Banking and Loans

What are three ways to ensure your bank account is secure?

• Use strong passwords

• Check account for irregular transactions

• Hire an accountant

• Report irregularities immediately

What is NOT an example of a bank fee?

• International transcation fees

• ATM fees

• Overdraw charges

• Overcharge fees

TRUE or FALSE: A transaction account will most likely have a higher interest reward than a savings account.

• True

• False

Answer explanation

A savings account will usually give a higher interest rate to rewards users to save more!

TRUE or FALSE: When using a debit card, you are borrowing money from the bank to be repaid later.

• True

• False

Answer explanation

Credit card: borrowing money from the bank when used to purchase items.

TRUE or FALSE: 'interest' is always a good thing.

• True

• False

Answer explanation

Great for building up savings but costly as a cost to borrowing

What are the 3 components of a loan to consider before taking on one?

• Interest

• Principal amount

• Credit

• Duration or 'term'

Anna takes on a loan from Commonwealth Bank for $15,000 which is repayable over 5 years. The bank charges interest at 5% per annum.

What is the interest incurred at the end of 5 years?

• $750

• $3,750

• $2,550

• $1,500

Anna takes on a loan from Commonwealth Bank for $15,000 which is repayable over 5 years. The bank charges interest at 5% per annum.

What is the total amount owed at the end of 5 years?

• $14,200

• $18,800

• $18,750

• $32,000

Anna takes on a loan from Commonwealth Bank for $15,000 which is repayable over 5 years. The bank charges interest at 5% per annum.

How much is her monthy repayment?

• 755.40

• 500

• 230.25

• 312.50

Answer explanation

Total amount = 18,750

60 months in 5 years

so

monthly repayment =

total owed / number of months

=18,750/60

You are about to take on a car loan: which of the following options is best?

• Borrow $20,000 at 7% interest over 5 years

• Borrow $20,000 at 7% interest over 10 years

• Borrow $20,000 at 6% interest over 5 years

• Borrow $20,000 at 6% interest over 4 years

Answer explanation

To reduce amount owed: find loans with lowest interest and repay them as quickly as possible.