Bank Products and Services Flashcards

A customer wants a deposit account that pays a fixed rate but agrees not to withdraw funds for 12 months. Which product fits best?

Answer: Certificate of deposit

A certificate of deposit pays a fixed rate for a set term and usually charges a penalty if funds are withdrawn early.

What usually happens when a CD owner withdraws principal before the maturity date?

Answer: An early withdrawal penalty, often a set number of days' interest, is charged

Banks typically charge an early withdrawal penalty, often stated as a number of days or months of interest.

Which deposit product usually lets a customer write a limited number of checks while earning a tiered interest rate?

Answer: Money market deposit account

Money market deposit accounts usually pay tiered rates and may offer limited check-writing.

A customer asks for a check guaranteed by the bank and drawn on the bank's own funds. What should the teller offer?

Answer: Cashier's check

A cashier's check is drawn by the bank on itself, so the bank's own funds back it.

How does a certified check differ from a cashier's check?

Answer: A certified check is the customer's own check, which the bank guarantees by setting aside funds

For a certified check, the bank sets aside the funds and guarantees the customer's own check.

What's the main purpose of overdraft protection linked to a savings account?

Answer: To automatically transfer funds to cover checks that would otherwise overdraw checking

A linked-account overdraft transfer moves funds from savings to cover a shortfall in checking.

A customer wants to set aside money for retirement with tax-deferred growth at the bank. Which product is appropriate?

Answer: Traditional IRA

A Traditional IRA lets contributions grow tax-deferred until they are withdrawn in retirement.