Unit 2.0 Preassessment - Principle of Managing Your Money

Common fees that may be charged on savings or checking accounts include all except:

• Overdraft fees

• Late fees

• ATM fees

• Minimum balance fees

Dylan is concerned about the safety of the money in his savings account. Which type of depository institution should he choose?

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

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

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

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

Ariel is saving money to purchase a new computer before she leaves for college in two years. She wants to open a special account at a depository institution to keep her saved money safe. What would be the best advice for Ariel?

• Check several depository institutions and choose one with a free, no-interest checking account. That way, when Ariel has saved enough for her computer she can simply write a check to pay for it.

• Shop around for the depository institution with the highest interest rates for their savings accounts. She would be able to make regular savings deposits and earn interest while she is saving up for the computer.

• Look for a credit union that offers share draft accounts. These secure accounts are designed especially for saving for long-term financial goals.

• Shop around for a depository institution that offers safe deposit boxes. These accounts offer extra security for deposits and can be set up to allow her to withdraw her money when she needs it.

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?

• 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.

• 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.

• 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.

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 student comments were based on fact while others were based on myths. Which aspect of security at a depository institution is not true?

• Depository institutions have insurance protection for up to $250,000 per depositor per account type so if something happened to the money in the bank, you would get it back as long as the deposited amount was no more than the insurance limit.

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

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

• 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 a $100,000 balance.

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

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

• When earning interest, look for low rates.

• When paying interest, look for low rates.

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

Taxes that are charged on consumption items such as gasoline, hotel rooms, and airline tickets are called which kind of taxes?

• Sales

• Excise

• Federal use

• Property

Dane is researching the topic of property taxes for a presentation he is doing in his Personal Finance class. He has come across the following statements he is considering adding to his presentation. Which should he exclude from his presentation because it is not correct?

• Property taxes are assessed at the same rate for all types of property, including homes, land, and buildings, regardless of location or whether they are used for business or personal use.

• Property taxes are usually charged by state and local governments to pay for local schools and other services and expenses incurred by these governments.

• Property taxes are commonly paid on automobiles. This tax is usually paid once per year when the automobile is licensed.

• Property taxes on homes, land, and buildings are usually only paid once or twice each year.

Which statement is true about payroll taxes?

• Payroll taxes are paid on both earned and unearned income.

• Payroll taxes fund different operations and programs of the federal government.

• Payroll taxes fund the Social Security and Medicare programs.

• The amount of tax paid depends on many different factors but increases as income increases.

As Mariah was looking over her sales receipt for the shirt she bought at a retail store, she discovered that she was charged 6% more than the price tag showed for the item. What is this extra 6% charge most likely to be?

• An excise tax on the shirt she purchased

• Income tax on the shirt she purchased

• Sales tax on the shirt she purchased

• Medical tax on the shirt she purchased