Financial Literacy Test: Savings Edition

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In this version of our financial literacy test, we focus on savings, banks and the interest earned from saving accounts. Test your knowledge, learn something new and pat yourself on the back for answering these correctly.

1. True/False: Money market mutual funds, similar to money market savings accounts, are FDIC insured. 

a. True

b. False

2. True/False: Money in safe deposit boxes, when stored in a bank vault, is FDIC insured.

a. True

b. False

3. What’s the difference between simple and compound interest?

a. Simple interest is only calculated on the principal amount of a deposit, while compound interest is based on the deposit’s principal amount and any additional interest earned from previous periods accumulated in the account.   

b. Simple interest is based on the deposit’s principal amount and any additional interest earned from previous periods, while compound interest is only calculated on the principal amount of a deposit.

c. There is no difference. 

4. Suppose you have $10,000 in a savings account earning 2% interest that compounds monthly for 5 years. You have made no additional contributions to that account. After the five years, you would have earned in interest:

a. More than $1,000

b. Exactly $1,000

c. Less than $1,000

5. What is the limit of withdrawals per month you can make from a savings account, according to the Federal Reserve? 

a. 30

b. 6

c. 1

6. Which of these penalties can your bank impose on you if you exceed the monthly transaction limit?

a. Fees

b. Re-characterization of the account (converting your savings account into a checking account, for example)

c. Closing of the account 

d. All the above

7. True/False: The Rule of 72 estimates how many years it will take for you to double your money with compound interest.

a. True

b. False

8. What type of Certificate of Deposit typically allows you to withdraw your money beginning seven days after funding without an early withdrawal fee? 

a. Zero coupon CD

b. No-penalty CD

c. High-yield CD

9. Which of the following would be considered a variable-rate savings product?

a. 12-month certificate of deposit

b. High-yield savings account

c. 7-month no-penalty CD

10. What is a CD ladder?

a. A CD that gives you a higher APY each time your account reaches a certain dollar amount 

b. A collection of your favorite CDs from the 90s

c. A savings strategy where you spread a lump sum of money across multiple CDs with different maturity dates

This article is for informational purposes only and is not a substitute for individualized professional advice. Articles on this site were commissioned and approved by Marcus by Goldman Sachs®, but may not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA or any of their affiliates, subsidiaries or divisions.