Cwmc Module 2: Banking Competency Test

The correct answer is $250,000. This is the maximum amount that is guaranteed by the FDIC (Federal Deposit Insurance Corporation) for savings in a customer's savings account in an FDIC-approved financial institution. This means that if the financial institution fails, the FDIC will reimburse the customer up to $250,000 of their savings.

Banks offer "free" Overdraft Protection, but the annualized interest rates for using this feature can be as high as 4000%. This means that if a person overdrafts their account and uses this feature, they will be charged an extremely high interest rate of 4000% on the amount they have overdrafted. This can lead to significant financial burden for the individual, as the interest charges can quickly accumulate and make it even more difficult to pay off the overdraft amount.

None of the options listed are designed to benefit the bank's customers. Clearing the largest check first, holding deposits, clearing checks via "first pay," and charging fees for ordering checks are all strategies that primarily benefit the bank by maximizing their profits or minimizing their risks. These actions do not directly benefit the customers in any way.

If my local bank fails, the worst thing that can happen is that I cannot get access to my cash temporarily. This means that I won't be able to withdraw money or make any transactions until the situation is resolved. However, it does not necessarily mean that I will lose all of my money, lose everything in my safety deposit box, or have all of my loans due immediately. The temporary lack of access to cash can still be a significant inconvenience, but it is not as severe as the other potential consequences mentioned.

The money in your bank account can be accessed by anyone who is an authorized signer on the account. This means that individuals who have been given the authority to sign and make transactions on the account can access the funds. This could include your spouse, parents, children, or even your employer if they have been given this authorization.

Opening a bank account for a teenager is a good idea if they are taught how to go online to check the balance and manage the account. This ensures that they have access to their account information and can monitor their finances. Additionally, it is important for the teenager to understand the charges for using overdraft protection, as this can help them avoid unnecessary fees. Explaining ATM charges is also necessary so they are aware of any additional costs associated with using their account. Lastly, it is beneficial if the bank offers a low-cost option for teenagers, as this can help them learn about banking without incurring high fees.

Banks today prioritize making a profit for their shareholders. This means that their main objective is to generate financial returns and maximize shareholder value. While they may also aim to help their customers, stimulate the economy, and provide a safe place for consumers to put their money, these goals are secondary to their primary focus on profitability.

A payroll debit card is the easiest and safest solution for employees who don't trust banks or cannot get a checking account. With a payroll debit card, employees can receive their wages directly onto the card, eliminating the need for a traditional bank account. The card can be used to make purchases, withdraw cash, and pay bills, providing a convenient and secure alternative to cash. Unlike credit cards, which can lead to debt if not managed properly, a payroll debit card only allows users to spend the funds they have available, ensuring financial responsibility.

The Truth in Lending Act, Fair Credit Reporting Act, and Dodd-Frank Wall Street Reform and Consumer Protection Act are all laws that protect bank customers. The Truth in Lending Act ensures that consumers receive accurate and clear information about the cost of credit. The Fair Credit Reporting Act regulates the collection, dissemination, and use of consumer credit information. The Dodd-Frank Wall Street Reform and Consumer Protection Act aims to prevent another financial crisis and protect consumers from abusive financial practices. These laws provide additional safeguards for bank customers in addition to the FDIC guarantees.

Consumers generally will not find the best terms on loans at national banks. This is because national banks typically have higher overhead costs and larger operating expenses compared to local community banks, credit unions, and online banks. As a result, national banks may offer higher interest rates and fees on loans compared to other financial institutions.

Bankrate.com is the best resource to compare bank fees because it is a reputable and reliable website that provides comprehensive information on various banks and their fees. It allows users to easily compare fees and services offered by different banks, helping them make informed decisions. Additionally, Bankrate.com is frequently updated with the latest fee information, ensuring that users have access to the most accurate and up-to-date data.

Monitoring activity on your bank account online daily can help you avoid overdraft charges by allowing you to keep track of your balance and ensure that you have sufficient funds to cover your expenses. It can also help you find errors sooner, such as fraudulent transactions or mistakes made by the bank, so that you can report them and have them resolved promptly. Additionally, monitoring your account regularly provides peace of mind by giving you a clear understanding of your financial situation and ensuring that everything is in order. Finally, it allows you to know how much money is in your account at any given time, helping you make informed financial decisions.

Having an account at a national bank will be beneficial when traveling and trying to access an ATM because national banks usually have a larger network of ATMs, making it easier to find one while traveling. It will also be beneficial during a disaster when the local branch may be inaccessible because national banks have multiple branches across the country, providing alternative options for banking services. However, it may not be beneficial when low monthly service fees are a priority as national banks may have higher fees compared to local banks. Additionally, personally getting to know a banker may not be a priority when choosing a national bank as they tend to have a larger customer base.

Credit unions generally charge the lowest fees overall for a checking account compared to brick and mortar banks, online banks, and savings and loans. This is because credit unions are not-for-profit organizations owned by their members, so they prioritize providing affordable financial services rather than maximizing profits. As a result, credit unions often offer lower fees for various banking services, including checking accounts.