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CRCM practice questions

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Question 1Deposit Products and Services

Under the Truth in Savings Act, which figure must be disclosed to express the total interest a depositor would earn in a year, assuming the funds remain on deposit and interest is compounded?

  1. Simple interest rate
  2. Annual percentage rate (APR)
  3. Annual percentage yield (APY) Correct answer.
  4. Nominal interest rate

Explanation

Regulation DD implements the Truth in Savings Act and requires institutions to disclose the annual percentage yield, which reflects the total interest earned over a one-year period based on the stated rate and compounding. The APR is a credit cost measure under Regulation Z and has no role in deposit advertising.

Question 2Deposit Products and Services

What is the standard maximum deposit insurance amount per depositor, per insured bank, for each account ownership category?

  1. $250,000 Correct answer.
  2. $500,000
  3. $200,000
  4. $100,000

Explanation

FDIC coverage is $250,000 per depositor, per insured bank, for each ownership category, such as single, joint, and revocable trust accounts. Coverage is not aggregated across categories, so one depositor may be insured well above $250,000 at a single bank.

Question 3Deposit Products and Services

Under Regulation E, what is the maximum liability for a consumer who notifies the institution within two business days after learning of the loss or theft of an access device?

  1. $500
  2. $25
  3. $0
  4. $50 Correct answer.

Explanation

Regulation E caps a consumer's liability at $50 when the institution is notified within two business days of learning of the loss or theft. Liability rises to $500 if notice comes after two business days but within 60 days of the statement, and can be unlimited beyond that.

Question 4Deposit Products and Services

A bank wants to charge an overdraft fee when a customer's debit card purchase exceeds the available balance. What must the bank obtain from the consumer before charging that fee?

  1. The consumer's affirmative consent Correct answer.
  2. A signed account agreement at account opening
  3. Written notice mailed 30 days in advance
  4. Board approval of the fee schedule

Explanation

Regulation E requires an affirmative consent, or opt-in, before charging a fee for paying an ATM or one-time debit card transaction that overdraws the account. Consent obtained through the general account agreement, or by treating silence as consent, is not sufficient.

Question 5Deposit Products and Services

A bank must report interest paid to the IRS on Form 1099-INT when the interest totals at least:

  1. $50
  2. $600
  3. $10 Correct answer.
  4. $100

Explanation

Interest of $10 or more paid on a deposit account during the year must be reported on Form 1099-INT. The $600 threshold applies to other information returns, such as those for nonemployee compensation, not to deposit interest.

Question 6Deposit Products and Services

Under Regulation CC, which deposit must be made available for withdrawal no later than the next business day?

  1. Cash deposited with a bank employee Correct answer.
  2. A check drawn on a local bank
  3. A check drawn on a bank in another state
  4. A money order deposited at an ATM

Explanation

Cash deposited in person to a bank employee is a next-day availability item under Regulation CC. Other checks generally receive next-day availability only for the first $225, with the remainder available within two business days.

Question 7Deposit Products and Services

Which characteristic distinguishes a transaction account from a savings deposit?

  1. Payment of a variable rate of interest
  2. A stated maturity date
  3. Unlimited transfers to third parties by check Correct answer.
  4. A required minimum balance

Explanation

A transaction account permits the owner to make unlimited transfers or withdrawals to third parties by check, draft, or similar instrument on demand. Savings deposits historically limited such third-party transfers, and a stated maturity is a feature of time deposits.

Question 8Deposit Products and Services

Under the Check 21 Act, a properly prepared substitute check is:

  1. The legal equivalent of the original check Correct answer.
  2. Enforceable only if the original check is destroyed
  3. Valid only when endorsed by the depositary bank
  4. Limited to checks under $25,000

Explanation

A substitute check that meets the Act's requirements is the legal equivalent of the original check for all purposes, including presentment and warranty claims. It must contain an accurate image and the required legend, but no minimum or maximum dollar amount applies.

Question 9Deposit Products and Services

A customer deposits a $7,000 check drawn on a local bank into an existing checking account at a staffed teller on Monday. Assuming no exception hold applies, when must the funds be available?

  1. The full $7,000 on Tuesday
  2. The full $7,000 on Monday
  3. $225 on Tuesday and the remaining $6,775 by Wednesday Correct answer.
  4. $225 on Tuesday and the remaining $6,775 by Friday

Explanation

Under Regulation CC, the first $225 of a non-next-day check must be available the next business day and the remainder within two business days of the deposit. The large-deposit exception could extend availability for the excess, but the question rules out any exception hold.

Question 10Deposit Products and Services

A customer calls the bank and orally orders a stop payment on a check. If the customer never confirms the order in writing, how long is the oral order binding on the bank?

  1. Two business days
  2. Until the check is presented
  3. Six months
  4. Fourteen calendar days Correct answer.

Explanation

An oral stop payment order is binding on the bank for 14 calendar days unless the customer confirms it in writing during that period. A written order, by contrast, remains effective for six months and may be renewed.

Question 11Deposit Products and Services

A bank cannot complete its investigation of a Regulation E error claim within 10 business days. What must the bank do?

  1. Wait for the merchant's response
  2. Provisionally credit the consumer's account Correct answer.
  3. Deny the claim and close the account
  4. Refer the matter to the card network

Explanation

If the investigation cannot be completed within 10 business days, the institution must provisionally credit the consumer's account for the disputed amount while it finishes the investigation. It then has up to 45 days, or 90 days for point-of-sale debit and foreign-initiated transactions, to resolve the claim.

Question 12Deposit Products and Services

What rate must a bank use for backup withholding on reportable interest when the depositor fails to furnish a correct taxpayer identification number?

  1. 10%
  2. 24% Correct answer.
  3. 15%
  4. 28%

Explanation

Backup withholding is imposed at the fourth lowest individual income tax rate, which has been 24% since the Tax Cuts and Jobs Act. The bank withholds from reportable interest and remits the amount to the IRS until a correct TIN is furnished.

Question 13Deposit Products and Services

An account holder with a $1,200 balance stops all contact with the bank for the statutory dormancy period. Under state unclaimed property law, the funds are generally reported and remitted to:

  1. The state of the owner's last known address Correct answer.
  2. The state where the branch is located
  3. The U.S. Treasury
  4. The state where the bank is chartered

Explanation

Unclaimed deposit accounts are escheated to the state of the owner's last known address as shown on the bank's records. If no address is known, the state of the bank's principal place of business generally applies.

Question 14Deposit Products and Services

A depositor holds a payable-on-death account naming three living beneficiaries. What is the maximum FDIC coverage for that account?

  1. $1,250,000
  2. $500,000
  3. $250,000
  4. $750,000 Correct answer.

Explanation

Revocable trust and payable-on-death accounts are insured up to $250,000 per named beneficiary, provided the beneficiaries are eligible. Three qualifying beneficiaries therefore produce $750,000 of coverage for that account.

Question 15Deposit Products and Services

Which customer is eligible to hold a NOW account?

  1. A limited liability company formed to operate a restaurant
  2. A for-profit corporation operating a retail chain
  3. A charitable nonprofit organization Correct answer.
  4. A general partnership engaged in manufacturing

Explanation

NOW accounts may be held only by individuals and by certain nonprofit and governmental entities, including organizations operated for charitable, religious, educational, philanthropic, or similar purposes. For-profit businesses are limited to demand deposit accounts for their checking needs.

Question 16Deposit Products and Services

Under Regulation DD, what must a periodic statement disclose about overdraft and returned-item fees?

  1. The date each overdraft item was paid
  2. The total fees imposed for the statement period Correct answer.
  3. The fees projected for the next cycle
  4. The fee schedule in effect at account opening

Explanation

Regulation DD requires the periodic statement to disclose the total dollar amount of fees imposed for the statement period for overdrafts and returned items, along with the amount of interest earned and the APY earned. Individual item-level detail is not required by the regulation.

Question 17Deposit Products and Services

A consumer fails to notify the bank of an unauthorized electronic transfer within 60 days after the statement showing the transfer was sent. What is the consumer's liability for unauthorized transfers occurring after that 60-day period?

  1. Unlimited, to the extent of the account balance Correct answer.
  2. $0
  3. $50
  4. $500

Explanation

If the consumer does not report within 60 days of transmittal of the statement, liability for transfers occurring after the 60-day period is unlimited if the institution can establish that timely notice would have prevented the loss. The $50 and $500 caps apply only to losses arising before that point.

Question 18Deposit Products and Services

A bank rents a safe deposit box to a customer. The legal relationship created is generally:

  1. A bailment for the mutual benefit of the parties
  2. A landlord-tenant lease Correct answer.
  3. A secured lending arrangement
  4. A fiduciary trust

Explanation

A safe deposit box arrangement is treated as a lease of space, not a bailment, because the bank does not take possession of or control the contents. The bank therefore is generally not liable for loss of contents absent negligence or breach of the rental agreement.

Question 19Deposit Products and Services

A customer writes a check dated three weeks in the future and asks the bank not to pay it before that date. If the bank pays the check early and the customer suffers a loss, the bank is liable because:

  1. The check is automatically void until its date
  2. The bank must hold all post-dated items for 30 days
  3. Post-dated checks are never payable
  4. The customer gave the bank timely notice of the postdating Correct answer.

Explanation

Under UCC Article 4, a bank may pay a post-dated check unless the customer has given notice of the postdating describing the check with reasonable certainty. If notice was given and the bank pays early, the bank is liable for the resulting loss.

Question 20Deposit Products and Services

A bank advertises a checking account as "free." Under Regulation DD, what must be true for the bank to use that term?

  1. No maintenance or activity fee may be imposed Correct answer.
  2. The account must earn no interest
  3. The account must be free of all fees, including incidental fees
  4. The account must remain free for at least one year

Explanation

Regulation DD permits the terms "free" or "no cost" only when no maintenance or activity fee is imposed on the account. Incidental fees, such as stop payment or NSF charges, may still apply without defeating the claim.

Question 21Deposit Products and Services

A bank has reasonable cause to doubt the collectibility of a check deposited into an established account. How long may the bank extend the hold beyond the standard availability schedule?

  1. Ten business days regardless of reasonableness
  2. Thirty calendar days
  3. A reasonable period not exceeding five business days Correct answer.
  4. A reasonable period not exceeding nine business days

Explanation

The reasonable-cause exception in Regulation CC allows the depositary bank to extend availability for a reasonable period not exceeding five business days. The bank must state the reason for the hold and give notice to the customer, and the extension cannot be used routinely.

Question 22Deposit Products and Services

For an account opened within the prior 30 days, a bank investigating an alleged Regulation E error may delay provisional credit for up to:

  1. Twenty business days Correct answer.
  2. Five business days
  3. Ten business days
  4. Forty-five calendar days

Explanation

Regulation E extends the provisional credit deadline from 10 to 20 business days for new accounts, defined as accounts opened within the preceding 30 days. The longer period reflects the greater risk of fraudulent claims on newly opened accounts.

Question 23Deposit Products and Services

When the IRS serves a notice of levy on a deposit account, the account holder may redeem the property levied upon by paying the amount due within:

  1. 10 days
  2. 21 calendar days Correct answer.
  3. One year
  4. 30 days

Explanation

The Internal Revenue Code gives the taxpayer a right of redemption for 21 calendar days after the notice of levy is served. During that period the bank must generally hold the levied funds pending the outcome.

Question 24Deposit Products and Services

In calculating the annual percentage yield for a deposit account under Regulation DD, the bank must assume:

  1. That the principal remains on deposit for 365 days Correct answer.
  2. A 360-day year and monthly compounding
  3. A standard balance of $2,500 regardless of the minimum
  4. That the account is closed at the end of the term

Explanation

Regulation DD's Appendix A requires the APY to be calculated assuming the principal remains on deposit for one year, using a 365-day year (366 in a leap year). The calculation uses the actual rate and compounding method and the minimum balance required to obtain the advertised yield.

Question 25Deposit Products and Services

A new customer deposits a $10,000 cashier's check into an account opened the same day. If the bank invokes the new-account exception, the funds must generally be available no later than:

  1. The second business day after the day of deposit
  2. The fifth business day after the day of deposit
  3. The ninth business day after the day of deposit Correct answer.
  4. The eleventh business day after the day of deposit

Explanation

Regulation CC's new-account exception permits the bank to hold funds until the ninth business day after the day of deposit, although the first $5,525 of certain next-day items must be available by the second business day. The bank must disclose the exception to the customer.

Question 26Deposit Products and Services

Two individuals open a joint savings account at an insured bank and have no other accounts there. What is the maximum FDIC deposit insurance available for this account?

  1. $750,000
  2. $1,000,000
  3. $250,000
  4. $500,000 Correct answer.

Explanation

FDIC coverage for a joint account is $250,000 per co-owner, so an account with two co-owners is insured up to $500,000. The co-owners' shares are combined and insured separately from any single-owner accounts they hold.

Question 27Deposit Products and Services

An account is titled 'A and B as joint tenants with right of survivorship.' When A dies, the account balance belongs to:

  1. B, outside of A's probate estate Correct answer.
  2. the bank until a court orders distribution
  3. A's estate, after probate
  4. B and A's estate in equal shares

Explanation

In a joint tenancy with right of survivorship, the decedent's interest passes automatically to the surviving owner by operation of law. The funds do not become part of the decedent's probate estate.

Question 28Deposit Products and Services

Under Regulation E, a bank that charges its customer a fee for an ATM cash withdrawal must:

  1. post notice of the fee on or at the ATM Correct answer.
  2. obtain written consent at account opening
  3. limit the fee to $2 per transaction
  4. disclose the fee only in the account agreement

Explanation

Regulation E requires a notice of the fee to be posted on or at the ATM, and the fee must also appear on the terminal receipt. The account agreement alone is not sufficient notice at the machine.

Question 29Deposit Products and Services

Which feature identifies a time deposit under Regulation D?

  1. No maturity date
  2. Unlimited third-party transfers
  3. Payable on demand
  4. Seven-day notice or early withdrawal penalty Correct answer.

Explanation

A time deposit is one the depositor has no right to withdraw within six days of deposit, or one that requires a penalty for early withdrawal. This is why time deposits carry a notice requirement or penalty.

Question 30Deposit Products and Services

A bank requires $100 to open a savings account and $2,500 to earn the advertised APY. Under Regulation DD, the account disclosures must state:

  1. only the opening amount
  2. neither amount
  3. only the APY balance
  4. both amounts Correct answer.

Explanation

Truth in Savings requires disclosure of the minimum balance needed to open the account and, when it differs, the minimum balance needed to obtain the stated APY. Each figure must be identified for what it represents.

Question 31Deposit Products and Services

For a change in terms that adversely affects a consumer, Regulation DD requires the bank to give written notice at least:

  1. 10 days before
  2. 60 days before
  3. 45 days before
  4. 30 days before Correct answer.

Explanation

Regulation DD requires at least 30 days' advance written notice of a change in terms that adversely affects the consumer. Certain changes, such as variable-rate adjustments and check printing fees, are exempt.

Question 32Deposit Products and Services

A bank's newspaper advertisement states 'Earn 3.50% APY on our money market account.' Under Regulation DD, the advertisement must also disclose:

  1. the minimum balance to obtain the APY Correct answer.
  2. the number of branch offices
  3. the bank's routing number
  4. the names of the bank's officers

Explanation

Stating an APY in an advertisement triggers additional required disclosures, including the minimum balance needed to obtain that APY and the minimum opening deposit. The advertisement must present the information clearly and prominently.

Question 33Deposit Products and Services

Under the Check 21 Act, a consumer must submit a claim for expedited recredit no later than:

  1. 14 days
  2. 60 days
  3. 30 days
  4. 40 days Correct answer.

Explanation

A consumer may claim expedited recredit for a substitute check within 40 days of the statement or the date the check was returned. The bank then has 10 business days to act on the claim.

Question 34Deposit Products and Services

Under Regulation E, a bank may charge an overdraft fee on a one-time debit card transaction only if:

  1. The account has been open at least 30 days
  2. The consumer affirmatively consents to the service Correct answer.
  3. The consumer receives direct deposit
  4. The transaction exceeds $100

Explanation

Regulation E requires affirmative consumer consent, often called opt-in, before a bank may charge overdraft fees on ATM and one-time debit card transactions. Without that consent, the transaction must be declined if funds are insufficient.

Question 35Deposit Products and Services

After completing its investigation of a Regulation E error claim, a bank must provide the consumer a written explanation of its findings within:

  1. One business day
  2. Three business days Correct answer.
  3. Thirty business days
  4. Ten business days

Explanation

Regulation E requires the bank to report the results of its investigation in writing within three business days after concluding it. The explanation must include the reasons for the determination and note any right to request documents.

Question 36Deposit Products and Services

A bank must report interest paid to a depositor on Form 1099-INT when the interest for the year is at least:

  1. $5
  2. $1
  3. $10 Correct answer.
  4. $50

Explanation

Interest payments of $10 or more in a calendar year must be reported to the depositor and the IRS on Form 1099-INT. Amounts below that threshold are generally not reportable.

Question 37Deposit Products and Services

Under Regulation CC, the cutoff hour for deposits made at a staffed teller station may not be earlier than:

  1. 12:00 noon
  2. 10:00 a.m.
  3. 2:00 p.m. Correct answer.
  4. 4:00 p.m.

Explanation

Regulation CC sets the cutoff hour for deposits at staffed facilities no earlier than 2:00 p.m. The cutoff hour at an ATM may not be earlier than 12:00 noon. Deposits received after the cutoff are treated as received the next business day.

Question 38Deposit Products and Services

A bank advertisement states a 4.00% interest rate in large type while the account's APY is 4.07%. Under Regulation DD, the advertisement must:

  1. omit the APY
  2. place the APY in a footnote
  3. state only the interest rate
  4. state the APY with equal prominence Correct answer.

Explanation

When an advertisement states an interest rate, Regulation DD requires the APY to be disclosed with at least equal prominence. Placing the APY in small print or a footnote does not satisfy the rule.

Question 39Deposit Products and Services

Deposits held by an irrevocable trust for three named beneficiaries are insured by the FDIC up to:

  1. $500,000
  2. $1,000,000
  3. $750,000 Correct answer.
  4. $250,000

Explanation

Trust account deposits are insured up to $250,000 per beneficiary, so three beneficiaries yield $750,000 of coverage. For trusts with five or more beneficiaries, coverage is at least $1,250,000.

Question 40Deposit Products and Services

A consumer learns on Friday that her debit card is missing and does not notify the bank until the following Wednesday. An unauthorized $900 transfer posts on Monday. The consumer's liability is limited to:

  1. $500 Correct answer.
  2. $50
  3. $0
  4. unlimited

Explanation

Regulation E caps liability at $50 only when the consumer notifies the bank within two business days after learning of the loss. Because notice came later, but within 60 days of the statement, liability is capped at $500.

Question 41Loan Products and Services

Which regulation implements the Truth in Lending Act and requires a creditor to disclose the finance charge and annual percentage rate before a consumer becomes obligated on a consumer credit transaction?

  1. Regulation B (Equal Credit Opportunity)
  2. Regulation Z (Truth in Lending) Correct answer.
  3. Regulation X (RESPA)
  4. Regulation O (Insider Lending)

Explanation

Regulation Z implements the Truth in Lending Act and requires creditors to disclose the cost of credit, including the finance charge and the annual percentage rate, before consummation. The other regulations cited implement different statutes and serve different compliance purposes.

Question 42Loan Products and Services

A regulated lender makes a loan secured by an improved commercial building located in a Special Flood Hazard Area of a participating community. Which statement describes the flood insurance requirement?

  1. Insurance is required only for residential loans, not commercial loans.
  2. Insurance is required only when the loan amount exceeds $250,000.
  3. Insurance must be maintained for the life of the loan in at least the lesser of the outstanding principal balance or the maximum coverage available under the NFIP. Correct answer.
  4. Insurance is required at origination but may be allowed to lapse after the first year.

Explanation

The Flood Disaster Protection Act requires flood insurance for the life of any designated loan secured by improved real property in a Special Flood Hazard Area. Coverage must equal at least the lesser of the outstanding principal balance, the insurable value of the improvements, or the maximum NFIP coverage available for the property type.

Question 43Loan Products and Services

Under Regulation B, within how many days after receiving a completed application must a creditor notify the applicant of the action taken?

  1. 60 days
  2. 10 days
  3. 15 days
  4. 30 days Correct answer.

Explanation

Regulation B requires notification of action taken within 30 days after receiving a completed application. When an application is incomplete, the creditor must instead send a notice of incompleteness within the same 30-day period.

Question 44Loan Products and Services

The primary purpose of Home Mortgage Disclosure Act data collection is to:

  1. replace the Good Faith Estimate with the Loan Estimate at application
  2. help regulators and the public detect discriminatory lending patterns Correct answer.
  3. establish maximum permissible interest rates for mortgage loans nationwide
  4. calculate the flood insurance premiums required for each covered property

Explanation

HMDA requires covered institutions to collect and report loan application, origination, and purchase data so regulators, researchers, and the public can identify possible discriminatory lending patterns and ensure community credit needs are met. Rate ceilings and flood pricing are governed by entirely different rules.

Question 45Loan Products and Services

Under the TILA-RESPA Integrated Disclosure rules, a creditor must deliver or place in the mail the Loan Estimate no later than:

  1. three business days before consummation
  2. three business days after receiving the application Correct answer.
  3. seven business days after receiving the application
  4. on the day of consummation

Explanation

The Loan Estimate must be delivered or placed in the mail no later than three business days after the creditor receives the application. The consumer must also receive the estimate no later than seven business days before consummation.

Question 46Loan Products and Services

Under the Homeowners Protection Act, a borrower with a residential mortgage loan may request cancellation of private mortgage insurance when the loan reaches what loan-to-value ratio, based on the original value of the property, provided the borrower has a good payment history?

  1. 70 percent
  2. 75 percent
  3. 90 percent
  4. 80 percent Correct answer.

Explanation

The Homeowners Protection Act permits borrower-requested cancellation when the loan reaches 80 percent loan-to-value based on the original value, subject to good payment history and other conditions. Automatic termination occurs at 78 percent of original value, and final termination at the midpoint of the amortization period.

Question 47Loan Products and Services

Which transaction gives the consumer a three-business-day right of rescission under Regulation Z?

  1. A business-purpose loan secured by a commercial warehouse
  2. A mortgage used to buy a vacation home the borrower does not occupy
  3. A refinance secured by the borrower's principal dwelling Correct answer.
  4. A purchase-money mortgage used to buy the borrower's primary residence

Explanation

Rescission applies to consumer credit transactions secured by the consumer's principal dwelling that are not purchase-money loans or construction loans. Purchase-money mortgages, second homes, and business-purpose credit are not rescindable.

Question 48Loan Products and Services

A bank obtains a consumer report on a loan applicant. Under the Fair Credit Reporting Act, the permissible purpose exists because the bank:

  1. obtained the applicant's verbal consent during a branch visit
  2. has a legitimate business need from the consumer's credit application Correct answer.
  3. wishes to prequalify the applicant for future marketing campaigns
  4. is a federally insured depository institution subject to federal supervision

Explanation

The FCRA permits a consumer reporting agency to furnish a report when the user has a permissible purpose, including a legitimate business need in connection with a credit transaction the consumer has initiated. Insured status alone does not create a permissible purpose, and marketing requires separate consent authority.

Question 49Loan Products and Services

A creditor issues a revised Loan Estimate based on a valid changed circumstance. The consumer must receive the revised estimate no later than:

  1. seven business days before consummation
  2. one business day before consummation
  3. three business days before consummation
  4. four business days before consummation Correct answer.

Explanation

Regulation Z requires that a revised Loan Estimate be received by the consumer no later than four business days prior to consummation. A revised estimate may not be provided on or after the date the Closing Disclosure is delivered.

Question 50Loan Products and Services

At the annual escrow account analysis, a servicer determines that a borrower's escrow account has a surplus of $75. Under Regulation X, the servicer must:

  1. refund the surplus to the borrower within 30 days Correct answer.
  2. retain the surplus because it is below $100
  3. credit the surplus to the following year's escrow projection
  4. refund the surplus only when the loan is paid off

Explanation

If the surplus at the annual escrow analysis is $50 or more, the servicer must refund it to the borrower within 30 days. Surpluses below $50 may be credited to the next escrow computation year instead.