Deck 5: Checking Accounts, Credit Scores, and Credit Cards

Question 1

Which of the following could incur fees and penalties on a checking account?

A) The account holder uses an ATM not owned by the financial institution.
B) A customer asks the financial institution to not honor a particular check.
C) The account balance falls below a set minimum amount.
D) All of these answer choices are correct.

Answer 1

All of these answer choices are correct.

Question 2

The following is an example of what type of endorsement? Pay to the Order of Mike Smith, Mary Timberly.

A) Blank endorsement.
B) Special endorsement.
C) Restricted endorsement.
D) Payee endorsement.

Answer 2

Special endorsement.

Question 3

Amara lost his debit card on May 1st. He reported it missing the next day; however, $600 had already been purchased with the card without the use of his PIN number. How much of this $600 loss is Amara responsible for?

A) $0.
B) $50.
C) $500.
D) $600.

Answer 3

$50.

Question 4

Macario received a $500 prepaid card for graduation. He lost the card on his way home. What is his maximum liability, given the fraud protection offered by prepaid cards?

A) $0.
B) $50.
C) $250.
D) $500.

Question 5

A(n) ________ is simply your written order to your bank to pay a third party.

A) check
B) receipt
C) invoice
D) endorsement

Question 6

Which of the following is generally required when you write a check?

A) The name of the person or company that will get the money.
B) The date.
C) The amount to be paid.
D) All of these answer choices are correct.

Question 7

The Federal Deposit Insurance Corporation (FDIC) insures accounts in

A) commercial banks.
B) credit unions.
C) brokerage companies.
D) commercial banks and credit unions.

Question 8

Which of the following acts as a payment trail for transferred funds?

A) The check number and the account number.
B) The account number, only.
C) The bank routing number, only.
D) The account number and the bank routing number.

Question 9

Mohammed had $750 in his checking account when his debit card was stolen. Assuming the thief made $525 in purchases with the card, how much could Mohammed save by reporting the stolen ATM card within 2 business days rather than waiting more than 2 business days (but less than 60 days) before reporting the theft?

A) $50.
B) $525.
C) $475.
D) $500.

Question 10

What type of card allows you to make a payment using money that was loaded onto the card in advance?

A) Prepaid card.
B) Debit card with PIN.
C) Debit card with signature.
D) Credit card.

Question 11

The following is an example of what type of endorsement? Pay to cash. Signed Mary Timberly.

A) Blank endorsement.
B) Special endorsement.
C) Restricted endorsement.
D) Certified endorsement.

Question 12

What is the end balance for the following check register?

A) $1,899.25.
B) $1,201.25.
C) $2,599.25.
D) $2,700.25.

Question 13

A check drawn on a financial institution, backed by the financial institution's finances, and made out to a specific payee is called a

A) certified check.
B) money order.
C) cashier's check.
D) traveler's check.

Question 14

Around what time period were checks introduced into the banking system in Europe?

A) ad 800.
B) ad 1000.
C) ad 1200.
D) ad 1400.

Question 15

How much does the Federal Deposit Insurance Corporation (FDIC) currently insure against loss per person in an individual account at any one institution?

A) $50,000.
B) $100,000.
C) $250,000.
D) $500,000.

Question 16

How quickly you can access cash is referred to as

A) liquidity.
B) insurance.
C) overdraft.
D) reconciliation.

Question 17

A personal check issued by a bank that guarantees the amount will be paid is what type of check?

A) Traveler's check.
B) Cashier's check.
C) Certified check.
D) Money order.

Question 18

What type of hybrid method immediately converts paper check payments at the point-of-sale terminal to an electronic form of payment?

A) Check-to-electronic conversion.
B) Automated Clearing House.
C) Peer-to-peer payments.
D) Prepaid card.

Question 19

The following is an example of what type of endorsement? For Deposit Only (1357902468) Oconee City Bank Mary Timberly

A) Blank endorsement.
B) Special endorsement.
C) Restricted endorsement.
D) Deposit endorsement.

Question 20

Mark and Betty want to keep $339,200 in cash equivalents that are FDIC insured. They could accomplish this by

A) investing $74,200 in a money market mutual fund and $265,000 in a federally insured credit union.
B) dividing it equally into three different joint accounts in the same federally insured bank.
C) dividing it equally into two different joint accounts in two different credit unions.
D) dividing it equally into two individual accounts at the same bank.

Question 21

On January 1, Pablo borrows $5,000 with a fixed interest rate on the loan of 10% and a loan term of 2 years. He will be making monthly payments of $230.72. How much of Pablo's first loan payment would be interest charged for January, the first month of the loan?

A) $40.09.
B) $41.67.
C) $42.98.
D) $43.67.

Question 22

Sachi borrowed $7,000 to purchase a used car. The total amount she will need to pay includes the $7,000 she borrowed, $2,400 interest, and $250 loan fees. What is the finance charge on Sachi's loan?

A) $250.
B) $2,400.
C) $2,650.
D) $9,650.

Question 23

Mainstream financial service providers include

A) payday lenders.
B) check cashers.
C) money order providers.
D) banks.

Question 24

What type of payment can be made electronically without a debit card?

A) Direct debit.
B) Debit card with PIN.
C) Debit card with signature.
D) Prepaid card.

Question 25

A loan consists of what elements?

A) Principal.
B) Interest.
C) Loan fees.
D) All of these answer choices are correct.

Question 26

Maarku lost his debit card. He reported it immediately before any unauthorized withdrawals were made. How much is Maarku responsible for?

A) $0.
B) $50.
C) $500.
D) $600.

Question 27

Tips to minimize the possibility of someone using your cards in a fraudulent manner include

A) reconciling statements monthly.
B) making copies of receipts.
C) sharing your account number over the phone.
D) filing statements in a bank safe.

Question 28

A finance charge represents that total amount of what elements?

A) Interest and principal.
B) Fees and principal.
C) Interest and fees.
D) Interest, fees, and principal.

Question 29

Which of the following forms of payment allows a consumer to make purchases over the Internet?

A) Cash.
B) Checks.
C) Prepaid cards.
D) Money orders.

Question 30

What types of fees may be incurred for debit cards?

A) Card balance inquiries.
B) Load and reload of funds.
C) Monthly maintenance.
D) Monthly maintenance and lost card.

Question 31

How are most goods and services purchased and money transfers done today?

A) Electronic transactions.
B) Coins.
C) Traditional checks.
D) Cash.

Question 32

On January 1, Pablo borrows $5,000 with a fixed interest rate on the loan of 10% and a loan term of 2 years. He will be making monthly payments of $230.72. How much of Pablo's first loan payment on February 1 would be principal?

A) $189.05.
B) $190.63.
C) $225.50.
D) $250.28.

Question 33

On January 1, Pablo borrows $5,000 with a fixed interest rate on the loan of 10% and a loan term of 2 years. He will be making monthly payments of $230.72. How much of Pablo's fifth loan payment would be interest charged?

A) $38.50.
B) $36.90.
C) $35.29.
D) $33.36.

Question 34

Traditional methods of payment include

A) cash.
B) coins.
C) checks.
D) All of these answer choices are correct.

Question 35

In what time frame are the funds transferred from your account to the merchant account when using your debit card?

A) Immediately.
B) The next day.
C) The next business day.
D) In 2 business days.

Question 36

On January 1, Pablo borrows $5,000 with a fixed interest rate on the loan of 10% and a loan term of 2 years. He will be making monthly payments of $230.72. How much of Pablo's second loan payment would be interest charged?

A) $41.67.
B) $40.09.
C) $38.50.
D) $36.90.

Question 37

How are finance charges generally stated?

A) Percentage.
B) As interest.
C) Absolute dollars.
D) Percentage and dollars.

Question 38

Fees may be incurred on what payment methods?

A) Checking account.
B) Debit card.
C) Prepaid card.
D) All of these answer choices are correct.

Question 39

Ladonna borrowed $2,000 to purchase a used car. The total amount she will need to pay includes the $2,000 she borrowed, $200 interest, and $75 loan fees. What is the finance charge on Ladonna's loan?

A) $75.
B) $200.
C) $275.
D) $2,275.

Question 40

What types of fees may be incurred for prepaid cards?

A) Low account balances.
B) Overdrafts.
C) Out-of-network transactions.
D) Load and reload of funds.

Question 41

Credit reporting agencies can maintain bankruptcy information on your report

A) for up to 7 years.
B) for up to 10 years.
C) for up to 15 years.
D) forever.

Question 42

Which company maintains housing and credit files on consumers?

A) Credit bureau.
B) Bank.
C) Credit union.
D) Payday lender.

Question 43

Your credit report may be viewed for what purpose?

A) Underwriting of life insurance.
B) Determining voter eligibility.
C) Gaining college admittance.
D) Applying for a marriage license.

Question 44

What type of loan has an interest rate that fluctuates?

A) Fixed installment loan.
B) Variable installment loan.
C) Personal loan.
D) All loans have a fixed interest rate.

Question 45

What personal information will you need to provide when requesting your credit report?

A) Parents' names.
B) Marital status.
C) Address(es) for the past 2 years.
D) The high school you graduated from.

Question 46

What information can stay in your credit report forever?

A) Bankruptcy.
B) Failure to pay a utility bill.
C) Failure to pay a phone bill.
D) Borrowing more than $150,000.

Question 47

On January 1, Pablo borrows $5,000 with a fixed interest rate on the loan of 10% and a loan term of 2 years. He will be making monthly payments of $230.72. How much of Pablo's fifth loan payment would be principal?

A) $190.63.
B) $192.22.
C) $193.82.
D) $195.43.

Question 48

What should installment loan lenders disclose to credit applicants?

A) The interest rate expressed as an annual percentage rate (APR), only.
B) The finance charge expressed in dollars, only.
C) The interest rate (as an APR) and the finance charge (in dollars).
D) Neither the interest rate (as an APR) nor the finance charge (in dollars).

Question 49

What information is included in your credit report?

A) Educational history.
B) Checking account balance.
C) Current employment status.
D) Inquiry history.

Question 50

Who decides to grant or deny your credit application?

A) Lender.
B) Credit bureau.
C) Credit reporting agency.
D) Federal Trade Commission.

Question 51

________ represents something of monetary value that can be sold in the event that loan payments are not made by the borrower.

A) Collateral
B) Credit
C) Signature
D) Future earnings

Question 52

The Fair Credit Reporting Act (FCRA) requires Equifax, Experian, and TransUnion to provide you with a free copy of your report once every how many months?

A) 6.
B) 12.
C) 18.
D) 24.

Question 53

How many days do the credit bureaus have to investigate fraud once you notify them in writing that their information is inaccurate?

A) 10.
B) 20.
C) 30.
D) 60.

Question 54

Which event can have a positive effect on your credit report?

A) Declared bankruptcy.
B) Taking out a student loan.
C) Losing a home to foreclosure.
D) Both declared bankruptcy and losing a home to foreclosure.

Question 55

Which event can have a negative effect on your credit report?

A) Owning stock in a company that declares bankruptcy.
B) Taking out a student loan.
C) Losing a home to foreclosure.
D) All of these answer choices are correct.

Question 56

Which of the following is a national credit bureau?

A) Equifax.
B) TransUnion.
C) Experian.
D) All of these answer choices are correct.

Question 57

A credit report is a summarized account of your

A) work history.
B) leasing history.
C) education.
D) credit history.

Question 58

How many years can credit reporting agencies maintain negative information (excluding a bankruptcy) on your report?

A) 7.
B) 10.
C) 15.
D) Forever.

Question 59

Thomas failed to make his loan payments, and the court ordered his employer to pay his wages directly to his creditor. What does this example represent?

A) Credit.
B) A loan.
C) Garnish wages.
D) A fee.

Question 60

Negative items on your credit report include which of the following?

A) Accounts sent to collections.
B) Inquiries resulting from a transaction you initiate.
C) Your request to review your own credit report.
D) Low checking account balances.

Question 61

Amar owes $2,000 on his credit card with a minimum percentage of 4% or a minimum payment of $60, whichever is higher. How much is the minimum payment due?

A) $60.
B) $80.
C) $140.
D) $2,000.

Question 62

How will having a credit score of 775 impact your application for new credit?

A) You will likely be approved for new credit.
B) You will likely be rejected for new credit.
C) It will not affect your application.
D) You will likely be approved and receive the best borrowing terms.

Question 63

Josiah owes $3,500 on his credit card with a minimum percentage of 3% or a minimum payment of $100, whichever is higher. How much is the minimum payment due?

A) $100.
B) $105.
C) $200.
D) $3,500.

Question 64

What represents the total amount of credit lines available compared to how much is used?

A) Credit usage ratio.
B) Debt-to-income ratio.
C) Debt-to-asset ratio.
D) Liquidity ratio.

Question 65

An example of installment credit includes

A) MasterCard.
B) student loans.
C) Visa.
D) a home equity line of credit.

Question 66

What input makes up the largest portion of your FICO score?

A) Amount of credit.
B) Payment history.
C) New credit.
D) Length of credit history.

Question 67

What impacts your credit score?

A) Race.
B) Marital status.
C) Payment history.
D) Nationality.

Question 68

What provides a summary of a person's credit risk?

A) Credit score.
B) Leasing history.
C) Credit application.
D) Credit history.

Question 69

Credit card costs can include

A) annual fees.
B) interest.
C) transaction fees.
D) All of these answer choices are correct.

Question 70

An example of revolving credit includes

A) MasterCard.
B) student loans.
C) mortgage loan.
D) car loan.

Question 71

The most widely used credit score is referred to as a

A) FICO score.
B) risk score.
C) payment score.
D) borrowing score.

Question 72

Which of the following is a loan that can be used at the borrower's discretion and convenience and has flexible repayment options?

A) Credit card.
B) Promissory note.
C) Amortized loan.
D) Mortgage.

Question 73

Types of credit represent what score input when calculating your FICO score?

A) 35%.
B) 30%.
C) 20%.
D) 10%.

Question 74

Having a credit score around 500 means you have a ________ risk of having a new credit application rejected.

A) low
B) moderate
C) high
D) The answer depends on how the credit score was calculated.

Question 75

What is the range for FICO scores?

A) 200−600.
B) 250−650.
C) 300−750.
D) 300−850.

Question 76

The longer you have had an account, the ________ your FICO score.

A) better
B) lower
C) more accurate
D) less accurate

Question 77

Your credit score is built, in part, using what input(s)?

A) Amount of credit.
B) Payment history.
C) Types of credit.
D) All of these answer choices are correct.

Question 78

Some people refer to credit cards as ________ loans.

A) amortized
B) mortgage
C) personal
D) revolving

Question 79

How will having a credit score of 400 affect your application for new credit?

A) You will likely be approved for new credit.
B) You will likely be rejected for new credit.
C) It will not affect your application.
D) You will likely be approved but charged a high interest rate.

Question 80

How will having a credit score of 575 impact your application for new credit?

A) You will likely be approved for new credit.
B) You will likely be rejected for new credit.
C) It will not affect your application.
D) You may be approved but charged a high interest rate.