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FHCE 3200 Module 4 Exam Questions And Complete Answers
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FHCE 3200 Module 4 Exam Questions AndComplete Answers
Banking Account Types: - Answer -checking accounts (convenient, safe, liquid)
-savings (available options for short term savings; preferably safer low risk
assets-usually generate low returns, but provides safety of capital)
Checking accounts: - Answer -named derived from an account that enables the account
holder to write checks
-a check is simply your written order to your bank to pay a third party
-checks have changed very little over time
Federal Reserve Act of 1913 - Answer set in the motion the creation of a national system
where a check written in one city at one bank could be cashed in another city at another
bank
Bank Routing Number - Answer 9 digit code on lower left check; in combination with a
bank account, which act as a payment trail for transferred funds
___ of american's conduct business on daily basis without a checking account. - Answer
8%; these consumers are forced to us cash for most purchases
3 major reasons to have a checking account: - Answer -you need an account that can
accept your wages and salary income in the form of a direct deposit
-protection: checking accounts are insured by FDIC Deposit Insurance Coverage,
(coverage up to at least $250,000 in case the bank was to go out of business)
-ability to use debit cards
What to look for in a bank: - Answer -reasonable monthly fee (<$5/mon)
-no monthly fees for debit cards
-free use of in-network ATMs
-low minimum balance requirements
-accounts that allow unlimited withdrawals and checks on a monthly basis
-requires no minimum, or a smaller dollar amount
Debit Cards: - Answer a substitute for using written checks, and cash; electronic
transactions account for more transactions than transactions that involve a written
check
, Credit Scores & Credit Reports - Answer used by merchants, lenders, rental agencies,
employers, businesses, and governmental organizations as a tool to screen the
credit-worthiness of people
What do financial institutions use credit scores for? - Answer to identify people who are
a low credit risk from people who are a high credit risk
Three major credit rating agencies: - Answer -experian
-trans union
-equifax
How often should one check their credit report? - Answer typically we have access to at
least one free credit report from each major credit reporting agency per year; Georgia
has access to 2 credit reports
how to check your credit report once every 4 months: - Answer -request a credit report
from Experian in January for 2015
-request another from Trans Union in May 2015
-request a third from equinox 2015
-request again from Experian in January 2016
What is a credit score? - Answer credit reporting agencies provide us with a credit
report but does not give us a credit score; can be purchased separately for a small fee
Factors that improve credit score: - Answer -length of credit history (how long someone
has been able to maintain a good credit score)
-low outstanding debt/available debt ratio (why cancelling credit cards might lower
credit scores)
-payment on time (no delinquencies)
Factors that harm credit scores: - Answer -late payments/delinquencies
-bankruptcy/foreclosure
-having a high outstanding debt/available credit ratio
-multiple recept applications for credit
Managing our credit scores: - Answer -keep revolving debt palaces low/pay off as much
of our unsecured debt as we can on a monthly basis
-remember the ratio rule. lenders look at the total amount of credit lines available to you
and compare that to how much has been used.
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