Final Exam Part 1 Review

You are at the checkout counter at the local supermarket and use your debit card to pay for your groceries. Where does the money for this purchase come from?

• It is deducted directly from your checking account

• Your credit card company covers the cost

• Your credit card company provides you with a cash advance to cover the cost

• It is deducted from your credit card account

Jaime gets a text alert from the bank that her account balance has dropped below $100 after a series of $20 ATM withdrawals. She has not used her ATM in over a week and wonders what she should do. What would you recommend?

• Wait a week as it is fairly common for the bank to catch mistakes like this

• Wait until your monthly statement arrives so you can check to see if those withdrawals are still there

• Check your wallet to be sure your debit card has not been stolen. If you still have it, then you should not worry.

• Contact your bank immediately as it appears that your account may have been hacked

FDIC Insurance is…

• Optional coverage consumers can purchase so that their bank deposits remain safe.

• Insurance bank branches can buy to protect their business against fraud and scams.

• Protection for bank customers’ deposits up to $250,000, guaranteeing their money is still available if the bank goes out of business.

• Required if you want to do online or mobile banking.

Sam is opening her first checking account, and she's trying to decide whether she should sign up for overdraft protection. Which friend's advice is MOST accurate?

• Kristie says, "With overdraft protection, you never have to worry about how much money is in your account."

• Bryson says, "Overdraft protection may seem handy if you have an emergency (like needing gas to get to work) but you might pay lots of overdraft fees if you don't keep track of your account closely."

• Kirk says, "Yes, you'll have to pay a fee for each overdraft, but you DON'T have to pay the bank back the money you overdrew the account by."

• Scott says, "If you say "No" to overdraft protection, and you TRY to withdraw more than what's in your account, the bank will contact you to see if you want them to cover it."

Which of the following transactions may be missing when you go online to review your checking account balance?

• The check that you mailed to your cousin for his birthday today

• ATM cash withdrawal from yesterday

• Automatic payment for your car loan paid two days ago

• Debit card transaction from purchasing snacks at a local convenience store today

Which of the following best describes monetary value?

• An item’s worth in comparison to something else

• The price at which an item is bought or sold for

• The value an individual gives an item for personal reasons

• The extent to which a person wants or needs an item

The budgeting process includes three important aspects. Which of the following describes the most important aspect?

• Categorizing spending habits to know which habits to break

• Categorizing spending wants because they result in dangerous spending

• Assigning limits to categories because budgets are built on limitations

• Committing to the limits and categories decided on

Which of the following is a common non-monthly expense that could be included in a monthly budget?

• Gasoline

• Oil Changes

• Rent

• Insurance

Which of the following is NOT true for the envelope budget?

• It utilizes the psychological advantages of paying with cash.

• Most, if not all, discretionary spending is done with cash.

• If a person uses a credit or debit card, he will most likely spend less money than if he used cash.

• Using cash instead of a card naturally limits spending.

Budgeting is not just about monitoring spending. More than anything else, effective budgeting involves ______.

• Building savings

• Managing credit

• Breaking old habits

• Behavior modification