What is the benefit of a checking account?

It helps you spend money without carrying cash.

What is the benefit of gifting money via check?

It is safer because you can trace the transaction.

Overdraft protection helps you cover a purchase in your checking account _________________.

when you don't have enough funds

Why should you work to be an informed consumer?

To get the most value for your money

Which review of an online clothing store is more trustworthy and why? Review A states: “All 5 of the shirts were high quality but small. Order a size up” (verified purchase). Review B states: “I love everything from this site. Don’t miss out on their great sales.” (sponsored review).

Review A is more trustworthy because it was a verified purchase.

Which of the following is accurate about the benefits and risks of using credit cards to make purchases? Credit cards come with fraud protection, but credit card numbers can be copied by identity thieves.

Credit cards come with fraud protection, but credit card numbers can be copied by identity thieves.

Which of the following are things a skilled consumer does? Research before buying, buy only from clearance sales, avoid using credit, consider unit prices. Research before buying, buy only what you need, consider unit prices, choose the best payment method. Buy only what you need, shop locally, avoid using credit, buy only from clearance sales. Buy only from clearance sales, pay in cash, consider unit prices, buy only local goods.

Research before buying, buy only what you need, consider unit prices, choose the best payment method.

Which is a good way to make an informed decision about a purchase? Options: Read the product descriptions online, Buy the lowest priced item, Buy the highest priced item, Read reviews from other consumers

Read reviews from other consumers

Which of the following transactions will REDUCE your checking account balance immediately? Writing your monthly rent check which you will mail tomorrow, Using your debit card to pay for groceries at the supermarket, Using your credit card to pay for your school books, Depositing a check at a local bank branch

Using your debit card to pay for groceries at the supermarket

Protection for bank customers’ deposits up to $250,000, guaranteeing their money is still available if the bank goes out of business

When signing up for a new checking account, you answer "Yes" to receive overdraft protection. On this day, you have $10 in your account and go out and use your debit card to buy lunch for $12, a movie ticket for $12 and dinner for $15. What is likely to be the outcome resulting from these transactions?

You will likely be charged an overdraft fee for one or more of the transactions and also will need to repay the bank for the amount overdrawn ($29)

When signing up for a new checking account you answer "No" and opt out of overdraft protection. On this day, you have $10 in your account and go out and use your debit card to buy lunch for $12, a movie ticket for $12 and dinner for $15. What is likely to be the outcome resulting from these transactions?

Since you turned down overdraft protection, the bank will not allow you to overdraw your account so your card will be denied in these 3 instances.

What is the mathematical formula that you would use to describe the financial activity on a bank statement?

Ending Balance = Previous Balance + Deposits - Withdrawals - Fees

Mia is opening her first checking account, and she's trying to decide whether she should sign up for overdraft protection. Which friend's advice is MOST accurate? Jordan says, "With overdraft protection, you never have to worry about how much money is in your account." Donnie says, "Yes, you'll have to pay a fee for each overdraft, but you DON'T have to pay the bank back the money you overdrew the account by." Frank says, "Overdraft protection may seem handy if you have an emergency (like needing gas to get to work) but you might pay lots of overdraft fees if you don't keep track of your account closely." Alex says, "If you say "No" to overdraft protection, and you TRY to withdraw more than what's in your account, the bank will contact you to see if you want them to cover it."

Frank says, "Overdraft protection may seem handy if you have an emergency (like needing gas to get to work) but you might pay lots of overdraft fees if you don't keep track of your account closely."

You are a customer with an Everyday Checking Account. Indicate which statement below about your account is TRUE: If you are between 17 and 24, you will not pay a monthly service fee; Your monthly service fee is waived if you have at least $1,500 as a daily balance; You are earning interest on this account; Based on current regulations, you were automatically signed up for overdraft protection, and you have to call to cancel it if you don't want it.

Your monthly service fee is waived if you have at least $1,500 as a daily balance.

Which of the following is a TRUE statement about check cashing stores? - Their checking accounts typically cost less than traditional bank accounts - They tend to charge consumers a lot of hidden fees - Customers use check cashing stores even though the employees are unfriendly and often make customers feel embarrassed or out-of-place - They make their money by charging fees for transactions that can be done for free by customers with a traditional checking account

They make their money by charging fees for transactions that can be done for free by customers with a traditional checking account.

Reconciling a bank statement is used to

determine if there are any discrepancies in your records.

Complete the statement. __________ means to put money in the bank, while ___________ means to take money out. ___________ is the current total amount of money you have in your account.

Deposit means to put money in the bank, Withdraw means to take money out, Balance is the current total amount of money you have in your account.

People who are unbanked are most likely to...

Incur lots of fees at Check Cashers to access their money

Tyreke has $5,000 to put into an account that earns compound interest. Which of the following is the BEST advice you can offer so that he can maximize interest? Options: It’s ok to open an account with a low interest rates as long as you deposit your money early, Deposit your money as early as possible in an account with the highest interest rate possible, Wait for interest rates to rise above 5%, otherwise compounding doesn’t have any effect, Compound interest will not have any effect at such a low dollar amount. Find different opportunities to earn interest on your savings.

Deposit your money as early as possible in an account with the highest interest rate possible

Which of the following is TRUE when comparing savings accounts and certificates of deposit? Savings accounts are FDIC insured while certificates of deposit are not, Savings accounts allow you to access your money at all times while certificates of deposit require your money to be left alone for a set period of time, Savings accounts typically have a higher interest rate than certificates of deposit, Both savings accounts and certificates of deposit allow you to deposit money at any time

Savings accounts allow you to access your money at all times while certificates of deposit require your money to be left alone for a set period of time.

What is a cosigner in the context of loans?

A person who is responsible for repaying the loan if you default.

Financial Literacy Unit Test Flashcards

Student preview

60 questions

Show all answers

1.

FLASHCARD QUESTION

Front

What is the benefit of a savings account?

Back

A savings account earns interest.

2.

FLASHCARD QUESTION

Front

What is one potential disadvantage of a payday loan?

Back

They are often considered the worst due to high interest rates

3.

FLASHCARD QUESTION

Front

Why do financial institutions offer higher interest rates for Certificates of Deposit (CDs)?

Back

You must keep your money in the account for a set amount of time.

4.

FLASHCARD QUESTION

Front

Keira is new to earning money and saving. She doesn't have a lot of money to open an account. Which savings option would be best for her?

Back

Savings Account

5.

FLASHCARD QUESTION

Front

What kind of account did Sawyer open that requires a large initial deposit, pays a high interest rate, and allows easy access to his money?

Back

Money Market Account (MMA)

6.

FLASHCARD QUESTION

Front

How can a budget help you reach your financial goals?

Back

Budgeting helps track spending and increases savings.

7.

FLASHCARD QUESTION

Front

What does "pay yourself first" mean?

Back

Put money in your savings account before you pay other expenses.

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