Accounts
Which type of account is connected to a debit card: checking or savings?
Checking
What does it mean to be unbanked?
Someone (an adult) who doesn't have a bank account
Marta is a sophomore who got a summer job at a bakery. She is new to having so much money for herself! She does not have any bills or rent to pay, but does like to go out to eat or to movies with friends once a week. What would be the BEST thing she could do with the money earned?
a. open checking account b. open savings account c. open BOTH checking and savings accounts d. keep her cash in a box in her room
open checking and savings accounts, put most in savings, enough in checking to cover outings
This type of fee is when you take out money from another bank:
a. ATM b. overdraft c. maintenance
ATM fee
What is FOMO and how does it impact spending money?
Fear of Missing Out and you may spend more money so you aren't left out of an event or conversation
How much does FDIC insurance protect in your account, even if the bank fails?
a. $250 b. $2,500 c. $250,000
$250,000
What is ONE reason someone might be unbanked?
don't trust the banks, no banks in their community, can't open an account because of credit history, can't meet the minimum balance to open an account, perception that there are too many fees
Joe is a junior in college and wants to go to Miami for spring break with his friends. He does not have a job at the moment because he is focused on his classes. What would you recommend for Joe to do in order to go on this trip?
a. take out a personal loan from a bank
b. find a part-time job that doesn't interfere with classes to save up for the trip
c. borrow money from his friends
finding a part-time job would be the best option for Joe, so he doesn't have to pay back interest to a bank or get into conflict with his friends for not paying the money back right away (he'll need a job anyway to pay them back)
This type of fee is when you take out more money than you have in your account, BUT the bank will let the payment go through
a. ATM b. overdraft c. maintenance
overdraft
Why might someone finish a meal at a restaurant, even if they aren't enjoying it much?
they feel like they should get their money's worth!
What is the difference between a checking and a savings account? Which one earns interest? Which one has a debit card? Which one is best to access for daily costs (rent, groceries, bills)
Checking account is easy to access, no interest
Savings account earns interest on what you deposit, no debit card or checks
What is one ADVANTAGE and one DISADVANTAGE of using a prepaid card instead of a debit/credit card?
Advantages: no bank account needed; limited to what you load on the card, so can't go into debt; feels more secure than carrying cash around
Disadvantages: does not help build credit history; less security than a bank account if lost, does not earn interest
Carla is opening a new checking account. In the past, she has not been great about checking her account balance, and has overdrawn her account multiple times. What should she do to keep her from going into so much debt with this new account? Why?
a. opt IN for overdraft coverage
b. opt OUT of overdraft coverage
c. open a savings account with the same bank and sign up for overdraft protection
b or c
This type of fee just keeps your account active
a. ATM b. overdraft c. maintenance
maintenance
What kind of mentality might influence someone to buy Jordans if everyone else at school has Jordans?
Herd mentality
What is one ADVANTAGE and one DISADVANTAGE to opening an online bank account vs. a traditional in person bank?
Advantages: can offer higher interest on savings accounts, access 24 hours online, fewer or lower fees
Disadvantage: virtual only customer service, not invested in a neighborhood/community, no in person service
What is a payroll card and why would someone choose to get paid this way?
a payroll card is a card with paycheck/salary loaded onto it, rather than receiving a paper check
Someone without a bank account may choose this option (if available) if they do not have a bank account, to avoid having to pay fees for cashing a check; it can be used like a debit card
DOUBLE JEOPARDY: Your younger brother Daniel is opening up his own bank account. You want to pass on what you have learned about checking and savings accounts to him. Prepare a list of recommendations for: what to ask before opening his account, how to best manage his money, and what online/mobile services he should use
Ask about: fees, interest rates, access to account
Explain one way having a checking account will actually save you money:
It's easier to keep track of your funds, you don't have to spend extra time and money cashing checks in order to pay bills in cash, banks protect your account's value up to $250,000 in case of theft or natural disaster
What is one reason credit cards influence people to spend more money?
cc's give access to more money (even if you have to pay back later; it's not as "painful" as physically handing over cash; many people want the rewards points
When should you start saving for retirement and why? What should you look for in an account for long-term savings?
As soon as you have a full-time job because the longer you have an account, the more money it can earn from interest - look for higher interest rates for savings accounts
What are TWO challenges of being unbanked?
money is less secure; alternative options for loans often have much higher interest; fees to cash checks for work; paying bills by cash is less secure - no paper trail; very difficult to make your money grow
Marco currently lives in NYC, but hopes to move to a suburb in the next 5-7 years. He currently does not have a car, but knows he will need one outside of the city. Which type of account would help him save him for a car, if he does not need to use the money for a few years?
a. regular savings. b. certificate of deposit.
c. checking d. money market
certificate of deposit
Which alerts are MOST important for avoiding an overdraft fee? Why?
a. large deposit alert b. large withdrawal alert
c. unusual activity alert. d. low balance alert
b, c, or d + justification
How does living paycheck-to-paycheck impact someone's life long-term?
makes it harder to retire at all, or they may have to delay retirement