Personal Banking Review

Someone who wants to "lock up" money for an extended period of time in exchange for a high interest rate should get a...

• Checking account

• Savings account

• Money Market Account

• Certificate of Deposit (CD)

Which of these statements about credit unions is FALSE?

• They are non-profit businesses

• They require members to belong to a certain community or occupation

• They are run by their members as a co-operative ("co-op")

• They usually charge higher fees and give lower interest rates on savings accounts than commercial banks

With compound interest, a person earns interest on their principal (own deposit) and previous interest payments

• True

• False

Debit cards are usually linked to our savings account(s)

• True

• False

Two people both deposit the same amount of money over 10 years. One account earns compound interest, the other earns simple interest. Which account will have more money in it after 10 years?

• Compound interest account

• Simple interest account

• Neither, they will both have the same amount after 10 years

All of these are advantages of money market accounts EXCEPT...

• We can use checks and debit cards with them

• We earn interest on the money we keep there

• There is no minimum deposit requirement

• It helps us downsize multiple accounts into a single account

Which of the following applies to investing rather than saving?

• High liquidity (easy to turn funds into cash)

• Low-risk

• Goal is planning for a future expense or emergency

• Goal is to make a financial return or gain

Why do we earn interest on bank accounts?

• So we can purchase shares of the bank's stock

• To make up for the fees the bank charges us

• Banks borrow money from us to finance loans

• We don't - we only pay interest (like on a loan)

What is the best definition of interest?

• Free money our bank gives us each year

• The extra charge on our car loan

• A fee that a lender charges a borrower

• Money I pay the bank to keep my deposits safe

Check all the accounts that would allow us to easily spend money at a store or online

• Checking account

• Money market account

• Savings account

• Certificate of deposit (CD)