PF Final

Key difference between commercial banks and credit unions

• banks-for profit; credit unions - not for profit

• credit unions-rural; banks - urban areas

• banks pay a higher interest rate

• banks offer more services

Which is NOT TRUE about interest

• It is the price paid for using someone else's money

• When earning interest, look for low rates

• Interest earned or paid is determined by the interest rate

• When paying interest, look for low rates

Gross income minus deductions equal

• net income

• Social Security

• employee benefits

• Medicare

NOT a required paycheck deduction

• Social Security

• Medicare

• Income Tax

• Workers Compensation and Life Insurance

"Pay yourself first"

• Save what is left after paying bills

• Pay all fixed expenses then pay flexible expenses

• Set aside a predetermined amount for savings before spending

• Spend money on items enjoyed in life before paying expenses

Best describes the security level of savings tools

• Secure because are protected by US government against loss

• Not secure - high risk of losing money

• Very secure - no risk involved with saving or investing

• None of these options are true

Lending money to a company or government describes which investment?

• bond

• CD

• stock

• mutual fund

How to avoid paying interest to credit card company

• Limit use of credit card to balance transfers only

• Pay balance in full every month by due date

• Pay minimum balance every month

• There is no way to avoid paying interest.

Life insurance is recommended when

• You reach 50

• Get your first job

• Fly in an airplane

• Have dependents

Recommendation for young adults (18-19 year olds) to begin to build positive credit history.

• Acquire several cards; manage them wisely

• Borrow as close to the credit limit as possible on current credit cards

• Only take out loans; void using a credit card

• Obtain a secure credit card