Personal finance chapter 8

If you see a charge you don't recognize, you should report it to your bank immediately. True False

True

People who are struggling with money often turn to alternative financial services like payday loans, but these services actually end up causing them to lose money. True False

True

Your emergency fund should go in your checking account, NOT a money market account. True False

False

The Federal Deposit Insurance Corporation (FDIC) and National Credit Union Administration (NCUA) keep your money in the bank insured up to ______ per account. $250 $2,500 $25,000 $250,000

250,000

A debit card, ATM access, payroll direct deposit, and checks are basic features of ___________. A money market account Online banking A savings account A checking account

A checking account

If you prefer great customer service and lower fees . . . A small, local bank is often a great option A large, national bank is for you You should use the check cashing service at a large retailer You should jump from bank to bank until you find the perfect match

A small, local bank is often a great option

Make sure your bank has plenty of ______ and ______. Branches; low interest rates Insurance; monthly maintenance fees ATM locations; a mobile banking app Security breaches; foreign transaction fees

ATM locations; a mobile banking app

Overdraft protection sounds like a good idea . . . Because it is But you have to pay back the deposited money with interest And it helps you build wealth But it will ruin your credit score

But you have to pay back the deposited money with interest

What are the main differences between checking and savings accounts?

Checking: spending and managing my money, while keeping it accessible savings: long term goals like my emergency fund

You need to track everything that involves money, including . . . Your clothing budget for the month Debit card purchases, third-party app transactions, and ATM withdrawals All of the sales that are currently happening The latest retail store credit card offers

Debit card purchases, third-party app transactions, and ATM withdrawals

You should avoid any bank service that leads to . . . Multiple checking accounts Savings Debt Gaining interest

Debt

Banks invest their customers' deposited money and then . . . Earn interest, keeping all of it as their own profit Typically lose some of it in risky investment deals Pay their customers 100% of the earned interest Earn interest, paying the customer a small amount of interest on their accounts

Earn interest, paying the customer a small amount of interest on their accounts

Overdrafting your account is a sign of diligence and responsibility. True False

False

It's your responsibility to know about all of the _______ before choosing a bank. Fees and services involved Employees who work there Branch locations Options for loans

Fees and services involved

Liquidity is . . . How quickly and easily you can access your money A great way to find a financial service that's right for you When you deposit silver or gold and they liquify it for you How money flows from bank to bank

How quickly and easily you can access your money

Why are tracking your expenses and balancing your checking account important?

If money is tight and you are living from paycheck to paycheck, then you need to carefully track your spending to make sure you do not accidentally overdraw your account. ... It is important to balance your account so that you know where you are and how much money you have left to spend until your next paycheck.

Credit Unions differ from retail banks in that they typically require membership based on specific criteria. True False

True

ESSAY QUESTIONS Why might you be at a disadvantage if you choose not to keep your money in a bank?

It doesnt have protection from theft and loss. no one to help you manage money or help you to make money.

If you see "pending" on an account charge, that means. . . You need to make a deposit before it is paid The payment was declined It hasn't been fully processed yet It is suspected of being a fraudulent charge

It hasn't been fully processed yet

With online banks, all of your deposits, transfers, and bill payments happen digitally, but . . . Online banks should never be trusted These banks do not offer interest on savings accounts It's often more difficult to get in touch with a real person when you need assistance They do not provide a debit card

It's often more difficult to get in touch with a real person when you need assistance

A savings account is for ___________. Investing your money Regular spending Long-term savings goals The Entertainment budget line item

Long-term savings goals

A bank can help you _____ your money and keep it _____. Manage; safe Find; growing Deposit; budgeted Budget; available

Manage; safe

An easy way to avoid ending up with errors in your checking account is to simply . . Only use cash Monitor your account at least twice a week Keep all your receipts Budget often

Monitor your account at least twice a week

Some of the services banks offer include . . . Mortgages, check writing, and debit cards Paying off your student loan debt and saving for your future Creating a personalized budget for you and managing your schedule Teaching you how to handle your finances and encouraging you to cut up your credit cards

Mortgages, check writing, and debit cards

Distrust, unemployment, and bank fees are a few excuses people give for . . . Not looking for work when their checking account is getting low Not making and sticking to a budget Not having a savings or checking account Not filing their taxes

Not having a savings or checking account

Verifying your bank's online account statements for accuracy is called ____________. Reconciling your account Adjusting your budget Debit card fraud Direct deposit

Reconciling your account

What does it mean to be blacklisted by a bank? They have decided to charge you extra fees and limited the services available to you. The bank doesn't allow you to open an account because you handled money poorly in the past and couldn't pass their financial background check. They promise you a higher credit score in exchange for a 15% interest rate on your investments You passed the financial literacy test and they offer to pay you for banking with them.

The bank doesn't allow you to open an account because you handled money poorly in the past and couldn't pass their financial background check.

Balancing your checking account is a lot like working on your budget because . . . They both get easier and build money confidence the more you do them They both involve money They're not alike at all They both lose you money in the long run

They both get easier and build money confidence the more you do them

A debit card linked with your checking account is a good option for regular spending. True False

True

Explain the benefits of keeping your money in a bank or credit union, as opposed to an envelope under your bed.

What are the benefits of saving money in an account in a bank or credit union? Your money will be protected from theft and fires. Plus, your money will be federally insured so if your bank or credit union closes, you will get your money back. The maximum amount of money that can be insured is $100,000. Many banks offer an interest rate when you put your money in a savings account.

When deciding on the right bank for you, you should first identify what type of bank you want, the features that matter most to you, and ____________. What kind of accounts you want How large your savings account is What type of home you want to own someday If you want to go to an Ivy League or community college

What kind of accounts you want

With certificates of deposit (CDs), you have to pay a penalty for ____________. Withdrawing your money early Depositing money into the account Creating a savings account Using an ATM

Withdrawing your money early

Something that all of the predatory financial services have in common is . . . They all require you to take out a loan They all require you to be a college graduate You end up losing money with all of them

You end up losing money with all of them

As the owner of your account, managing your money is ______ responsibility. Not your Your Your parent's The banks

Your

How do banks make money?

interest on loans and service fees, atm fees, overdraft, account fees

What is a predatory financial service?

these are services that typically target unbanked people and hurt them in the long run. Examples are: check cashing, payday loans, pawn shop loans, car title lenders, and tax refund lenders