Basics Beginner: Managing Your Money at a Bank or Credit Union

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When your savings account transfers money to your checking account to cover a lack of cash due to your overspending, that is called _______.

An overdraft

Overdraft protection

Bouncing a check

Overdraft protection. Transferring money to keep your checking account positive is called overdraft protection. Overdrafts and check-bouncing are the acts that got you into this situation to begin with.

You will likely be charged an ATM fee if you _______.

Have a small balance in your account

Use an ATM from a different financial institution

Withdraw more than $200

All of the above

Use an ATM from a different financial institution. Most banks charge a fee for transactions completed for non-customers. These can range from $2-6 per transaction.

Good habits for monitoring and managing your accounts include _______.

Reviewing your balance 2-3 times each week or before making large purchases

Reviewing your transaction activity to be aware of your spending habits and to check for accuracy

Comparing the checks you have written to those that have been cashed per your statement or online transaction activity

All of the above

All of the above. All are good habits to incorporate into managing your daily finances.

Common uses for a savings account include _______.

Retirement

Day-to-day spending

Short-term savings goals

None of the above

Short-term savings goals. Savings accounts are very safe, pay a low rate of interest, and allow you to access your money at any time.

When it comes to borrowing money to buy a home or car, it is an advantage to belong to a bank or credit union.

True

False

True. When you have a relationship with a bank or credit union, you might qualify for a lower interest rate. You would also get convenience and service.

Suppose your balance at the end of the month in your check register is $98. Let's say you would like to have a little more of a cushion and would like your balance to be at least $200 at the end of the month. What are your options for accomplishing this?

Reduce your variable expenses, like entertainment

Eliminate a 'want' like cable

Consider reducing a fixed cost like housing/rent by moving to lower-cost housing or getting a roommate to share the rent

All of the above

All of the above. Reducing your expenses is all about making choices. What tradeoffs are you willing to make to free up additional savings dollars?

What kind of interest earnings do check cashing stores offer?

Higher rates than banks

Higher rates than both banks and credit unions

Lower rates than banks

None

None. You don't deposit money at a check cashing store, so you cannot get interest earnings.

Checking accounts are designed for _______ money.

Saving

Spending

Spending. As such, most of their value lies in helping you pay expenses.