Consumer Economics Chapter 10 Test Review

*In general, commercial banks pay lower interest rates on savings accounts than nonprofit financial institutions.

True

ATMs owned by different banks can be part of an interconnected ATM network.

True

If you were to move across the country, you could direct your old bank to close your account and send the balance to the new bank as a wire transfer.

True

Many banks provide free ATM transactions to their own customers.

True

Money transfer services, while helpful in an emergency, are relatively expensive.

True

Online-payment services have been developed to make payments quick and easy.

True

Some financial institutions offer better rates and fees if you maintain a certain balance or combination of accounts.

True

Some utility companies offer an automatic payment system, in which your monthly payment is deducted directly from your bank account.

True

The Financial Services Modernization Act made it possible for banks to offer insurance investment services to customers, and insurance companies to offer traditional banking services.

True

When banking by telephone, you can access your accounts by using a touch tone keypad or voice activation.

True

When you buy traveler's checks, you sign each check in front of the selling agent.

True

When you make a person-to-person payment at a Web site offering such a service, the payee receives an email explaining how to collect the payment.

True

You can deposit, withdraw, and transfer funds without using a bank teller by banking electronically.

True

Writing a check is more secure than paying with cash because...

a check is usable only by the payee.

A federal agency that insures savings, checking, and other deposit accounts in most banks...

FDIC

*By law, the amount of the fee for an ATM transaction must be disclosed after you complete the transaction.

False

*You can purchase cashier's checks at any post office.

False

A certified check is guaranteed with a credit card.

False

ATMs are located in private, hard-to-reach places.

False

All of the money deposited in banks is kept on reserve.

False

An offline debit-card transaction requires you to enter your PIN into a keypad.

False

Banks make a profit because interest paid to savers is generally greater than interest paid by borrowers.

False

Electronic banking raises costs for financial institutions.

False

If your traveler's checks are lost or stolen, you should report the numbers of the missing checks to the nearest bank.

False

Money transfers paid for with credit cards are usually available within minutes.

False

Savings and loans offer a wide variety of financial services, but at one time they specialized in providing loans to businesses.

False

You should count your cash immediately after making an ATM withdrawal.

False

You should wait one week to report a lost or stolen debit card.

False

________________ cards are also called store-valued cards.

Prepaid

You can purchase ______________ checks at financial institutions in specific dollar amounts, such as $25, $50, or $100.

traveler's

A document that functions as cash but can be replaced if lost or stolen...

traveler's check

If you do not report the loss of an ATM card within _______________, you may be liable for all charges made on the card. (two words)

two months

If you make a mistake writing a check, you should...

void the check.

A financial transaction that electronically moves funds from one bank to another...

wire transfer

All of the following will most likely happen if you write an overdraft EXCEPT...

you will be arrested for writing a bad check.

You must be at least ____________ years old to open a checking account.

18

_____________ checks are often required for very large payments, such as the down payment on a home.

Cashier's

_____________ banks can offer higher deposit rates and lower loan rates because they do not incur the costs of traditional "brick and mortar" banks. (two words)

Internet-only

A financial institution that offers online banking only...

Internet-only bank

For credit unions, deposit insurance is administered by the ____________________. (four words)

National Credit Union Administration

Always shield the ATM screen and keypad from the view of others when you enter your ____________.

PIN

People generally use the term ___________ to refer to any type of financial institution where they deposit money.

bank

A _______________________ shows an opening balance, a list of financial transactions conducted during the month, service charges, and the closing balance.

bank statement

A ________________________ provides legal proof of payment. (two words)

canceled check

A check that is stamped and perforated to show that it has been paid...

canceled check

When you use traveler's checks to make a purchase, any change due will be given to you in ____________.

cash

A check issued and guaranteed by a bank...

cashier's check

A check from a personal checking account that has been stamped by the bank to guarantee that there are sufficient funds in the account to cover it...

certified check

Legitimate financial institutions have a _______________, or a governmental document that grants them the right to operate.

charter

A written order that instructs a bank to pay a specific amount of money to a particular person or business is called a...

check.

A financial institution owned by shareholders and operated for their profit...

commercial bank

A ________________________ is composed of members with a common bond, such as working for the same employer or belonging to a labor union. (two words)

credit union

A nonprofit financial institution owned by its members...

credit union

A ________________ endorsement limits payment to a particular payee.

special

At your request, banks can automatically perform all of the following services EXCEPT...

debit card advances.

You can deduct money from your bank account to make a purchase by use of a...

debit card.

In the event of a bank failure, _________ insurance protects you from losing the money in your accounts.

deposit

Other names for debit cards are check cards and ___________ cards. (two words)

deposit access

In an automated service called __________________, payment such as your paycheck or tax refund can be electronically transferred into the account you choose. (two words)

direct deposit

Electronic funds transfer (EFT) refers to...

the movement of funds by electronic means.

The signature on the back of a check that entitles the payee to receive the payment...

endorsement

If your checkbook is lost or stolen, some of your checks could be ________________, or used illegally.

forged

A fee paid for the opportunity to use someone else's money over a period of time...

interest

When the bank lends some of your money to other people, those borrowers pay ________ to the bank.

interest

Online banking requires the use of a computer with ____________ capabilities.

internet

If you cannot reconcile your bank statement's ending balance with your checkbook balance, you should do all of the following EXCEPT...

look for the error when you receive the following month's statement.

To receive favorable banking terms or avoid a penalty, you may need to...

maintain a minimum balance.

Amount of money required to be kept in an account...

minimum balance

A purchased certificate used to pay a specified amount to a particular payee...

money order

There are two types of ____________: domestic and international. (two words)

money orders

A state-chartered financial institution operated by trustees for the benefit of depositors...

mutual savings bank

You can use your ATM card at any teller machine displaying the same ____________ logo.

network

Lack of sufficient funds to cover the full amount of a check...

overdraft

The person to whom the check is made out...

payee

Some individuals and businesses won't accept _______________ checks because of the possibility of insufficient funds.

personal

You can order checks that are ________________ with your name and address.

personalized

Paying by electronically transferring funds at the place of purchase is called a...

point-of-sale transaction.

A card sold in specific dollar amounts that can be used to purchase products or services...

prepaid card

To bring the bank statement and your own record of transactions into agreement...

reconcile

If your ATM card is lost, you should...

report the loss to the issuing bank.

A ___________ endorsement limits the use of a check, for example to deposit only.

restrictive

If you have a _________ account, the bank pays you interest for letting it use your money.

savings

The bank might automatically transfer money from _____________ to checking to cover a check for which the checking account has insufficient funds.

savings

A PIN is a code that is concerned with the...

security of your account.