Rule of 72 + Interest Types
The rule of 72
A way to determine how often your investment doubles in value
True or False: The FED and FDIC are the same thing?
False
True or False: There are only two types of credit cards
False, There are three
True or False: 0.5-2% APY is a realistic amount for a savings account?
True, savings accounts have very little APY but have many other advantages including: low risk and high liquidity.
True or False: Lower credit score is better
False, Higher is better.
If your money doubles every 72 years, how much interest are you earning?
1% interest
This is one thing the FED does
What is regulates inflation / Supervises Banking systems / Maintains economic stability / provides banking services
True or False: Credit cards have an unlimited amount of money you can spend / month
False, credit cards have a credit cap, or a maximum amount of money you can spend / month.
Which savings account is best for the provided scenario (Bond (EE), Savings, Money Market, CD)
Jenny is saving her money for a car she wants to buy in exactly two years when she graduates college. She wants higher APY, but little risk.
CD, this provides little risk and higher APY. Since she needs her money in exactly 2 years it would be the best choice.
This is the highest possible credit score.
850
The amount of years to double with 12% intrest
What is 6 years
This is the main purpose of the FDIC?
What is to insure money put into a savings account
Is the way to avoid paying interest on credit cards?
What is if you pay off the debt in full the first month
If you desire a savings account with high liquidity you should chose :
A - Savings Account
B - Money Market
C- CD / Bond (EE)
A - This savings account has the most liquidity out of the choices.
Money market is the next best choice, however they have a lot of restrictions added on, so the best choice is savings.
This is the minimum credit score to receive the best interest rates on loans from banks.
about 740
This interest adds money to the original amount, increasing your earnings each time.
What is compound interest?
Is what FDIC stands for
Federal Deposit Insurance Company
The types of credit cards (3)
Store Card
Bank-Issued Card
Travel Card
Which savings account is best for the provided scenario (Bond (EE), Savings, Money Market, CD)
Jacklyn just had a kid, and wants to create a savings account for him when he graduates college in about 20 years. Which would be the best choice for her?
What are three ways someone can get a bad credit score?
Late Payments / Paying Minimum Balance / Spending to credit limit / Closing credit accounts (or opening) / bouncing checks / paying credit late / etc.
$12,500
This government agency regulates inflation.
FED / Federal Reserve System
This is the main difference between Credit and Debit cards.
Debit cards take your money directly out of your checking account, but credit cards borrow money from the bank which you have to pay back later
This is the difference between a CD and Bond (EE)
A CD is money is money you lend the bank for a certain period of time, and agree to collect at the end of said period for a slightly higher APY.
A Bond (EE) is money you lend the bank for 20 years. At the end of that period you cash the bond for double the money you put in.
Name 4 of the factors of credit.
Payment History (35%) / Credit Utilization (30%) / Length of Credit History (15%) / New Credit (10%) / Credit Mix (10%)