Cwmc Module 2: Banking Competency Test
This quiz is part of LFE Institute’s CWMC (Certified Workplace Money Coaching) course. It will test your proficiency in the Banking Module (Module 2) of the program. The questions are all multiple choice, and are designed to be a review of this Module. Let LFE know when you’ve successfully completed this test and are ready to begin the next Module.
Correct answers required for passing grade: 12/14
- 1.
Banks today are in business to:
- A.
Help their customers
- B.
Make a profit for their shareholders
- C.
Help stimulate the economy
- D.
Provide a safe place for consumers to put their money
Correct Answer
B. Make a profit for their shareholdersExplanation
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.Rate this question:
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- 2.
Which resource will generally charge the lowest fees overall for a checking account?
- A.
“Brick & Mortar” Bank
- B.
Online bank
- C.
Credit Union
- D.
Savings & Loan
Correct Answer
C. Credit UnionExplanation
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.Rate this question:
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- 3.
Savings in a customer's savings account are guaranteed in an FDIC-approved financial institution up to:
- A.
$100,000
- B.
$150,000
- C.
$200,000
- D.
$250,000
Correct Answer
D. $250,000Explanation
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.Rate this question:
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- 4.
Banks offer “free” Overdraft Protection today, but annualized interest rates to use this feature can go as high as:
- A.
4%
- B.
40%
- C.
400%
- D.
4000%
Correct Answer
D. 4000%Explanation
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.Rate this question:
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- 5.
Where will consumers generally NOT find the best terms on loans?
- A.
National banks
- B.
Local community banks
- C.
Credit Unions
- D.
Online banks
Correct Answer
A. National banksExplanation
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.Rate this question:
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- 6.
When will having an account at a national bank be beneficial? (check all that apply)
- A.
When traveling and trying to access an ATM
- B.
During a disaster when my local branch may be inaccessible
- C.
When low monthly service fees are a priority
- D.
When personally getting to know a banker is important
Correct Answer(s)
A. When traveling and trying to access an ATM
B. During a disaster when my local branch may be inaccessibleExplanation
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.Rate this question:
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- 7.
Monitoring activity on my bank account online daily will help: (check all that apply)
- A.
Avoid overdraft charges
- B.
Find errors sooner
- C.
Provide peace of mind
- D.
Let me know how much money is in the account
Correct Answer(s)
A. Avoid overdraft charges
B. Find errors sooner
C. Provide peace of mind
D. Let me know how much money is in the accountExplanation
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.Rate this question:
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- 8.
What is the easiest and safest solution today for employees who don’t trust banks or cannot get a checking account?
- A.
Just use cash
- B.
Get money orders to pay bills
- C.
Use a payroll debit card
- D.
Use credit cards
Correct Answer
C. Use a payroll debit cardExplanation
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.Rate this question:
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- 9.
What is the best resource to compare bank fees?
- A.
Ask the bank managers
- B.
Www.Bankrate.com
- C.
Contact the FDIC
- D.
Www.TheStreet.com
- E.
Ask another bank what they’ve heard
Correct Answer
B. Www.Bankrate.comExplanation
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.Rate this question:
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- 10.
Which of the following services are designed to help a bank's customers?
- A.
Clearing the largest check first
- B.
Holding deposits to ensure the funds are available
- C.
Clearing checks via “first pay” so that the priority checks clear the bank first
- D.
Charging up to $48 when ordering two boxes of checks so that customers only order one free box at a time
- E.
None of the above are really designed to benefit the bank’s customers
Correct Answer
E. None of the above are really designed to benefit the bank’s customersExplanation
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.Rate this question:
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- 11.
The worst thing that can happen if my local bank fails is:
- A.
I lose all of my money
- B.
I lose everything that was in my safety deposit box
- C.
All of my loans are due immediately
- D.
I cannot get access to my cash temporarily
Correct Answer
D. I cannot get access to my cash temporarilyExplanation
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.Rate this question:
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- 12.
Helping a teenager open a bank account is a good idea if: (check all that apply)
- A.
The teen is taught how to go online to check the balance and manage the account
- B.
He or she understands the charges for using overdraft protection
- C.
ATM charges are explained
- D.
The bank has a low-cost option for teenagers
- E.
It’s never a good idea until the child is 18
Correct Answer(s)
A. The teen is taught how to go online to check the balance and manage the account
B. He or she understands the charges for using overdraft protection
C. ATM charges are explained
D. The bank has a low-cost option for teenagersExplanation
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.Rate this question:
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- 13.
Who can access the money in your bank account?
- A.
Your spouse
- B.
Your parents
- C.
Your children
- D.
Your employer
- E.
Anyone who is an authorized signer on the account
Correct Answer
E. Anyone who is an authorized signer on the accountExplanation
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.Rate this question:
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- 14.
Besides FDIC guarantees, which of the following laws protect bank customers? (check all that apply)
- A.
Truth in Lending (see http://en.wikipedia.org/wiki/Truth_in_Lending_Act)
- B.
FCRA (Fair Credit Reporting Act) (see http://en.wikipedia.org/wiki/Fair_Credit_Reporting_Act)
- C.
Dodd–Frank Wall Street Reform and Consumer Protection Act (see http://en.wikipedia.org/wiki/Dodd-Frank_Wall_Street_Reform_and_Consumer_Protection_Act)
Correct Answer(s)
A. Truth in Lending (see http://en.wikipedia.org/wiki/Truth_in_Lending_Act)
B. FCRA (Fair Credit Reporting Act) (see http://en.wikipedia.org/wiki/Fair_Credit_Reporting_Act)
C. Dodd–Frank Wall Street Reform and Consumer Protection Act (see http://en.wikipedia.org/wiki/Dodd-Frank_Wall_Street_Reform_and_Consumer_Protection_Act)Explanation
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.Rate this question:
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Current Version
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Aug 18, 2023Quiz Edited by
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Dec 18, 2008Quiz Created by
Alice Whinnery
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