Answers To Learning Exercises

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Self Test #1

1. False. Choose a bank that meets your needs and has a good reputation.
2. False. ATM/debit cards work like checks. The purchase amount is deducted from your bank account.
3. True. Accounts created for students are usually the least expensive.
4. True. With a pre-paid spending card, you cannot spend more money than you have on the card.

Self Test #2

1. True. In most states you must have a Social Security Number (SSN) and be able to show proof of identity such as a driver's license or birth certificate.
2. False. You should not share your PIN.
3. False. To avoid overdrawing your account, you should always use your check register to record ATM/debit card withdrawals, service fees and purchases.
4. False. It must be an ATM owned by your bank.

Self Test #3

1. True. Checks can be processed within 2 to 3 days or as little as a few hours.
2. False. Endorse a check only when you are ready to use it.
3. True. The way you deposit your money determines how fast you can use the money. If you deposit a check from another bank, it may be several days before you can withdraw your money.
4. False. You must write only in the endorsement area on the back of the check.

Self Test #4

1. False. The sooner you start saving, the longer your money has to grow.
2. False. You can save part of your allowance or money you receive for gifts.
3. True. If you have an interest-bearing savings account, the bank pays you for keeping money there.
4. True. Compound interest is calculated on your savings plus the interest you have already earned.

Self Test #5

1. True. Smart spenders know that needs and wants are different, and they create a plan for both — called a budget.
2. False. A good rule for saving is "pay yourself first."
3. True. A budget puts you in control of your money. It is a tool for knowing where your money comes from (income) and planning where it goes (saving and spending).
4. False. You should check your account balance and budget. Stop and ask whether it is a smart purchase. If so, see if you can substitute a planned expense for the item you wish to buy.