PF8 Unit 3 MidUnit Review

Which of the following transactions will REDUCE your checking account balance immediately?

• Writing your monthly rent check which you will mail tomorrow

• Using your debit card to pay for groceries at the supermarket

• Using your credit card to pay for your school books

• Depositing a check at a local bank branch

Which of these is the most convenient feature of using online and mobile banking?

• Once you set up online banking, your bank will waive overdraft, ATM, and monthly fees

• By signing up for online banking, you will activate the FDIC insurance on your account

• Using online banking, you can request transfers, bill pay, automatic savings, and other features without visiting the bank branch

• You can shop online only if you've set up online banking

You are comparing two savings accounts based on the interest you would earn and the fees they charge. Assuming you have a savings account with an average balance of $500, which combination of interest rates and fees are a better deal?

• Bank A offers you a savings account with a 10% annual interest rate and $5/month in fees

• Bank B offers you a savings account with 2% annual interest rate and no fees

• The two banks deals are equivalent

• Trick question -- it's a bad idea to open a savings account with just $500

Zola just secured her first job after college, and she's heard that it's important to start investing for her retirement. She can afford to put 5% of her monthly salary toward retirement. What type of account should she choose for this goal?

• IRA

• CD

• MMA

• HSA

Which financial product typically pays the highest rate of interest? Why?

• Money market account because there is a minimum balance

• Certificate of Deposit because the interest rate is set

• Money market account because the interest rate is set

• Certificate of Deposit because it is a contract for a set time and balance

Which of the following best describes an ESA/529 account?

• A type of retirement account for teens & younger adults

• A special type of saving account for minors

• A tax exempt fund that lets your savings grow for school related expenses

• A special type of saving account for college students only

How does inflation impact the money in your savings account?

• Inflation decreases only the $ you earn in interest

• Inflation increases the value of the money in your account

• Inflation has no impact on $ your savings account

• The purchasing power of your money decreases over time

Purchases can be made using your smartwatch, tablet, or smartphone using this instrument

• Mobile wallet

• Debit card

• Credit card

• Ecommerce

Daniel has saved $2,000 in a savings account that earns 0.5% interest annually. What will most likely happen to the purchasing power of his savings over time?

• His purchasing power will INCREASE because the interest rate is higher than the historical rate of inflation

• His purchasing power will INCREASE because the interest will compound faster than the historical rate of inflation

• His purchasing power will DECREASE because the interest rate is lower than the historical rate of inflation

• His purchasing power will remain the SAME because the interest rate is the same as the historical rate of inflation

Why would the money in a mobile payment account reduce the ability to grow savings?

• The money in a mobile payment account is not earning interest

• The money in a mobile payment account is invested

• The money in a mobile payment account is not insured by the FDIC

• The money in a mobile payment account is easily stolen due to identity theft