Propose possible solutions to reduce an excessive credit card balance.
> What is the opportunity cost of having excessive amounts of liquid funds?
> Travis has invested $3,000 in a three month CD at 4%. How much will Travis have when the CD matures?
> Lisa is depositing $2,500 in a six month CD that pays 4.25% interest. How much interest will she accrue if she holds the CD until maturity?
> Teresa has just opened a NOW account that pays 3.5% interest. If she maintains a minimum balance of $500 for the next 12 months, how much interest will she earn?
> Recall that the Sampsons have resolved to save a total of $800 per month. Dave and Sharon notice that their local bank offers the certificates of deposit listed in the following table; they now need to determine which CDs will best suit their savings goa
> Recall that the Sampsons have resolved to save a total of $800 per month. Dave and Sharon notice that their local bank offers the certificates of deposit listed in the following table; they now need to determine which CDs will best suit their savings goa
> Mary’s last bank statement showed an ending balance of $168.51. This month, she deposited $600.00 in her account and withdrew a total of $239.00. Furthermore, Mary wrote a total of five checks, two of which have cleared. The two checks that have cleared
> Recall that the Sampsons have resolved to save a total of $800 per month. Dave and Sharon notice that their local bank offers the certificates of deposit listed in the following table; they now need to determine which CDs will best suit their savings goa
> What is the likely impact of increased government borrowing on market rates of interest?
> How is the risk premium calculated?
> When making banking decisions, why should you be concerned about current interest rates?
> Steve just received his first paycheck and wants to open a checking account. There are five banks in his hometown. What factors should Steve consider when choosing a bank?
> What is the difference between a debit card and a credit card?
> Why do some investors pursue higher-risk investments when their income falls during economic downturns? What is wrong with this strategy?
> Describe and compare the three types of depository institutions.
> When would you use a traveler’s check? What are the advantages of using traveler’s checks?
> List and describe some of the banking services offered by financial institutions.
> What is a financial conglomerate? List some services financial conglomerates provide. Give some examples of financial conglomerates.
> What is the risk premium of Metallica Financial Company’s 2-year interest rate of 12% given your local FDIC-insured bank only offers a 5% return for 2-year CDs? Why is Metallica offering a higher interest rate?
> List the advantages of paying your bills online.
> What is the difference between a cashier’s check and a money order?
> What is check float? How has check float changed due to electronic banking?
> Why is it important to reconcile your account balance every month?
> Why is a high-risk premium an advantage for the investor? Why is a low-risk premium an advantage for an investor?
> Explain why a weak economy may cause the risk premium to rise.
> Briefly discuss conditions that can cause a shift in the demand for funds and a change in the interest rate.
> What is monetary policy? What organization controls monetary policy in the United States?
> What is the term structure of interest rates? Why is this concept important to an investor?
> In considering investments with different degrees of risk, what two factors will influence an investor’s decision? What is an appropriate investment for an individual who needs funds in a short period of time for necessities?
> What effect would a general change in current interest rates have on you as a depositor or borrower?
> Where do financial institutions obtain funds for making loans? How are the interest rates for loans determined? Are the interest rates the same for all borrowers? Why or why not?
> List and describe the four main types of nondepository financial institutions.
> What is a risk premium? Who might take advantage of it?
> What is a risk-free rate? Give an example of an investment with a risk-free rate. Why is there no risk?
> Mike, a recent college graduate, opened a checking account with a local bank. He asked numerous questions before deciding on this bank, including inquiring about checking account fees and annual credit card fees. When Mike returns from his first internat
> Casey has $1,000 to invest in a certificate of deposit. Her local bank offers her 2.5% on a 12-month FDIC-insured CD. A nonfinancial institution offers her 5.2% on a 12-month CD. What is the risk premium? What else must Casey consider in choosing betwee
> Name some special services that banks provide. How might you make use of them?
> Paul has an account at St. Jerome Bank. He does not track his checking account balance in a checkbook register. Yesterday evening, he placed two checks in the mail for $156.66 and $238.94. Paul accesses his account online and finds that his balance is $5
> Randy, a student, has $500 to deposit in a new checking account, but Randy knows he will not be able to maintain a minimum balance. He will not use an ATM card, but will write a large number of checks. Randy is trying to choose between the unlimited chec
> Veronica plans to open a checking account with her $1,200 tax refund check. She believes she can maintain a $500 minimum balance. Also, she estimates that she will write 10 checks per month and will use other banks’ ATMs as many as 15 t
> Julie wants to open a bank account with $75. Julie estimates that she will write 20 checks per month and use her ATM card at the home bank. She will maintain a $200 balance. Which bank should Julie choose? South Sun Hillsboro First Trust Coast Bank
> Jason wants to open a checking account with a $100 deposit. Jason believes he will write 15 checks per month and use other banks’ ATMs 8 times a month. He will not be able to maintain a minimum balance. Which bank should Jason choose?
> Brenda purchased a $30,000, 90-day T-bill for $29,550. What will Brenda’s return be when the T-bill matures? What will her annualized rate be?
> Lauren purchased a $40,000 T-bill for $38,400. A few months later, Lauren sold the T-bill for $39,000. What was Lauren’s return on the T-bill?
> Dave has $20,000 excess cash to invest. He can purchase a $20,000 T-bill for $19,400 or two $10,000 T-bills for $9,600 each. Which will give him the better return?
> Claire has invested $10,000 in an 18-month CD that pays 6.25%. How much interest will Claire receive at maturity?
> What credit restrictions apply to persons under age 21?
> List some typical incentives credit cards issuers offer to encourage you to use their card.
> What is a prepaid credit card? How does it differ from a secured credit card?
> Discuss some ways that charging large amounts on your credit cards might affect your overall financial planning.
> What credit management decisions should be included in your financial plan?
> Should you view credit cards as a source of funds? Why or why not? Why should you self-impose a tight credit limit?
> When is a finance charge applied to credit purchases? What is the common range of interest rates on credit cards?
> How might you eliminate the annual fees that are charged by some credit cards?
> What is a credit limit? How can you increase your credit limit?
> Why should you review your credit card statement before paying the bill? What steps should you take if you discover an error?
> Explain why getting a cash advance on your credit card is a costly source of funds.
> Explain how the Credit CARD Act changed the way credit card issuers assess late fees.
> What is overlimit protection? Explain why consumers should use this feature sparingly.
> How does a secured credit card differ from a standard credit card? Under what circumstances would you need a secured credit card?
> Describe the role of the Consumer Financial Protection Bureau.
> Describe some of the key provisions of the Credit CARD Act.
> Explain how you can impose your own limits on credit card spending.
> What are the three methods used by financial institutions to calculate finance charges on outstanding credit card balances? Briefly describe how interest is computed under each method.
> Why is paying your credit card balance in full so important? What should you do if you can’t avoid credit card debt? Explain.
> List five tips for using credit cards wisely.
> What should you consider when comparing credit cards?
> List some items that appear on the credit card statement. What accounts for the difference between your previous balance and your new balance?
> How does the interest rate affect your credit payments? What is meant by simple interest? What is the annual percentage rate (APR), and when is it used?
> What is a cash advance? How are they commonly obtained? Discuss interest rates and grace periods with regard to cash advances.
> What is a grace period? How can you use it to your advantage?
> Discuss how credit cards offer incentives to use the cards. How else might credit card companies reward cardholders with excellent credit ratings?
> Describe the differences between a credit card like MasterCard or Visa and a retail (or proprietary) card. How do credit and retail cards generate revenue? What is the biggest disadvantage of a proprietary card?
> What information will you need to supply when applying for credit? What kinds of attributes are creditors looking for? Do you need to have all these attributes to get credit?
> What are three advantages of using a credit card? Can you think of any disadvantages?
> The $2,000 credit card balance that the Sampsons are carrying, on which they are currently making the minimum payment due, has a credit limit of $10,000. The Sampsons have just received a letter from the credit card company offering to increase their cre
> The $2,000 credit card balance that the Sampsons are carrying, on which they are currently making the minimum payment due, has a credit limit of $10,000. The Sampsons have just received a letter from the credit card company offering to increase their cre
> How will the new EMV technology help reduce identify theft?
> Can identity theft occur through legitimate access to your personal information? Explain.
> Aside from the financial losses, what other negative impacts might a victim of identity theft encounter?
> Is identity theft only perpetrated to acquire money, goods, or services?
> What constitutes identity theft?
> How can you improve your credit score, and how long can it take to erase a poor credit history
> How does a Vantage Score differ from a FICO score?
> What factors determine your credit score, and how are these factors weighted by FICO?
> What are the six major areas of information that may be included on your credit report?
> Name the three major credit bureaus. How do they score your credit rating? Will all three major credit bureaus always produce the same credit score?
> How do utilities extend credit, and how can this credit help you establish a credit history?
> The Equal Credit Opportunity Act prohibits creditors from denying credit for what reasons? If you are denied credit, do you have the right to know the reason for the denial?
> What are some factors to consider when using social media with respect to identity theft?
> Explain the advantages and disadvantages of using a credit counseling organization.
> Explain how closing a credit card account can negatively impact your credit score.
> What is your credit history? How does it impact your ability to borrow money?
> How did the Credit Card Accountability, Responsibility, and Disclosure Act of 2009 change credit card access to students under the age of 21? Why was this change deemed necessary?
> Theft. What steps should you take if you become a victim of identity theft?
> Discuss steps you can take to safeguard your personal information.
> Name and explain at least three tactics used by identity thieves to obtain information.
> How often should you review your credit report from each of the three major credit bureaus? Why is this review beneficial?
> Explain how a weak credit report can affect you.
> What are the advantages and disadvantages of using credit?
