Who is FICA and why is she taking my money?
FICA is an acronym that stands for the Federal Insurance Contributions Act tax, which is made up of two federal taxes:
- Social Security - a federal program that provides benefits to retired people
- Medicare - a federal health insurance program for people 65 and older
TRUE OR FALSE – The Federal Insurance Contributions Act tax (FICA) is made up of two federal taxes and is only taken out of your check if you are a retired person.
The current tax rate for Social Security is 6.2%, while the Medicare tax rate is 1.45%. Together, these taxes make up FICA.
What goes into a credit score?
All of the credit reporting companies have their own way of calculating your credit score. Even with these differences in calculating scores, each company does look at the same group of factors when coming up with your credit score. These include:
- The number of loans and credit cards you have
- How much money you owe
- How long you have had credit
- How much new credit you have
- How you pay your bills
MULTIPLE CHOICE - Credit reporting companies calculate your credit score based on:
- The number of loans and credit cards you have
- How much you owe and how you pay your bills
- *All of the above
Credit companies consider payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%), and types of credit used (10%). These percentages are just guidelines based on the importance of five categories for the general population. The companies then take a look at the information on your credit report and give it a number - this is your credit score.
What is a credit union?
A credit union is another place where you can put your money to keep it safe in an account. To use a credit union you generally have to meet the requirements of the credit union to join - usually based on groups that include the community you live in, your employer or religious institution.
Credit unions offer many of the same financial services as a bank and sometimes a few extra perks like community paper shredding days, accounts for wedding gifts to be deposited to and free coin counting machines.
TRUE OR FALSE – To use a credit union you generally have to meet the requirements of the credit union to join - usually based on groups that include the community you live in, your employer or religious institution.
To explain this definition further Investopedia.com states, "As soon as you deposit funds into a credit union account, you become a partial owner and participate in the union's profitability. Credit unions are formed by large corporations and organizations for their employees and members."
What is a payday loan?
Payday loans are usually for a small amount ($500 or less) and are typically due on your next payday for the amount you borrowed plus a fee of $10 to $30 for every $100 borrowed.
It is very costly to get trapped in a payday loan cycle, continually taking out another loan when you can’t pay the previous one back. The annual percentage rate (APR) can average 400%, whereas credit cards can range from 12% to 30%. If you do not repay the loan at the end of the term, and you “renew” or “rollover” the loan, you will be charged additional fees and finance charges.
MULTIPLE CHOICE – Payday loans can have an annual percentage rate (APR) of:
Since these loans don’t require a credit check, getting one to pay a short-term expense may sound like a good idea if you don’t have access to a credit card, but it is very easy to get into trouble. Ask yourself if you really have an emergency. Never take out a payday loan to cover living expenses such as your rent, utilities, food or credit card bills.
How do you make deposits into your bank account?
- Go to your bank or credit union's physical location
- Use your bank or credit union's ATM
- Use "direct deposit" with your employer or government benefit agency where they directly deposit the funds into your bank account for you without cutting you a paper check or giving you cash
- Some bank branches now have mobile phone applications where you can deposit checks into your bank account by taking pictures of the check and submitting them through that bank's mobile phone application, usually referred to as a "mobile deposit"
YES OR NO - When making deposits into your bank account, do you have to go to your bank or credit union's physical location?
You can go to your bank or credit union's physical location, but you can also use your bank or credit union's ATM, use "direct deposit" with your employer or government benefit agency, or you may even be able to use a mobile phone application where you can deposit checks into your bank account by taking pictures of the check and submitting them through that bank's mobile phone application.
How do I protect my online account with a strong password?
A strong password is your first line of defense against hackers and identity thieves, so it's important to create one for every account you have.
The first step to ensuring your passwords are strong is to create ones that are easy for you to remember but hard for others to guess. Try making an anagram out of a phrase - for example, "My birthday is January 10, 1994" becomes "Mbi01101994." To make it even stronger, replace some letters or words with numbers and symbols. The same example could become "Mb1$01101994."
TRUE OR FALSE - For ease of use, you should create one strong password to use for all of your online accounts.
Each account contains private information, so why do we use the same password for all of them? When thinking of a password to use, always include a combination of numbers, capital letters, and symbols, and don't use any dictionary words. If you're worried about not remembering all of your passwords, some programs can remember them for you and even suggest a strong one for you to use when creating a new account. Just don't forget the password for the program!
How do you secure your Social Security number?
- Leave your Social Security card at home - You do not usually need to have it on your person and having it with you all time increases the risk of the number falling into the wrong hands
- ALWAYS ask why someone needs your Social Security number and not an account number or other personal identifier
- There are situations when you will need to give out your Social Security number including:
- To an employer for wage and tax reporting purposes
- Your financial institutions for reporting purposes
- Businesses who may need it to check your credit when you apply for a loan, rent an apartment or open a new utility account
TRUE OR FALSE - You will need to give your Social Security number to an employer for wage and tax reporting purposes.
Giving your Social Security number out is always your decision, but there are situations when you will need to provide it - to an employer, your financial institution, or businesses who need to check your credit when you apply for a loan, rent an apartment or open a new utility account.
What is your personal information that should be kept secure?
- Name and Address
- Credit card or bank account numbers
- Social Security number
- Medical Insurance account numbers and other medical account numbers
MULTIPLE CHOICE - You should keep the following personal information secure to prevent identity theft:
- Name, Address, and Social Security number
- Credit card or bank account numbers and medical account numbers
- *All of the above
There is nothing more important than keeping your personal information secure so that you can prevent identity theft. This information is the gateway to your financial institutions, medical records, credit score and other important personal records.
What is a savings account?
A savings account is an account you can open at your bank or credit union that allows you to deposit the money that you want to save and keep separate from your spending money. In some cases, you can earn a small amount of interest on the balance that is deposited in the account.
MULTIPLE CHOICE - Opening a savings account can help you:
- Save money for emergencies or a savings goal you have set for yourself
- Keep your money safe (and sometimes even earn money for you)
- *All of the above
If you already have a checking account with a bank, you can simply go into a location of your bank and let the teller know that you want to open a savings account. Most of the time there will be a minimum deposit required to open the account.
What is responsible credit card behavior?
While credit cards can be useful in true emergencies (that unexpected car repair), the finance charges and fees on the borrowed money can cost more than the actual repair service. Responsible credit card behavior includes:
- Paying on time
- Paying off the balance each month
- Using only in true emergencies
MULTIPLE CHOICE - Responsible credit card behavior includes:
- Throwing a pizza party for a football game
- Shopping trip because you had a bad day
- *Only using in true emergencies
For example, you have a credit card that has a $2,000 credit limit at 14.50% APR (Annual Percentage Rate) that you max out on emergencies. Here is the math:
Estimated minimum monthly payment: $40.00 | Years to payoff: 14 | Estimated total interest: $2,070
This scenario is assuming that you make every payment for 14 years on time and don't incur a late fee that can be anywhere between $29.00 - $49.00 and that your interest rate doesn't increase for paying late.