personal finances week 5 study guide

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

"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 "Do not lay up for yourselves treasures on earth, where moth and rust destroy and where thieves break in and steal." -Matthew 6:19

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

$250,000.00

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 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 maintain a certain ratio of how much it lends compared to its capital assets 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 has to have a minimum amount of capital holdings to do business.

Banks are the only financial institutions available for people to keep their money in.

False, there are other financial institutions including credit unions and thrifts.

FDIC is a banking acronym in which the letters stand for __________________________.

Federal Deposit Insurance Corporation

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

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.

What is the FDIC?

The Federal Deposit Insurance Corporation is an independent federal agency created in 1933 to promote public confidence and stability in the nation's banking system.

Choose all the descriptors that tell about the functions and policies related to credit unions.

Their profits and surpluses are used to pay for administrative costs and member services. they are member owned and governed.They provide services to members only. They offer financial services similar to banks, but for members only. They are not for profit.

Choose all the descriptors that tell about the functions and policies related to thrifts.

They are mutually held corporations with decisions made by depositors and borrowers. They are also known as savings and loan associations. They specialize in savings accounts and making money off of mortgages and personal loans. Their law limitations govern use of assets that can be used for commercial loans.

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.

Fees, fees, fees...what are all those fees that you are charged for used to cover? Match up the correct answers. membership fee overdraft fee minimum balance fee ATM fee transaction fee returned check fee wire transfer fee

a fee that a credit union charges its members to open an account a fee charged when you write a check and your account does not have enough money to cover the check a fee charged when your account balance goes below a certain minimum balance a fee charged when you use an ATM outside your bank's network a fee charged when you exceed a set number of transactions in a month for deposits or withdrawals a fee charged when you deposit a check from someone, and it is returned because the check has insufficient funds a fee charged when you wire money from your account to someone else's account

Choose all statements that describe a "credit union."

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

Choose all statements that describe a "thrift."

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

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

Most financial institutions offer ATM or debit cards that allow you to withdraw funds from your account at places other than your institution. A debit card looks like a credit card but it works more like a ______________.

check

A transaction fee can be assessed against an account for the following transactions (choose all possible answers):

checks cashed off other bank accounts deposits over the maximum number allowed transfers to other accounts copies of bank statements withdrawals over the maximum number allowed

Instead of an annual fee, most credit unions assess a one-time _______________which is usually accepted as the first deposit and is refunded when closing the account.

membership fee

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.

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

Financial institutions may charge certain operational fees to help defray the costs of doing business. Choose the fees listed below that are common to financial institutions.

non-sufficient funds fees overdraft fees minimum balance fees transaction fees returned check fees

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. (Check the FDIC website https://www.fdic.gov/edie/ (Links to an external site.) if you need help.)

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

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

Choose all statements that describe a "bank."

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

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

theft, loss, and fire