Intro to Banking
What is the main purpose of a bank?
To keep your money safe and offer financial services (loans, accounts, etc.).
What is the main purpose of a checking account?
To store money for everyday transactions like paying bills and making purchases.
What is a check register used for?
To keep track of deposits and withdrawals.
What is the main purpose of a savings account?
To store money and earn interest.
What is an overdraft fee?
A fee charged when you spend more money than you have in your account.
What government agency insures deposits up to $250,000 in banks?
FDIC (Federal Deposit Insurance Corporation).
What is a debit card linked to?
Your checking account balance.
What is the purpose of balancing your checkbook or account?
To make sure your records match the bank’s records.
Why might someone choose an online savings account instead of a traditional bank savings account?
Online savings accounts often offer higher interest rates and lower fees.
What is an ATM fee?
A fee for using another bank’s ATM.
Name one difference between a bank and a credit union.
Banks are for-profit; credit unions are nonprofit and member-owned.
What does it mean when your account is “overdrawn”?
You spent more money than you had in your account.
What are the main parts of a check you must fill out?
Date, payee, and amount (plus signature).
How is compound interest different from simple interest?
Compound interest earns interest on interest; simple only earns on the principal.
What is a minimum balance fee?
A fee for not keeping a required minimum balance in your account.
What is an online-only bank?
A bank that operates entirely online without physical branches.
What is the difference between a debit card and a credit card?
Debit uses money you already have; credit borrows money you must repay.
What does it mean to “reconcile” your account?
To compare your check register with the bank statement and fix differences.
Why do savings accounts typically have withdrawal limits?
To encourage saving and because banks use deposits for lending.
How can you avoid overdraft fees?
Track spending, set up alerts, or opt out of overdraft protection.
Why might someone choose a credit union over a traditional bank?
Lower fees, better interest rates, and personalized service.
Why is it important to set up direct deposit?
It allows paychecks to go straight into your account quickly and safely.
Why is it important to endorse a check?
It authorizes the bank to deposit or cash it.
Give one advantage and one disadvantage of a savings account.
Advantage: Safe, earns interest. Disadvantage: Limited access, low interest compared to investments.
Why do banks charge fees?
To make money and encourage customers to manage accounts responsibly.