Question

Which of the following statements is false? a. A credit is a deposit to a checking account. b. A debit is a withdrawal from a checking account. c. An overdraft is a fee your bank charges you for opening a checking account. d. Taking money from your account with an ATM card is a debit.

Answer 1

Answer:

c. An overdraft is a fee your bank charges you for opening a checking account.

Explanation:

Checking account is a deposit account with a bank or any  financial institution that allows the owner of such account to make withdrawals and deposits. They are also known as demand accounts or transactional accounts. They are very liquid and allows for countless deposits and withdrawals and can be obtained  by using automated teller machines, checks and electronic debits, and a number of  other methods.

A checking account is unlike other bank accounts like less liquid savings or investments account it allows for countless withdrawals and unlimited deposits, and savings accounts sometimes limit both.

The statement that an overdraft is a fee that banks charges for opening a checking account is false.

Overdraft is a form of extension of credit from a finiancial institution and often granted when an account reaches zero. it allow such account holder to continue withdrawing money even though the account has no funds  or insufficient funds that would cater  for and cover the amount of the withdrawal. So it is not the fee that bank charges for opening a checking account, instead what checking account offers is overdraft protection in which if a checking account owner write a check or make a purchase than the funds in the checking account, the bank may cover the difference.

Answer 2

Answer:

C. An overdraft is a fee your bank charges you for opening a checking account.

Explanation:

An overdraft occurs when money is withdrawn from a bank account and the available balance goes below zero. In this situation the account is said to be "overdrawn". If there is a prior agreement with the account provider for an overdraft, and the amount overdrawn is within the authorized overdraft limit, then interest is normally charged at the agreed rate. If the negative balance exceeds the agreed terms, then additional fees may be charged and higher interest rates may apply.

Reasons for overdraft

1.Intentional loan

2.Failure to maintain an accurate account register

3.Temporary deposit hold

4.Unexpected electronic withdrawals

5.Merchant error

6.Charge back to merchant

7.Authorization holds

8.Bank fees

9.Returned cheque deposit

10.Intentional fraud

11.Bank error

12.Victimization

13.Merchant overdraft