1. Personal Finance EQʼs
1. What are the differences between commercial banks, Savings and Loans, and Credit
Unions?
Commercial Banks- takes deposits, gives loans, mortgages, bank accounts (saving,
checking, ect), Banks, ATMs, safe deposit boxes, make profit, better rates because of
competition
Savings and Loans- Specializes in accepting safety deposits, dealing with mortgages,
and doing other types of loans.
Credit Unions- nonprofit bank, credit unions typically more likely to give loans but they
have higher rates
2. What are the functions of the FED?
The Federal Reserve steps in to maintain the nations Monetary Policy and keep the
country afloat financially. The Monetary Policy is the regulation of money supply in the
government through either expansion or liquidity.
3. List and describe all types of accounts banks offer.
Savings Accounts- You can make deposits and withdraws but you canʼt write checks.
They have higher interest rates than checking accounts but typically lower interest rates
than a money market account or CDs (certificates of deposit).
Checking Accounts- You can make deposits, withdraws, and write checks. Typically
donʼt accumulate interest and some have set restrictions such as minimum balance,
overdraft fees, and limits amount of checks written per month.
Interest-Bearing Checking Accounts- Like a basic checking account however does
accumulate interest. These accounts have stricter restrictions though such as being
fined if the balance drops below a certain number.
Money Market Deposit Accounts (MMDAs)- These accounts are investments. They
accumulate interest but typically require a much higher minimum balance. The
restrictions are much stricter only allowing 3 check transfers and six total transfers per
month.
Certificates of Deposit (CDs)- These “time deposits” is where the money must stay in
the account for a certain period of time typically anywhere between 3 months and 6
years. The money accumulates a much higher interest rate since the funds cannot be
accessed during the time period. You can access the money early but will face large
fees for doing so.
4. What is disposable /discretionary income?
Disposable Income- The total income a person brings in minus current taxes.
Tara Pawlyk Monday, March 11, 2013 1:14:04 PM ET 04:0c:ce:d3:10:88

2. Discretionary Income- The total disposable income minus the money needed to pay
current bills
5. Describe the difference /importance of comparison shopping and unit pricing?
Comparison shopping is when the costumer looks around different stores in order to
find the best deal on a specific product. Itʼs basically trying to get the most for your
money. Most stores donʼt want to lose money and offer to match the price if you bring
proof someone else is selling the same thing for a lower price. Unit pricing applies more
to food shopping. Unit pricing is the price per unit of the product. For example lets say
you wanted to buy a can of diced tomatoes. One can is 8 cents per unit and the other is
7.5 cents per unit. Then you can multiply that unit price by how many units are in the
can. Now you know the true value for each can and can pick the better price.
6. Describe the differences between fixed and variable rates? Name the type of loans
you would receive these rates.
Fixed Rates- Loans in which the interest rate charged on the loan will remain fixed for
that loan's entire term, despite market interest rates. A type of loan would be a fixed-rate
mortgage.
Variable Rates- The rate is tied to an outside indicator such as prime interest rates as
well as the predetermined floor and ceiling. A type of loan would be a mortgage or car
loan.
7. What is the APR of credit cards/ give examples of APR.
APR is the Annual Percentage Rate that is similar to interest rate. You have monthly
interest as well as up front and annual fees. The higher the ARP the more it will cost
you. APR is found on credit cards and mortgages.
8. What is the principal/interest of a loan?
Loan principal is the total amount of money borrowed. The loan interest is the interest
that accumulates on the money you owe. So basically the longer it takes you to pay it
off, the more interest will accumulate, and therefore the more money you will owe
before being out of debt.
9. List and describe all methods to save money.
CD's- These “time deposits” is where the money must stay in the account for a certain
period of time typically anywhere between 3 months and 6 years. The money
accumulates a much higher interest rate since the funds cannot be accessed during the
time period. You can access the money early but will face large fees for doing so.
Stocks- Buying stocks is investing in a share of a company. When the company does
well and their stock value increases you gain money. But it goes both ways, when the
stocks go down you will lose money.
Bonds- Government issued savings bonds accumulate interest but are non-negotiable
and cannot easily be transferred. They are not subjected to local or state income taxes.
Tara Pawlyk Monday, March 11, 2013 1:14:04 PM ET 04:0c:ce:d3:10:88

3. Annuities- These are purchased to grow funds for an individual. These funds are then
paid out after the annuities are collected gradually as a regular payment often used in
the retirement years.
Mutual funds- These funds are pooled investments used to make large investments into
stocks, bonds, ect. These funds are managed by professionals.
401k- Plans established by employers to basically allow retirement for their employees
when they reach a certain age.
403b- Plans established by employers for the retirement of public school employees,
ministers, and other certain tax-exempt organizations
Roth IRA's- An individual retirement plan that isnʼt tax deductible and face penalty for
early withdrawal.
Tara Pawlyk Monday, March 11, 2013 1:14:04 PM ET 04:0c:ce:d3:10:88