module 2 week 5

There are several reasons why people should use a financial institution to help them with managing their money. Choose all valid reasons to have an account with a financial institution.

It provides a safe place for your money. You are insured against losses up to the federal maximum amount. It is cheaper than other possible alternatives. It allows quick access to your money. It helps with establishing credit and getting loans.

Since being created in 1933, the FDIC has caused participants to lose how much money?

No depositor has ever lost a penny of insured deposits since the FDIC was created in 1933.

Most ATMs that accept debit cards for transactions also require you to enter your PIN as well. What is a PIN?

Personal Identification Number

What is the FDIC?

The Federal Deposit Insurance Corporation is an independent federal agency created to promote public confidence and stability in the nation's banking system.

When you pay for your purchases at a store and you use a check, why do they sometimes give you your check back instead of keeping it?

The store used an EFT system to automatically withdraw the money from your account.

Why are financial institutions safe places to keep your money?

They are regulated by federal guidelines and are in business to make money for their depositors, members, and/or stock holders.

A debit card purchase is much like a credit card purchase except _____________________________.

a debit card purchase transfers money directly from your checking or savings account

returned check fee

a fee charged when you deposit a check from someone, and it is returned because the check has insufficient funds

transaction fee

a fee charged when you exceed a set number of transactions in a month for deposits or withdrawals

ATM fee

a fee charged when you use an ATM outside your bank's network

wire transfer fee

a fee charged when you wire money from your account to someone else's account

overdraft fee

a fee charged when you write a check and your account does not have enough money to cover the check

minimum balance fee

a fee charged when your account balance goes below a certain minimum balance

membership fee

a fee that a credit union charges its members to open an account

Choose all statements that describe a "bank."

accepts deposits to accounts regulated by the government invests in capital markets to make money for the institution as well as its customers a financial institution charges fees and interest to pay administrators and stock holders

What are the three main types of financial institutions available to help you manage your finances?

banks, credit unions, and thrifts

Online financial institutions offer all services that "brick and mortar" institutions offer, EXCEPT these:

branch manager offices to sit down and discuss your account in a teller working at a walk-up office

People enjoy using online banking because it is ____________________.

convenient and saves time

A direct withdrawal is an electronic transaction similar to direct deposit, except a direct deposit ________________________.

deposits money into your account while a direct withdrawal takes money out of your account

In the 1970's under the Carter administration, the United States was plagued with __________________.

high inflation and high unemployment

You can use your debit card to make purchases _____________________. Choose all correct responses.

in person at a store online over the phone

Choose all statements that describe a "thrift."

limited by law as to the amount of assets it can use for commercial loans specializes in making money off of mortgages and personal loans to its members a mutually held corporation with decisions made by depositors and borrowers a financial institution also known as a savings and loan association

Choose all statements that describe a "credit union."

not for profit a financial institution accepts deposits to accounts like a bank profits and surpluses go to pay administrators and provide services for members member-owned provides services only to its members

The FDIC insures different kinds of accounts at participating financial institutions. Choose all of the accounts or investing programs that are covered by the FDIC.

passbook savings accounts checking accounts statement savings accounts Money Market Deposit Accounts certificate of deposits (CDs)

If you are using your personal computer to carry out banking transactions, it is important that no one else knows your _____________.

passwords

Electronic banking or electronic funds transfer can include which of the following? Choose all that apply.

phone-activated transfer from one account to another electronic check conversion at a store for payment for merchandise automatic insurance bill drafted off your account monthly ATM withdrawals using your personal computer to transfer money from your checking account to your savings account direct deposit of your payroll to your bank account

What is the source of funding used by the FDIC to pay insured depositors of a failed bank?

premiums already paid by insured banks and interest earnings on its investment portfolio of U.S. Treasury securities

Alexander Hamilton was the first Secretary of ____ . He believed in a strong federal government with a centralized ____ . Hamilton's critics attacked him by stating that a central government-run bank would be ____ . The first Bank of the United States was a ____ institution and was owned by a majority (70%) of ____ investors.

the Treasury banking system a monopoly and unconstitutional private foreign

What event in American history had a profound effect on modern-day banking regulations and policy?

the great depression

In a financial institution that is federally insured, deposited money is safe from ____________________.

theft, loss, fire

Select the correct answer(s). God used the ant in Proverbs 6:5-8 to teach us:

to acquire wisdom to not be lazy to put aside extra money from each paycheck to a savings account

Even though we should be careful with our money and valuables, what does the Bible say about the things of this world and wealth?

"Do not lay up for yourselves treasures on earth, where moth and rust destroy and where thieves break in and steal." -Matthew 6:19 "Jesus said to the rich young ruler, "You lack one thing: go, sell all that you have and give to the poor, and you will have treasure in heaven; and come, follow me." "For where your treasure is, there your heart will be also." -Matthew 6:21 "But lay up for yourselves treasures in heaven, where neither moth nor rust destroys and where thieves do not break in and steal." -Matthew 6:20

The present limit for insuring any account at participating banks through the FDIC is ________________.

$250,000.00

The Federal Reserve System was established in ____ and was the ____ attempt by the United States government to establish a central banking system. Unlike its two predecessors, the Federal Reserve System was not limited to a ____ by the passing of the McFadden Act of 1927. The Banking Act of 1933 established the ____ to protect the deposits of consumers against bank failure. ____ financial institutions are members of the Federal Reserve System today.

1913 third 20-year charter Federal Deposit Insurance Corporation some

Because banks are federally regulated, there are certain guidelines that they have to follow. What are some of these guidelines? Choose all that apply.

A bank has to abide by guidelines set up by the Federal Reserve System. A bank is insured by the FDIC and must follow its guidelines in order for its depositors to be covered against loss. A bank is regulated to make sure it does not lend more money than it can safely cover with assets and depositors' monies. A bank has to have a minimum amount of capital holdings to do business. A bank has to maintain a certain ratio of how much it lends compared to its capital assets.

Financial institutions do not offer their services for free. You may have a free checking account, and you may receive interest on the money you have in a savings account, CD, or money market account; however, the institution will charge you fees for a variety of reasons. Choose all charges discussed in the lesson that can be levied against an account owner.

ATM transaction fee check-cashing fee when cashing a check from a different bank minimum balance fee overdraft fee membership fees at credit unions monthly or annual account fees non-sufficient funds fee

What four responsibilities does the Federal Reserve System have that were also the responsibilities of its predecessors, the First and Second Bank of the United States? Choose all correct answers.

Acts as the federal government's fiscal agent. Holds deposits for the federal government. Receives revenues for the federal government. Makes payments for the federal government.