Exercises: Everyday banking: accounts, cards, and security

A current account is for everyday use (salary, direct debits, debit card); a savings account is for storing money you do not need immediately so that it earns interest. Explain the difference and decide where you would place each item: weekly pocket money, $300\ \text{€}$ saved for a laptop, money for the monthly bus pass.

There are three types of payment card: debit (the payment comes out of your account immediately), credit (you pay even if you do not have a balance and repay it later, sometimes with interest), and prepaid (you top up only what you want to spend beforehand). State which card describes each situation: (a) paying for shopping and having it deducted immediately from your account; (b) buying headphones online after topping up only $60\ \text{€}$ beforehand; (c) paying for a trip at the end of the month even if you do not have the balance today. Then explain the risk of a credit card if you defer payments.

The figure shows a bank card and what can be done with each piece of information. The red box highlights the two secret details that should never be shared, but one of them is covered up.

1. a) State which three-digit code, written on the back of the card, completes the red box, and explain what it is used for when shopping online.
2. b) Make a complete list of what you would never give out over the phone, via SMS, or by email, even if they claim to be from your bank: the two details in the red box, your app login details, and the verification codes sent to your phone.

Setting up a direct debit means authorising the bank to pay a bill automatically from your account: electricity, the phone, the gym.

1. a) Explain what advantage it has (you don't forget to pay) and what care it requires: if the bill arrives and there is no balance, the bank returns it and there may be a charge.
2. b) Make a list of the bills paid by direct debit in your home or in that of an adult you know, and decide which one you would not set up without checking it first every month.

To make a transfer you need the recipient's IBAN (their account code). An ordinary one takes one working day and is usually free; an instant one arrives in seconds and may carry a charge.

1. a) Explain when you would choose each one: paying the rent that is due tomorrow versus helping out a friend today.
2. b) Argue why it is worth re-reading the IBAN twice before confirming (transfers are very hard to undo).

Taking money out at your own bank's cash machine is usually free; at another bank's it can cost around $2\ \text{€}$ per withdrawal.

1. a) Explain why that charge exists (your bank pays the cash machine's owner) and how to avoid it.
2. b) Calculate how much you would pay a year in charges if you take out $20\ \text{€}$ every week at other banks' cash machines at $2\ \text{€}$ a time, and say what you would rather spend that money on.

Going overdrawn means spending more than you have: the account goes into the negative (for example, $-30\ \text{€}$) and the bank charges you for that automatic 'loan'.

1. a) Explain the difference between having a zero balance and being overdrawn.
2. b) Argue why a $30\ \text{€}$ overdraft over a few weeks can end up costing several euros in interest and charges, and which two habits prevent it (checking the balance before paying, switching on low-balance alerts).

The bank's app is the door to your money. Write five security rules for using it and explain what risk each one prevents: a unique password that isn't the school one, two-factor authentication, not logging in on the station's public wifi, not leaving your phone unlocked for anyone, and keeping the app updated.

Bank A offers a fee-free account but charges $0,50\ \text{€}$ per bank transfer; Bank B charges a $3\ \text{€}$ monthly maintenance fee with free transfers. Nora makes about $4$ transfers a month.

1. a) Calculate how much she would pay per year at each bank.
2. b) Explain what else you would compare before choosing (free ATMs, minimum age, app quality, nearby branch) and how to deal with a bank when you are young (asking about youth accounts, reading the fine print).

Mobile-to-mobile payments (such as Bizum or instant bank transfers) move money from your account to another person's using their phone number, and arrive instantly.

1. a) Explain two safety rules when using them (sending money only to known contacts, checking the recipient's name before confirming).
2. b) Common scam: a stranger texts you saying "I sent you a mobile payment by mistake, please send it back", but no money has been credited to your account. Explain what they are trying to do and what you should do.

Vera receives this SMS: "BANK: Your account has been blocked. Verify it immediately at bnc-security.example.com with your username and password."

1. a) Point out three clues showing that this is a scam (sense of urgency, threat, unofficial URL, asking for login details).
2. b) Explain step by step what Vera should do and what scammers gain if someone enters their details there.

This is the June statement of Abril's account: opening balance $240\ \text{€}$; a payment from her parents $+50\ \text{€}$; the phone bill $-15\ \text{€}$; a card purchase $-32,90\ \text{€}$; a Bizum transfer to her sister $-10\ \text{€}$; a payment for a job $+40\ \text{€}$.

1. a) Calculate the account's closing balance.
2. b) Explain what reviewing the statement every month is for (spotting charges you don't recognise, knowing where your money goes) and what you should do if an unknown charge appeared.

Diego's account has $45\ \text{€}$ and today the gym direct debit is charged: $60\ \text{€}$. The bank pays it anyway and leaves his account in the negative, charging him a $4,50\ \text{€}$ overdraft fee plus interest of $0,10\ \text{€}$ for each day it stays in the red.

1. a) Calculate how much Diego owes the bank right after the charge and the fee.
2. b) If he takes $10$ days to pay money in, calculate the total cost of the mishap (fee plus interest).
3. c) Explain what he should have done to avoid it (warning the gym, keeping a small cushion, low-balance alerts).

'Revolving' cards let you put off paying for everything bought during the month at extremely high interest (a TAE of $20\ \%$ or more). Silvia owes $600\ \text{€}$ on one of them and decides to pay only $50\ \text{€}$ a month.

1. a) Explain why, with that interest, the debt goes down very slowly: a good part of each instalment is interest, not repayment of what was spent. Estimate how many months she will take to clear it.
2. b) Argue why the Supreme Court has declared some of these credits usurious and what cheaper alternative Silvia had (an ordinary personal loan to pay off the card).

Nerea has to pay $300\ \text{€}$ for the end-of-year trip. Options: an instant transfer ($1\ \text{€}$ fee, arrives in seconds), an ordinary transfer (free, arrives tomorrow) or a Bizum (free and instant, but the recipient must have it activated).

1. a) Recommend one option for each case: the deadline ends today and the organiser has Bizum; the deadline is the day after tomorrow and they only gave their IBAN.
2. b) Explain why paying $1\ \text{€}$ for the instant one can work out cheap if it stops you losing your place (the cost of the alternative is much greater).

Unai's mother gets a call 'from the bank': they say there are suspicious charges and, to block them, they need her to read out the code that has just arrived by SMS.

1. a) Explain what vishing is and why the SMS code is the key they are after: the real bank never asks for it over the phone.
2. b) Write the correct script: what she should say, what she should do after hanging up (calling the official number on her card herself or checking the app) and who to warn if she already gave the code.

Íker had his backpack with his wallet stolen at 11:30 h. Inside was his debit card and, on a folded piece of paper next to it, the PIN.

• At 11:45 h, 300 € is withdrawn from an ATM by entering the PIN.

• At 12:15 h, a contactless purchase of 28 € is made at a supermarket without requesting a PIN.

• At 12:40 h, Íker notices the theft and blocks the card through his bank's app.

• At 13:00 h, an attempt is made to make a fraudulent online charge of 150 €, which the system denies.

Íker goes to the branch demanding a full refund of the stolen 328 €, arguing that the law limits the cardholder's liability to a maximum of 50 € in cases of loss or theft.

1. a) Analyze the regulations on payment services (differentiating between unauthorized transactions, gross negligence of the user, and transactions after notification of the block) and determine the exact amount Íker will have to pay out of his own pocket and what amount the bank will have to refund him. Justify your answer by breaking down each transaction.
2. b) If the criminal had also accessed online banking from Íker's mobile phone because it had no biometric lock or passcode, how would that affect the legal and financial liability of the parties? Design a comprehensive security protocol for the user to prevent this kind of vulnerability.

Compare three bank account offers for young people in the Spanish market:

• Account Alfa: 0 € maintenance fee and free online transfers. It has no ATMs of its own in your town: it allows 2 free withdrawals per month at ATMs of any institution if at least 60 € is withdrawn each time; if you withdraw less or from the 3rd withdrawal onwards, the full ATM fee is passed on (between 1,50 € and 2,50 € per transaction).

• Account Beta: Monthly maintenance fee of 2 € (100% waived if a paycheck of at least 400 € is direct-deposited or an average balance over 1.000 € is maintained). It offers a wide network of free ATMs and branches in your municipality.

• Account Gamma: 0 € maintenance fee, but mandatorily linked to a credit/revolving card that charges a 25 € annual fee starting in the second year unless a minimum of 6 deferred-payment purchases are made per year.

1. a) A 16-year-old student receives a 50 € monthly cash allowance, makes digital payments of 10 € to 15 € using their phone, and usually withdraws 20 € in cash two or three times a month. Calculate and quantify the estimated real annual cost that each option would entail, and point out any legal or suitability hurdles some of them present for a minor.
2. b) Design the financial user profile for which Account Alfa is the most efficient alternative and the profile for which Account Beta would be, justifying your proposals with opportunity cost and payment habit criteria.

Over the last decade, financial institutions in Spain have closed more than 40% of their branches and a third of their ATMs, accelerating banking digitalization. At the same time, the European Central Bank defends the mandatory legal tender status of cash and the obligation to guarantee access to physical money for the entire population.

1. a) A banking executive argues: "Closing physical branches and replacing cash with 100% digital channels reduces operating costs, fights tax fraud, and modernizes the economy, benefiting society as a whole." Critically assess this stance: contrast the efficiency gains of the institutions with the negative externalities (economic, social, and financial exclusion) that this process imposes on vulnerable groups and rural areas.
2. b) Design a banking regulation or public policy proposal that reconciles digitalization and the viability of the banking business with the guarantee of access to basic financial services for all citizens. Propose two specific measures and assess their economic feasibility.

Íñigo starts the month with an available balance of 15 € in his checking account. His forecast of income and expenses for November is:

• Day 1: Mobile phone bill (14 €).

• Day 4: Receipt of his monthly allowance transferred by his guardians (50 €).

• Day 5: Release of a video game he wants to buy with a debit card (45 €).

• Day 18: Direct debit of a music subscription (9,99 €).

• Day 28: Direct debit fee for an extracurricular activity (20 €).

The account contract states: "In the event of an overdraft (negative balance), the institution may authorize the debit by charging a fixed fee for claiming debtor positions of 30 € plus an overdraft interest rate of 7,5% per annum, or reject the direct debit due to insufficient funds" (in which case the phone company charges a 10 € return fee).

1. a) Prepare Íñigo's monthly cash flow table recording balances day by day if he carries out all planned transactions. Determine at what points liquidity pressures or overdrafts occur and calculate the direct financial cost he would face if the bank covers the overdraft charges versus if it rejects the bills.
2. b) Design a financial restructuring plan for Íñigo without resorting to loans or asking for extra money, applying the expense prioritization criterion ("pay yourself first") and establishing a feasible timeline to purchase the video game without generating bank charges.

Marcos financed a 1.200 € computer using a credit card with deferred payments (revolving credit). The terms on his statement are:

• Interest rate: 21,5% nominal interest rate (TIN) (23,75% APR / TAE).

• Fixed monthly payment chosen by Marcos: 30 € per month.

• Breakdown of the first payment: 21,50 € corresponds to accrued interest and 8,50 € to principal repayment.

• Outstanding debt after paying the first month: 1.191,50 €.

Marcos states: "It's a bargain: I enjoy a new computer paying only 30 € a month, what I spend on a dinner, without hurting my checking account."

1. a) Refute Marcos's perception using calculations and financial arguments: deduce why this repayment schedule generates the effect known as "perpetual debt" or "snowball effect" and why the Supreme Court has declared similar contracts void on grounds of usury.
2. b) Model and compare this situation with two alternatives: (1) paying the entire amount in a single lump sum at the end of the month, and (2) financing the 1.200 € over 12 months with constant payments of principal plus interest. Justify which option is the most rational for a responsible consumer and what psychological biases revolving credit exploits.

Carmen's grandmother receives a message on her mobile phone from an unknown number: "Hi Mum, my phone broke and I can't receive calls, this is my temporary number. I urgently need to pay a 400 € bill before 14:00 so they don't cut off my service; please send me a Bizum to this number, don't call me because the speaker isn't working". Distressed, the grandmother immediately sends the 400 € via Bizum. Half an hour later, her daughter calls her from her usual phone mentioning that everything is normal.

1. a) Analyse the characteristics of instant transfers and the Bizum system (immediacy, irrevocability, traceability) to explain why cybercriminals prefer this medium over an ordinary bank transfer. What legal obstacles prevent the bank from automatically cancelling the transaction once the fraud has been reported?
2. b) Design a family action plan against social engineering fraud covering two phases: preventive out-of-band authentication measures (alternative verification channels and transaction limits) and the immediate actions that must be taken with banks and law enforcement if the scam has already taken place.

Yassine has a balance of 50 € in his bank account. Due to an IT error, his telephone operator issues a duplicate direct debit of 65 € (that is, it charges him 65 € twice), leaving his account with an overdraft of -80 €. Yassine does not check his banking app until 9 days later, when he discovers that the bank has charged him a 39 € "fee for claiming overdrawn positions" and 1,20 € in debit interest. The bank refuses to reverse the charge, claiming that the fee is stated in the signed contract and that the overdraft was caused by the telephone company.

1. a) Analyse the doctrine of the Bank of Spain and court rulings on overdraft fees (which require proof of effective and individualised collection efforts and the existence of proportionality). Determine whether the bank has acted in accordance with good banking practices and what liability lies with the company that issued the improper charge.
2. b) Design the roadmap Yassine should follow to claim his money back: identify which formal bodies he must turn to in sequence, what supporting documentation he must submit, what legal response deadlines apply, and what the binding scope is of the report issued by the Market Conduct and Complaints Department of the Bank of Spain.

A family is evaluating two alternatives to manage their banking transactions:

• Institution A (traditional banking): Charges a 36 € annual maintenance fee (free with a salary deposit over 800 €), has a local branch with teller service in the neighbourhood, and charges a 3 % fee for purchases or withdrawals in currencies other than the euro.

• Institution B (digital neobank incorporated in Lithuania with a European passport): 0 € maintenance fee, 100 % app-based operations, currency exchange at the interbank rate without a surcharge, but with no physical branches and customer service handled exclusively by a virtual assistant (chatbot).

1. a) A relative argues that "an online neobank offers the exact same guarantees and legal protection as a large traditional Spanish institution, but without paying fees". Critically evaluate this statement: differentiate between an electronic money institution and a credit institution with a banking licence, and explain how the Deposit Guarantee Scheme operates within the European Union and what practical difficulties arise in the event of an account freeze or a cross-border legal dispute.
2. b) Justify which institution is more efficient and secure for two specific cases: (1) a 16-year-old student travelling for a school term to study outside the eurozone and managing their expenses from their phone, and (2) their 78-year-old grandmother who receives a 950 € pension, does not use a smartphone, and needs to withdraw cash periodically at the counter.