Banking Concepts Trivia: MCQ Quiz!

1. When you write a check and your account doesn't have the funds to cover the check, the check will _____________________.

When you write a check and your account doesn't have the funds to cover the check, the check will bounce. This means that the bank will not honor the check and it will be returned to the person or business who tried to deposit or cash it. Bouncing a check can result in fees from both the bank and the recipient, as well as potential damage to your credit score. It is important to ensure that you have sufficient funds in your account before writing a check to avoid this situation.

Explanation

When you write a check and your account doesn't have the funds to cover the check, the check will bounce. This means that the bank will not honor the check and it will be returned to the person or business who tried to deposit or cash it. Bouncing a check can result in fees from both the bank and the recipient, as well as potential damage to your credit score. It is important to ensure that you have sufficient funds in your account before writing a check to avoid this situation.

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2. A PIN on a debit card is a?

Passbook interest number

Personal insurance number

Personal identification number

Passbook insurance number

There isn't a PIN number on a debit card

A PIN on a debit card is a personal identification number. It is a unique code that is used to authenticate the cardholder and authorize transactions when using the debit card. The cardholder must enter this PIN at ATMs or when making purchases at point-of-sale terminals to prove their identity and ensure the security of their transactions.

Explanation

A PIN on a debit card is a personal identification number. It is a unique code that is used to authenticate the cardholder and authorize transactions when using the debit card. The cardholder must enter this PIN at ATMs or when making purchases at point-of-sale terminals to prove their identity and ensure the security of their transactions.

3. Which of the following is NOT a banking service?

Electronic Funds Transfer

Safe Deposit Boxes

Stop Payment Orders

Discretionary Funds

Discretionary funds are not a banking service because they refer to funds that are under the control and discretion of the individual or organization, rather than being managed or provided by a bank. Banking services typically involve the handling, management, and transfer of funds, such as electronic funds transfer, safe deposit boxes, and stop payment orders.

Explanation

Discretionary funds are not a banking service because they refer to funds that are under the control and discretion of the individual or organization, rather than being managed or provided by a bank. Banking services typically involve the handling, management, and transfer of funds, such as electronic funds transfer, safe deposit boxes, and stop payment orders.

4. What type of account is a mix between a savings and checking account?

Share draft account

Standard account

Interest account

Special account

An interest account is a type of account that combines features of both a savings and a checking account. It allows the account holder to earn interest on their deposited funds, similar to a savings account. At the same time, it also provides the convenience of check writing and easy access to funds, like a checking account. This type of account is suitable for individuals who want to earn interest on their money while still having the flexibility to use it for daily transactions.

Explanation

An interest account is a type of account that combines features of both a savings and a checking account. It allows the account holder to earn interest on their deposited funds, similar to a savings account. At the same time, it also provides the convenience of check writing and easy access to funds, like a checking account. This type of account is suitable for individuals who want to earn interest on their money while still having the flexibility to use it for daily transactions.

5. What is the limit for FDIC insurance on a single account?

$100,000.00

$150,000.00

$200,000.00

$250,000.00

$300,000.00

The correct answer is $250,000.00. The Federal Deposit Insurance Corporation (FDIC) provides insurance coverage for deposits held at banks and savings associations. The current limit for FDIC insurance on a single account is $250,000. This means that if an individual has a deposit account with a balance of up to $250,000, their funds are fully insured by the FDIC in case the bank fails. Any amount exceeding $250,000 in a single account would not be covered by FDIC insurance.

Explanation

The correct answer is $250,000.00. The Federal Deposit Insurance Corporation (FDIC) provides insurance coverage for deposits held at banks and savings associations. The current limit for FDIC insurance on a single account is $250,000. This means that if an individual has a deposit account with a balance of up to $250,000, their funds are fully insured by the FDIC in case the bank fails. Any amount exceeding $250,000 in a single account would not be covered by FDIC insurance.

6. Check 21 means

The bank uses an electronic image of a check

The bank returns your cancelled check

The bank doesn't return the original paper check

The bank gives you 21 free checks per month

Check 21 refers to the process where the bank does not return the original paper check to the account holder. Instead, the bank uses an electronic image of the check for processing and record-keeping purposes. This allows for faster and more efficient check processing, as well as reduces the need for physical storage of paper checks. By not returning the original paper check, the bank promotes a more digital and streamlined approach to check transactions.

Explanation

Check 21 refers to the process where the bank does not return the original paper check to the account holder. Instead, the bank uses an electronic image of the check for processing and record-keeping purposes. This allows for faster and more efficient check processing, as well as reduces the need for physical storage of paper checks. By not returning the original paper check, the bank promotes a more digital and streamlined approach to check transactions.

7. A _______________________ is a type of endorsement that is simply writing your name on the back of a check.

A blank endorsement is a type of endorsement where the person simply writes their name on the back of a check. This type of endorsement does not specify a particular payee and makes the check payable to whoever presents it, essentially turning it into a bearer instrument. It is commonly used when the check needs to be cashed or deposited into a bank account.

Explanation

A blank endorsement is a type of endorsement where the person simply writes their name on the back of a check. This type of endorsement does not specify a particular payee and makes the check payable to whoever presents it, essentially turning it into a bearer instrument. It is commonly used when the check needs to be cashed or deposited into a bank account.

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8. A check written by the bank on its own funds is a(n)

A check written by the bank on its own funds is called a Cashiers Check. This type of check is considered more secure than a personal check because it is guaranteed by the bank. The bank withdraws the funds from the payer's account and holds them in its own account until the check is presented for payment. This ensures that the check will not bounce or be returned due to insufficient funds. Cashiers checks are often used for large transactions or when a guaranteed form of payment is required.

Explanation

A check written by the bank on its own funds is called a Cashiers Check. This type of check is considered more secure than a personal check because it is guaranteed by the bank. The bank withdraws the funds from the payer's account and holds them in its own account until the check is presented for payment. This ensures that the check will not bounce or be returned due to insufficient funds. Cashiers checks are often used for large transactions or when a guaranteed form of payment is required.

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