Financial Literacy 8th grade

Erik has a balance of $9,250 on his car loan and has an interest rate of 5.5%. Erik wants to pay off his loan in 2.5 years, he will have to make a monthly minimum payment of $475.12. How much will Erik be paying in interest alone?

• $10,574.82

• $1,271.88

• $1,324.82

• $5,003.60

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What's one similarity between credit and debit cards?

• Both are for purchases that use money you don't currently have.

• Both are for purchases that you pay back at a later date.

• Both require a signature when making a purchase.

• Both are dangerous to lose.

Mrs. Coronado deposited $2,000 in a savings account that pays her interest compounded annually. Mrs. White deposited $3,500 in a saving account that pays her simple interest. Both ladies are getting the same interest rate of 7.5%, if they both leave their money in the bank for 6 years, which of the following is a true statement?

• Mrs. White will earn $1,575 more than Mrs. Coronado.

• Mrs. Coronado will earn $1,988.40 less than Mrs. White.

• Mrs. Coronado will earn $11.60 more than Mrs. White.

• Mrs. White will earn $1,511.60 less than Mrs. Coronado.

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True/False: A payday loan is a loan that you take out the day you get paid, and you pay the loan back the next month.

• True

• False

What is a unique risk of a title loan?

• It's an unsecured loan.

• Your car is used as collateral.

• You must pay the loan back by the next payday.

• There's high interest charged on the loan.

What is one advantage of credit purchases over debit purchases?

• The purchase is secured by a personal password.

• Debit purchases charge interest per purchase, while credit purchases do not.

• The purchaser can spend more money than they currently have and can pay it back later.

What is one advantage of saving money in a savings account over a piggy bank?

• Savings accounts accrue interest for the amount of money saved in that account.

• You can withdraw from a savings account as many times as you want without penalty.

• Savings accounts are easier to access than a piggy bank.

• A savings account does not require a bank to hold the money.

What type of payment is paying your bills by logging on to a website and transferring money directly from your bank?

• Debit

• Credit

• Cash

• Online banking

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Which saving strategy generally results in more interest gained over time?

• Depositing less initially, but saving an increasing amount each month.

• Depositing more initially, but saving less each month.

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Judy is a 16 year-old who just got her first job. She wants a credit or debit card to spend money she will be earning.

Judy's parents worry about her spending money she doesn't own, and don't want her to accrue heavy interest. Which type of card should she get?

• Credit card

• Debit card