Week 5 QUIZ: Interest and Credit Cards

  1. Select the most likely consequence of making credit card payments late?
  2. Fees and paying the default interest rate on the balance
  3. Fees and paying the introductory interest rate on the balance.
  4. Paying higher interest rates
  5. None of these are correct
  1. Zach is an authorized user on his parent’s credit card. What may happen if Zach doesn’t use the card in a responsible way?
  2. Zach’s credit may be damaged.
  3. Zach’s parents credit may be damaged
  4. Zach and Zach’s parent’s credit may be damaged.
  5. None of these answers are correct
  1. If interest rates rise, what will happen to the price of bonds?
  2. Increase
  3. Decrease
  4. No change
  5. Interest rates and bond prices are not related
  1. If the typical balance on Lucy’s credit card is $500 and interest rate on her credit card is 16%, how much in interest would you expect Lucy to be charged in a typical month?
  2. About $6.67
  3. About $16.00
  4. About $51.74
  5. About $80.86

Week 5 Quiz - Saving (15pts)

1. If the interest rate on a savings account is 0.01%, approximately how much money do you need to keep in this account for 1 year to earn enough interest to cover a single $9.99 Below-Minimum-Balance Fee?

$1,000

$10,000

$100

$100,000

2. The three main types of banks (Traditional, Credit Union, Online or Online-Only) have many tradeoffs with respect to technology, convenience, personal experience, fees and savings rates. For this question, put aside all of the trade-offs and look only at savings rate offered on savings accounts. Rank the following from highest to lowest on the interest rates they offer to consumers on savings accounts.

Online Bank, Credit Union, Traditional Bank

Credit Union, Traditional Bank, Online Bank

Traditional Bank, Credit Union, Online Bank

Credit Union, Online Bank, Traditional Bank

3. For most people, the most effective way to save is:

Deposit extra money into a saving account

Use a budget to determine how much you can save, then transfer that amount into a savings account

Use a budget to determine how much you can save, then automate the savings by direct depositing that amount from each paycheck

Transfer money from a checking account into a saving account

4. True or False, you can never save too much?

True

False

5. Assume you have just started a new job, have a car loan, and have a student loan. You have just received a cash gift of $1,000 from a relative, which of the following is the best use of this money?

Deposit into a 529 savings account for college

Deposit into a CD earning 2% interest

Invest for your retirement in an IRA

Deposit into an unfunded emergency fund