MAAT University
MHCT Knowledge Check 1.3
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1) Select the correct term for the following definition:
Fee charged to invalidate a check before it is cashed.
(D) Service Fees
Account Maintenance/Service Fees are fees charged by a financial institution for account maintenance. Though typically a monthly fee, it can be charged annually. Frequently, fees can be waived under certain circumstances. For example, banks may waive fees when a member’s direct deposit exceeds $500, minimum daily balance exceeds $1,500, or average balance exceeds $5,000.
Incorrect Answers: (A) Overdraft Fee, (B) Stop Payment Fee, and (C) NSF Fee
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2) Select the correct term for the following definition:
Stop payment fees are fees charged to stop payment on a check before the check is cashed. Members may not want a check to be cashed when they are suspicious of a scam, have lost a check, or have realized that there are insufficient funds in their account.
Incorrect answers: (A) Overdraft Fee, (C) NSF Fee, and (D) Service Fee
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3) Select the correct term for the following definition:
Fee charged if there is not enough money in an account to cover a check payment or other purchase.
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4) Select the correct term for the following definition:
Non-sufficient funds/returned item fees are fees charged if there is not enough money in an account to cover a check payment or other purchase. In addition to a fee, the returned item (or bounced check) may result in additional charges from the creditor.
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5) For the next 3 questons, remember these file notes on Megan from our session:
Which statement should the housing counselor avoid sharing with Megan based on what you know about emergency funds?
Savings for any large expenses should be used if and only if an essential expense that cannot be anticipated arises.
Incorrect answers: (A) Emergency funds can be used to cover living expenses while Jill looks for a new job, if she is laid off—This reason supports the importance of
establishing an emergency fund. A good rule of thumb is to build up 3 to 6 months’ worth of regular life expenses in the fund. This fund will be essential during unexpected unemployment or after emergencies with financial repercussions;
(B) Emergency funds placed in a liquid account can be retrieved when needed without taxes or penalties—This reason supports the importance of establishing an emergency fund. A liquid account is one from which money can be retrieved quickly and without taxes or penalties. Members should not invest emergency funds, because there could be a cost incurred for withdrawing the investment. The idea is to be able to access the money as soon as the emergency occurs; and (D) It is ultimately cheaper to pay for emergency expenses from an emergency fund rather than on
credit—This reason supports the importance of establishing an emergency fund.
If Jill is laid off and pays for living expenses on credit instead of from an emergency fund, the amount of the expense could ultimately cost double the original amount or more.
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6) Which is the most appropriate use of Megan’s emergency funds?
Though some car maintenance should be expected, emergencies that need immediate attention may arise, especially in situations that may affect a member’s ability to commute to work.
Incorrect answers: (A) Contributing to a mutual fund; (B) Upgrading a refrigerator; and (C) Establishing a retirement fund—There are many large purchases or account contributions that she can anticipate. If she prepares for these purchases by establishing a fund for them, she will be less likely to use her emergency funds for these predictable purchases.
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7) Match the item expenses best paid for with Megan’s Emergency Fund (EMF) with the item expenses best paid for with her Short-Term Large Purchase Fund (STF).
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