) Paying off the loan early without penalty
D) Transferring the loan to another person
A) Owing more on the loan than the asset is worth