Personal Finance Final Review

All of the following would reduce Maria’s checking account balance, EXCEPT…

• Writing a check to pay her rent

• Using her debit card to buy groceries

• Receiving a direct deposit from her employer

• Setting up an automatic payment for her utility bill

Usually, ______ are easier to reduce because they change monthly, compared to ______ which are set costs you pay monthly

• needs; wants

• wants; needs

• variable expenses; fixed expenses

• fixed expenses; variable expenses

All of the following are common benefits of mobile banking, EXCEPT…

• Transfer money without visiting a bank branch

• Deposit checks using your phone’s camera

• Avoid all banking fees, like overdraft fees

• Check your account balance at any time

What is the benefit of compounding in savings accounts?

• It yields larger returns than simple interest

• It allows you to make more transactions each month

• It is easier to transfer money from checking to savings

• It minimizes your tax liability

How is putting money in a savings account different from investing in the stock market?

• Saving is usually high-risk; investing is usually high-return

• Saving is best for short-term needs; investing is best for long-term goals

• Saving earns about 5-7% per year; investing earns about 1-2% per year

• Saving is best for building wealth; investing is best for an emergency fund

Which of the following best describes a credit report?

• A detailed record of your borrowing and repayment history

• A summary of your monthly income and expenses

• A list of all the bank accounts you have opened

• A document that shows your current credit and balances only

Compared to alternative banking services (e.g. check cashing), traditional banks…

• have higher fees for services like check cashing and money orders

• Offer more consumer protections

• Make it harder to build a credit history

• Offer more short-term high-cost loans

Sayeed has an extra $100 to pay down his debts. To minimize his total interest, which debt should he pay off first?

• His car loan: $2,400 at a 7.2% interest rate

• 1. His credit card: $2,500 at a 19.5% interest rate

• His federal student loans: $4,300 at a 6.53% interest rate

• His personal loan: $500 at a 3% interest rate

Which investment automatically adjusts your asset allocation over time?

• Target Date Fund (TDF)

• Index Fund

• Individual Stock

• 401(k)

Which of the following is TRUE about a secured credit card?

• Secured credit cards have a spending limit equal to the deposit amount

• Secured credit cards do NOT build your credit history

• Secured credit cards are higher risk for a bank than other credit cards

• Secured credit cards usually have a higher credit limit than other cards