Managing Your Money

A key difference between commercial banks and credit unions is that:

• Commercial banks offer more services, such as debit cards and online banking, than credit unions.

• Commercial banks typically pay higher interest rates than credit unions

• Commercial banks are ‘for‐profit’ and credit unions are ‘not‐for‐profit’

• Credit unions are more commonly located in rural areas while commercial banks are more commonly located in urban areas.

David made a mistake in his checking account record keeping and spent $10 more than he had deposited in his account. As a result, he can expect to be charged a(n):

• Contact Fee

• Overdraft Fee

• Safe Deposit Fee

• ATM Fee

Since Taylor was a young child she has kept her savings in a piggy bank. She likes this method of saving because she can have immediate access to the money if she needs it. Recently, in a class at school, discussion focused on why depository institutions are safer than her piggy bank. Some students’ comments were based on fact while others were based on myths. Which aspect of security at a depository institution is NOT TRUE?

• All money stored at a depository institution is kept safe at all times by numerous security measures.

• Depository institutions have insurance protection. Depositors can have multiple accounts insured at the same depository institution as long as each account has no more than $100,000.

• Information about depositors and their accounts is kept in secure data storage.

• Depository institutions have insurance protection for up to $250,000 per depositor per account type.

Common fees that may be charged by a depository institution include all EXCEPT:

• ATM fee

• Overdraft fee

• Minimum Balance fee

• Late fee

Samantha wants to be able to use funds in her checking account but finds going to the bank to withdraw cash to be inconvenient. She would like a more effective way to access her checking account funds. What would you suggest she do?

• Request a cashier’s check from her depository institution. That way she can spend money from her checking account without risk of an overdraft fee.

• Apply for a credit card. That way she can use the card to purchase the things she needs and pay for it when the credit card statement comes from her checking account.

• Apply for mobile banking. That way she can access her money with her smartphone to pay for the things she needs. The amount she spends would automatically be deducted from her savings account.

• Apply for a debit card. That way she can use the card instead of cash to purchase the things she needs and the amount spent is immediately deducted from her account.

Sanjay is concerned about the safety of the money in his savings account. Which type of depository institution should he choose? (choose answer that is MOST correct)

• A credit union, since his deposits would be insured by the National Credit Union Association (NCUA)

• Neither a commercial bank nor a credit union. Money is most safely kept at home in a personal safe or vault.

• He could safely choose either a commercial bank or a credit union, as long as his savings account balance meets the insurance requirements.

• A commercial bank, since his deposits would be insured by the Federal Deposit Insurance Corporation (FDIC)

Savings tools offered by depository institutions may earn interest. Which of the following statements is NOT TRUE about interest?

• When paying interest, look for low rates.

• Interest is the price paid for using someone else’s money.

• The amount of interest earned or paid is determined by the interest rate.

• When earning interest, look for low rates.

Who is Medicare designed to help?

• Senior Citizens

• Children of unemployed parent

• Low income families

• Single parents

Which statement is NOT TRUE about property taxes?

• Property tax is often charged by states or local governments to pay for local schools.

• Property taxes are most often paid only once or twice each year.

• The property tax rate is set by the federal government to be equal in every state.

• The fee paid to license a vehicle is an example of property tax.

Taxes that are charged on consumption items such as gasoline, hotel rooms, and airline tickets are called _____________ taxes.

• Excise

• Property

• Federal use

• Sales