EVERFI Module 1 Banking Basics Test Questions and Answers

EVERFI Module 1 Banking Basics Test Questions and Answers 1. Brick and Mortar banks?: banks have physical buildings. These are the banks you may see as you drive through town. 2. What are 3 things you can do at a brick and mortar bank?: exchange checks for cash, deposit checks, speak to someone in person 3. What are 3 negative things about using brick and mortar banks?: Earn little interest on the money in your accounts, you pay higher bank fees since banks have to pay to keep the physical building, can't access physical bank after hours 4. Internet banks: only online. All services are done through an application or website using either a computer or mobile device. 5. What are 3 things you can do with internet banks?: deposit checks into accounts, earn interest on your money in accounts and pay less interest on your loans, use debit cards at ATMs around the world 6. What are 3 negatives to online banking?: Difficult to deposit cash, could lose account temporarily if website glitches, may not have access to checking accounts 7. Credit Unions: are not-for-profit institutions that are co-owned by their members who make decisions democratically and they typically offer all of the same services as traditional banks. 8. What are 4 positives with using a credit union?: Get free checking account with low deposit and lower bank fees, better interest rates on savings accounts and loans, access banking services online 9. What are 2 negatives about using a credit union?: Have to be eligible to join credit union through your job, location, membership of certain groups, or a family member, there may be fewer branches available in your area 10. Cash advance or payday loans: allows a person without a bank account or credit union to get money quickly, but at a high risk. 11. What are 2 positives with using cash advance?: Get cash for check imme- diately, have 24 hour access in many cases 12. What are 3 negatives about using cash advance?: Always have to pay for the service, get a very bad deal, can fall into payday loan cycle where you need to take out another payday loan to pay for the first one 13. What does a loan officer do?: Advises, evaluates, and signs off on loans to individuals and businesses 14. What does a branch manager do?: Manages all the employees at a specific location 15. What does the customer or member service representative do?: Help customers or members with any questions they have 16. What does the teller do?: Helps with account transactions like depositing or withdrawing money 17. What are the 2 most common bank accounts?: Checking accounts and savings accounts 18. What are the 4 differences between checking and savings accounts: -A savings account is used to store money long term, while a checking accounts is used for everyday transactions -Savings account fees are often waived if you maintain minimum balance or make minimum monthly deposit, while a checking account has fees that vary by account and institution -A savings accounts has a limited amount of withdrawals per month, while checking accounts are common but only include basic services -Savings accounts can earn interest daily, weekly, monthly, or annually, while it less likely that a checking account earns interest 19. What is simple interest?: The interest earned on just the original loan amount 20. What is compound interest?: Someone is paying you on the interest they already gave you 21. What 4 items do you need to open an account?: Drivers license, cash, paycheck, social security card 22. What is an overdraft?: When you accidentally spend more money than is in your account 23. What is a special savings plan for?: To save money for something specific 24. What is a money market account?: A type of savings account that can offer a higher interest rate compared to traditional savings 25. What is a certificate of deposit?: CD is a type of savings account that stores your money for a pre set period of time 26. What are 3 things you should think about when approaching an ATM to use?: Good lighting to see your surroundings, be aware of surroundings, look for suspicious people 27. What are 3 things you should think about when using an ATM?: Look for tampering with the ATM that could steal your card information, shield keypad when you enter your pin, check records to see if you have enough money to withdrawal 28. What did Martin get a $3 fee when using the ATM to withdraw money?: He used an ATM outside of his network, so he was charged a fee. 29. What are 4 financial rights Martin had?: Safe, Transparent, Protected, Ac- countable 30. Safe: your money is insured and you are guaranteed to get your money back if something happens to the institution 31. Transparent: financial institutions must tell you when the money you are depositing will be available for you to use 32. Protected: electronic transactions are protected and you aren't held responsi- ble for transactions you didn't give permission for. 33. Accountable: if you have complaints about your financial institution, you can go to a financial regulatory agency like the Consumer Financial Protection Bureau. 34. What is the difference between using savings vs investing?: Savings are short term goals, like buying a car, but investing is long term goals, like paying for your children's education. Savings also has small amounts of risk, because the government insures your money, but investing is always risky because you can lose money if your investment value goes down. Savings returns 1% and investing returns 10%. 35. What are the main types of investments?: Stocks, Bonds, Mutual Funds, Index Funds, and Exchange Traded Funds (ETFs)