W!SE Financial Literacy Test - Banks & Banking Study Guide Directions: Answer each of the following questions in 1-2 complete sentences. Please make sure your answers are in a different font color. What is a Cashier's Check and why is it guaranteed? What is another term for a Cashier's Check? Why should you avoid making a check payable to Cash? What is a Check Register? How is it used? What does it mean to Reconcile a Checking Account? What is Overdraft Protection designed to do? Can having Overdraft Protection lower your credit score? What is a "Stop Payment Order" and how does it work? What is EFT banking and how does it work? Provide 2 examples in your response. What are Safe Deposit Boxes? Where are they located and how do you access your Safe Deposit Box? Provide at least 2-3 examples of what someone might keep in a Safe Deposit Box. What is the difference between a Collateralized Loan and an Uncollateralized Loan? What are the disadvantages of using Pawn Shops, Check Cashing Stores/Centers, and Payday Lenders? Why are loans needed? How do banks make money when lending to people who want to borrow? Explain the difference between our Nation's Monetary Policy and Fiscal Policy. What is your liability if you lose your Debit Card and report it within 2 business days? Name 3 precautions you could take to help prevent Identity Theft. What is a Down Payment? What type of account should you use to start saving for a Down Payment? Provide 2 examples of something someone might need a Down Payment for? Explain the differences between a Commercial Bank and a Credit Union. Which financial institution usually charges the lowest interest rates on loans? What is a College Savings 529 Plan? What is the definition of the "Time Value of Money"? Explain how Direct Deposit works. Be sure to include some advantages of using Direct Deposit in your response. What is the FDIC (include full name and purpose)? Explain how/why the FDIC was created. What are the advantages and disadvantages of a Certificate of Deposit (CD) vs. a Savings Account