Financial Lit Test 1

What is the difference between a bank and a credit union?

A bank is for profit, has no requirement to be a customer, and the interest rates are higher than credit unions. Credit unions are non-profit organization, you must be a member to become a customer, and they have lower interest rates than banks.

What is the difference between a checking account and savings account?

A checking account is for accessing your account daily while a saving account is for emergencies and savings.

What is the savings account monthly withdrawal limit?

six

What does “APY” stand for?

Annual Percentage Yield

Whats does “FDIC” stand for?

Federal Deposit Insurance Corporation

What does “NCUA” stand for?

National Credit Union Association

Principal

original amount of money in savings account

Bank Statement (what it is and how often you get it)

you get it from the bank and it shows all of the baking activites and your ending balance from the month, you get it once a month

Deposit and Direct Deposit

a deposit is money put into the bank and a direct deposit is money directly into your account

Withdrawal

taking money out of an account

Balance

total money you have in your bank account

Why is it important to reconcile your bank statement?

you need to make sure that the transactions you made on your records match the transactions made on the bank records

Interest

price paid for the use of money

Compound Interest

interest you earn on interest

Rule of 72

the number of years it will take you to double your money. The formula is 72 divided by the annual interest rate.

Certificate of Deposit (CD)

a savings account that you must put money in for a specific amount of time.

High Yield Savings Account

ibank account with a higher interest rate

Money Market Account

is a safe bank deposit account that blends the features of a traditional savings account with the easy access of a checking account.

Debit Card

Used to make purchases from your checking account

Overdraft Fees

you do not have enough money in your account to cover the transaction but the bank pays it anyway. Fee they charge you when you spend more.

50/30/20 Rule

50% of income is for daily needs

30% of income is for your wants

20% of your income is for savings.

How much money should be kept in your emergency fund? List 3 specific things it should be used for.

3 to 6 months of essential living expenses. Unexpected medical bills, job loss, and major car repairs.

What does it mean to pay yourself first?

It means to dave money before spending money on anything else.

What is the difference between a debit and credit card?

The main difference is where the money comes from: a debit card uses your own checking account funds immediately, while a credit card lets you borrow money from a line of credit to pay back later.

What does it mean to live paycheck to paycheck?

It means that you only have enough money to pay for daily needs and nothing else.

What are 4 specific banking alerts that you can receive that will help protect your money?

1.) Low balance

2.) Direct deposit alert

3.) Unusual account activity alert

4.) large purchase alert

What are 3 specific things you can do to improve your online banking security?

1.) never give out personal information through text or email

2.) report scams to the FTC

3.)

Routing Number

identified your account at the bank on a check

5 parts of a smart goal

S. specific

M. measurable

A. attainable

R. realistic

T. time