Banks vs Alternatives

What is a common feature of payday lenders, pawn shops, and check cashing services?

• They all require a credit check.
• They all offer free financial advice.
• They all charge high fees for their services.
• They all provide long-term loans.

How does the APR of payday loans compare to that of credit unions?

• Credit unions have a maximum APR of 28%, while payday loans can be as high as 575%.
• Payday loans have a lower APR than credit unions.
• Credit unions do not charge any APR.
• Both payday loans and credit unions have similar APRs.

What does APR stand for, and why is it important in borrowing?

• Annual Principal Rate; it reflects the principal amount borrowed.
• Average Payment Rate; it shows the average cost of loans.
• Annual Percentage Rate; it indicates the cost of borrowing over a year.
• Annual Payment Rate; it determines the monthly payment amount.

If a $300 payday loan has an APR of 385%, how much interest will you pay?

• $100
• $150
• $9
• $65

What could happen if you fail to repay a payday loan?

• You may receive a lower interest rate on future loans.
• You could face fees for overdrawing your account.
• You will be automatically forgiven the loan.
• You may receive a refund of your interest payments.

What is a common misconception about payday loans?

• They are always the best option for quick cash.
• They have no fees associated with them.
• They can lead to a cycle of debt if not managed properly.
• They are regulated by the government.

Which of the following statements is true regarding check cashing services?

• They do not charge any fees for cashing checks.
• They are the only option for cashing checks.
• They offer better rates than banks for cashing checks.
• They charge around 3.5% of the check amount.

Which financial service typically charges less for cashing checks?

• Pawn shops
• Banks and credit unions
• Payday lenders
• Check cashing services

What is a potential disadvantage of using prepaid cards?

• They often come with activation and usage fees.
• They provide unlimited cash withdrawals.
• They offer higher interest rates than banks.
• They are free to use for all transactions.

What is one benefit of maintaining an account with a bank or credit union?

• You can avoid all fees associated with financial services.
• You will have unlimited access to cash without any fees.
• You can easily access direct deposit for your paycheck.
• You will receive higher interest rates than payday lenders.