EverFi Checking and Savings

What is the benefit of a checking account?

• Helps you spend money without needing to carry cash

• Allows you to save money and earn interest

• Helps you invest for retirement

• Allows you to spend money now and pay for it later

It's your friend's birthday and you want to gift them some money as a gift. What is the benefit of gifting the money via check?

• It is safer because you can trace the transaction

• It is better because you earn interest

• It is faster and the money is available instantly

• There is no benefit. Just give them physical cash

Answer explanation

Checks have unique numbers on them that let you trace them so you can see when they were deposited. You can also cancel the check if your friend loses it before they deposit it. If your friend loses cash...well tough luck!

Overdraft protection helps you cover a purchase from your checking account____________

• when you lost your debit card

• when you do not have enough funds (money) in your account

• only if you are investing your money

• only if you are paying with a mobile payment app

Answer explanation

Overdraft protection protects you from having your transaction get declined if you try to write a check or use your debit card for something. Remember - you will likely pay a fee for each time you overdraft.

Carlos does NOT use overdraft protection. He has $100 in his checking account and tries to buy shoes for $110. What happens?

• He gets the shoes and is charged a $35 overdraft fee

• He gets the shoes and is NOT charged an overdraft fee

• His card is declined and he cannot buy the shoes. He is charged a $35 overdraft fee

• His card is declined and he cannot buy the shoes. He is NOT charged an overdraft fee.

Answer explanation

When you do not have overdraft protection and try to spend more money than you have in your account, your transaction is denied. You cannot buy the item, however you are not charged an overdraft fee.

What usually comes with a checking account?

• Credit Card

• Debit Card

• High Fees

• High Interest

Lucy just opened a new checking account. How can it help her better manage her money?

• She can earn more money through interest

• She can borrow money and pay for it later

• She can check her withdrawals, deposits, and other transactions to track how she spends her money

• She can get a greater investment return

Answer explanation

Think back to your activity of filling out the checkbook register. You can usually login online and see when and where you spent money from your checking account. This makes it easier to track and make better money choices

What are the benefits of a SAVINGS account?

• Allows you to borrow money

• Allows you to spend money with a debit card

• Allows you to track your spending

• Earns interest over time

Answer explanation

Savings accounts offer interest. You earn a little bit of money each month for having money in a savings account.

Look at your banks interest rate. The higher, the more money you'll earn! Last month, Mr. Driscoll earned over $200 in interest!

Chuck wants to save money for his emergency fund for unexpected situations. Which feature would benefit him the most?

• Earning the highest interest rate

• Easy access to his money

• No banking fees

• Mobile banking alerts

Answer explanation

Your emergency fund should be easily accessible. Generally a savings account works great! Something like a Certificate of Deposit (CD) is not recommended for emergency funds because you have to wait a certain amount of time before you can use that money.

CD's generally pay more interest, BUT if you need the money NOW for a flat tire, having a CD that matures in 6 months won't help you today.

Why do financial institutions offer you higher interest rates for Certificate of Deposits (CDs)?

• They are paying you back for fees and interest that you have prepaid

• The interest you earn is only borrowed and you must pay it back later

• You must keep your money in the account for a set amount of time (usually 6-12 months)

• You are required to invest your interest funds with the same bank

Answer explanation

CD's pay higher interest because the bank gets to hold onto the money for a set period of time. Usually 6-12 months, but some CDs can be for just 1 month or up to 18.

Mr. Driscoll's savings account pays 4.25% interest and his CD pays 5.20%. He keeps some money in a CD to earn more interest, but keeps his emergency fund in his savings account so he can take it out at any time.

Emily is new to saving and earning money. She does not have very much money yet, but wants to start saving. What would be the best option?

• Money Market Account (MMA)

• Checking Account

• Certificate of Deposit (CD)

• Savings Account

Answer explanation

New savers should typically start with a savings account.

Money Market accounts often require a large amount to open ($5,000-$10,000 usually).

Checking accounts are for spending, not saving

Certificate of Deposits are great for long term savings goals, but generally not the first thing recommended for new savers