Personal Finance Chapter 5
Insurance up to _________ on each account is provided for depositors by the FDIC.
$250,000
Checkbook Register
A booklet used to record checking account transactions.
Certified Check
A personal check that the bank guarantees or certifies to be good.
Stop-Payment Order
A request that the bank not honor a specific check.
Share Account
A savings account representing ownership interest.
Cashiers Check
Also called a bank draft, is a check written by a bank on its own funds.
A debit card is the same as a credit card. True or False
False
When a minimum balance is not maintained in a checking account, the bank will usually waive a service charge. True or False
False
Your only option when cashing a check is to endorse it with a blank endorsement. True or False
False
Safe Deposit Box
Financial institutions offer them to customers to store valuable items or documents.
What are some types of checking accounts?
Joint, special, standard, money market, and share drafts.
Bank Reconciliation
The process of matching your checkbook register with the bank statement.
Demand Deposit
What a checking account is known as.
Checks over _________ old may not be honored by a bank.
6 months
Debit Card
A bank card that deducts money from a checking account almost immediately to pay for purchases.
Canceled Check
A check that has cleared your account.
Overdraft
A check written for more money than your account contains.
What are some advantages of having a checking account?
A checking account is a good way to pay your bills, it is safer than carrying cash, it is a built-in record-keeping system, it provides proof of purchases, and it gives you access to many other banking services.
Special Account
Banks offer this to customers who have a small amount of activity in their accounts each month.
Why is it important to reconcile your bank accounts?
Can identify errors you may have made, checks not accounted for, and other important information such as fees and other automatic payments from your account. Doing this helps you avoid overdrafts and fees.
A __________ check is one that has been cleared, or processed, by your bank and deducted from your account.
Canceled
A check that has cleared your bank account is said to be a(n):
Canceled Check
What is a check written by a bank on its own funds called?
Cashiers Check
A _________ is a personal check that the bank guarantees to be good.
Certified Check
A __________ account is a demand deposit that provides a safe, convenient way to pay bills.
Checking
Certified checks and cashier's checks are not guaranteed by the bank to be paid. True or False
False
Financial institutions usually do not charge a fee for checking account services. True or False
False
Joint Account
Is opened by two or more people.
How can you avoid service fees charged by banks?
Know the bank's policies and choose the type of checking account carefully.
What does Interest=
Principal x Rate x Time
A _________ is a safe place to keep stocks and bonds, deeds, and other important documents.
Safe Deposit Box
A(n) _________ account charges customers fees based on the number of checks written each month; a minimum balance is usually not required.
Special
Check My Work A _________ endorsement results when the payee signs over a check to a third person.
Special
A __________ is a request that the bank not honor a specific check.
Stop-Payment Order
When payment on a check is prevented by the bank before it can be made to the payee, it is a(n)
Stop-Payment Order
__________ checks provide a readily acceptable and safe form of payment for people who are traveling.
Traveler's
A money market account is an interest-bearing checking account that pays a higher rate of interest. True or False
True
Banks offer individual accounts, joint accounts, special accounts, standard accounts, and money market accounts. Credit unions offer share and share draft accounts. True or False
True
Electronic funds transfer (EFT) often involves the use of ATM machines. True or False
True
Financial institutions offer safe deposit boxes to customers to store valuable items or documents. True or False
True
If you float a check, you are risking the possibility of an overdraft on your account because today's electronic systems process checks so quickly. True or False
True
It is important to reconcile your checkbook immediately when you receive the bank statement. True or False
True
Most financial institutions offer online and telephone banking services. True or False
True
To open an account, either checking or savings, you first must fill out and sign a signature form. True or False
True
When a check you have issued has been lost or stolen, you should request a stop payment order. True or False
True
When filling out a deposit form to the left of the amount you should right ABA American Bank association.
True
With online banking, you can make deposits and withdrawals. True or False
True
With overdraft protection, your checks will be covered even if you have insufficient funds in your checking account. True or False
True
ATM Fee
Typically charged by an ATM that does not belong your own bank.
Electronic Funds Transfer (EFT)
Uses a computer-based system that enables you to move money from one account to another without writing a check or exchanging cash.
Standard Account
Usually has a small monthly service fee and no per-check fee.
Notary Public
Verifies a person's identity, witnesses the person's signature on a legal document, and then "notarizes" the signature as valid.
NSF Fee
When you spend more than you have in your account and you don't have overdraft protection.
Overdraft Protection
Your checks will be covered even if you have insufficient funds in your checking account.