Personal Finance Midterm Review Flashcards
Which one of the following strategies will result in your paying NO interest to the credit card company?
A
Paying the minimum monthly payment due each billing cycle
B
Paying the entire credit card bill in full by the end of each calendar year
C
Paying off your entire balance every month by the due date
D
Only using your credit card for purchases, not for withdrawals from the ATM
C
Paying off your entire balance every month by the due date
Isaiah works at a technology company in the summer and earns $3000. After federal, state, and Social Security/Medicare taxes are deducted, his take-home pay is $2,500.
Which of the statements below is CORRECT?
A
His gross pay is $3,000 and net pay is $2,500
B
His gross and net pay are $3,000
C
His gross and net pay are $2,500
D
His gross pay is $2,500 and net pay is $3,000
A
His gross pay is $3,000 and net pay is $2,500
The purpose of a 1040 form is to…
A
Report wage information as well as the amount of federal, state, and other taxes withheld from your paycheck.
B
File your annual income tax return.
C
Report the total amount of income you received as an independent contractor.
D
Provide the information needed to calculate tax withholding from your paycheck.
B
File your annual income tax return.
School A has sticker price of $52,000 and an average net price of $6,000 for families with income of less than $60,000.
Meanwhile, School B has sticker price of $22,000 and an average net price of $11,000 for families with income of less than $60,000.
If your number one factor in selecting a school was cost and your family income was under $60,000, which school would you choose?
A
School A
B
School B
C
Neither school – only choose a college that will allow you to graduate debt free
D
Either school – you can always take out student loans, and then the cost won’t matter as much
A
School A
Choose the BEST answer: Which of these represents a major convenience of using a mobile banking app?
A
Most banks waive all fees for customers who use mobile banking
B
Mobile banking is the only way to transfer money electronically between accounts
C
You can deposit physical checks by using your phone to take a picture of the front and back and sending it through your mobile app
D
You can leave your debit card safely at home, because stores that accept debit will also take payment via your phone instead
C
You can deposit physical checks by using your phone to take a picture of the front and back and sending it through your mobile app
Caleb is trying to select his first credit card, and he’s got it narrowed down to two options he thinks would work really well for his circumstances.
What should his final step be before making a choice between the two?
A
Choose the credit card offering the best promotional deal for applying
B
Ask his friends for recommendations
C
Put off getting a credit card until he’s older and has a #1 best choice in mind
D
Read the fine print for each credit card before making a final choice
D
Read the fine print for each credit card before making a final choice
Marcellus is going into his senior year, and he’s not sure whether he intends to start college the fall after graduation or take a year off first.
How should he approach the FAFSA this school year?
A
It’s expensive to file the FAFSA, so wait until he’s sure he’s going to attend college this fall before wasting money on filing
B
He can delay filing until he’s sure he’ll go to college because it doesn’t matter how late he files. He is guaranteed the same amount of aid money
C
He should file this fall regardless of what he decides; that way he has an opportunity for financial aid just in case
D
He cannot file the FAFSA until he has acceptance letters from colleges, so he’s got time before he needs to file
C
He should file this fall regardless of what he decides; that way he has an opportunity for financial aid just in case
Ryan has a major problem of overspending from each of his paychecks, even though his ultimate goal is to be saving money for college. His friend Sydney says Ryan’s problem is that he’s too worried about “keeping up with the Joneses.” What does Sydney mean by this?
A
Ryan’s college savings goals are too lofty, which is why he can’t achieve them
B
Ryan is buying too many material things or spending too much on experiences so that he feels on par with his peers
C
Ryan is imitating a famously wealthy family – the Joneses – from American history
D
Ryan doesn’t know the 50-20-30 rule for budgeting, so he needs to take a financial management class like the fictitious “Jones” family would do in this situation
B
Ryan is buying too many material things or spending too much on experiences so that he feels on par with his peers
You’ve just turned 16 and obtained your first part-time job.
You want to open a checking account as well as a savings account. Which of these questions is LEAST important to ask?
A
Is there a minimum monthly balance for checking and/or savings accounts? Will you be able to meet and maintain it?
B
Do the accounts offer free online access, mobile banking, and text alerts to help you stay organized?
C
Does the bank you’re considering also have an investments division that can help you compound your money quickly?
D
Is there an advantage to opening both accounts with the same bank, or are you better off choosing one bank for checking and one for saving?
C
Does the bank you’re considering also have an investments division that can help you compound your money quickly?
When using online and mobile banking, which of these is a smart tip to keep your account safe?
A
Never password protect your phone
B
Share your log-in information with a trusted friend in case of emergency
C
Choose clever and secure usernames and passwords, and keep them secret
D
Use easy-to-remember numbers for your online PINs, such as your Social Security number or birthday
C
Choose clever and secure usernames and passwords, and keep them secret
Which represents the most accurate description of how credit cards differ from loans?
A
Loans are typically “good debt,” while credit cards are typically “bad debt”
B
Credit card payments typically vary from month to month, whereas loan payments typically remain the same (as long as interest rates remain constant)
C
Credit cards are very easy to qualify for, whereas loans are much harder to obtain
D
The minimum age for getting a credit card is 18, whereas the minimum age for getting a loan is 21
B
Credit card payments typically vary from month to month, whereas loan payments typically remain the same (as long as interest rates remain constant)
Your wealthy grandma gives you a $500 check for your middle school graduation, and you deposit it into your savings account which earns 1% compounding interest. You keep it there for 4 years until you’re heading off to college and want to buy some dorm supplies. How much money do you have available? You can ignore inflation and assume no bank fees during this time.
A
The same $500 you started with
B
$20
C
Exactly $520
D
Slightly more than $520
D
Slightly more than $520
Which of the following is a method of spending the money in your checking account?
A
Use a money order
B
Take money from the ATM using your credit card
C
Sign up for direct deposit from your employer
D
Write a check for your purchase
D
Write a check for your purchase
Marcia works a part-time job during her junior and senior years of high school. Although her main goal is to save enough for a really nice laptop, she’d also like to build up an emergency fund. She wants to have at least $500 to take with her in case she needs it during college. Which saving strategy is most likely to help Marcia meet her goal?
A
Go ahead and spend her paychecks during her junior year of high school, but save all the money she makes during her senior year
B
She should not worry about the emergency fund – if she’s got access to student loans, she can just pay for college expenses that way
C
Assume if she sets aside whatever is leftover after she pays bills and goes out with friends each month, she’ll have more than enough for the laptop and the emergency fund
D
Determine how much she needs to save from every paycheck to afford the laptop and the emergency fund, and then auto-deposit that amount into a savings account so she can’t spend it
D
Determine how much she needs to save from every paycheck to afford the laptop and the emergency fund, and then auto-deposit that amount into a savings account so she can’t spend it
Fatima is looking forward to college graduation in the spring but knows she’ll need to start thinking about how to pay her student loans.
Which is the best approach for Fatima?
A
Don’t worry about repayment, as student loans are the easiest type of loan to get rid of by declaring bankruptcy
B
Always select the standard repayment plan because it will result in the least amount of interest
C
Choose the repayment plan that has the largest monthly payment she can realistically afford while also minimizing her interest payments
D
Just go with whatever her loan service provider sends in the mail, regardless of whether she can afford to make the payments
C
Choose the repayment plan that has the largest monthly payment she can realistically afford while also minimizing her interest payments
