Which credit card offers the best deal? Should you take the cash rebate on the new car or the low interest rate? You are bombarded with confusing financial questions every day. Here are 20 more.
What's the most important difference between a traditional IRA and a Roth IRA?
A Roth IRA only invests in stocks, not bonds or other securities.
With a Roth IRA, you pay taxes on your income when you earn the money; with a traditional IRA, you pay taxes when you take out the money.
A traditional IRA pays an annual dividend.
Bob is 30 and expects to be in a higher tax bracket by the time he retires. Which is the better deal for Bob: to invest in a traditional IRA or a Roth IRA?
Nancy only has $5 in her checking account, but she wants to buy a $20 skirt. Which is the better deal: write a $20 check and let it bounce or take out a payday loan and repay it in two weeks?
Bounce the check.
Get the payday loan.
What's the biggest difference between interest rates expressed as annual percentage rate (APR) and annual percentage yield (APY)?
APY includes the effect of compound interest, which is compounded monthly.
APR will always be higher, because it includes financing fees and charges.
APY doesn't take into account the effects of inflation.
Which is the better deal: Signing up for a credit card with an advertised APR of 12 percent or a card with an APY of 12.34 percent? (Both cards compound interest monthly).
APR of 12 percent
APY of 12.34 percent
Which is the better deal: Investing in an IRA or investing in a 401(k)?
It depends on the individual investments.
Steve has an extra $1,000 and wants to pay down some debt. Should he pay down his $200,000 mortgage (3 percent APR) or pay down his $10,000 credit card debt (17 percent APR)?
Pay down the mortgage.
Pay down the credit card debt.
Don't pay either. Invest the money in the stock market and make some more money first!
Every investor wants to pick individual stocks or mutual funds that will be the best performers in the future. Which of these is the best strategy?
Look for a top performer from the previous five-year period.
Go with low-cost index funds that will at least do as well as the market.
Pin a bunch of mutual funds to a wall and aim at them with a random dart toss. Go with whichever one the dart hits.
Let's say you have a 30-year $200,000 mortgage at an interest rate of 6.5 percent, giving you a monthly payment of $1,264. Your mortgage broker encourages you to make one extra mortgage payment each year to lower the principal faster. If you do that, which number will be larger: the total amount you'll save in interest over the life of the loan, or a winning lottery ticket worth $50,000?
total saved in interest payments
$50,000 winning lottery ticket
What time of year are you more likely to get the best deal on a new car or truck?
beginning of the year
end of the year
Timing doesn't influence prices on new cars.
Sally has a credit card debt of $10,000 at an interest rate of 17 percent annually. She’s been paying the minimum every month, but it’s taking forever to make a dent. What would be the best way to pay it off?
Take the $2,000 in her savings account and apply it to the debt immediately.
Look for another credit card with a lower interest rate to transfer the balance.
Borrow against a life insurance policy or 401(k).
What is the best month to make an offer on a house?
You are planning a long-awaited vacation to France. What is the best way to pay for purchases while traveling abroad?
Bring U.S. dollars and exchange them for euros at the local bureau de change.
Use your U.S. debit card to get draw out euros from French ATMs.
Pay for everything with your U.S. credit card.
If you are looking for the cheapest airline tickets, what is the best day to fly?
You are clothes shopping and comparing the sales at two competing stores. Clothes King is advertising "50 percent off all items in the store," and Thrifty Threads is promoting a "buy one, get one free" sale on everything in the store. Which deal will save you more money?
They are exactly the same deal.
Which was a better deal for the United States in terms of price per acre: the Louisiana Purchase from France or the purchase of Alaska from Russia?
The prices were the same.
You want to buy a $20,000 car and only have $5,000 saved up for a down payment. The wily car dealer offers you two different options. Number one: Take the regular APR for 6.99 percent for a 60-month loan and get an instant cash rebate of $2,000. Number two: Take a lower APR of 3 percent but no cash rebate. Which deal will result in a lower monthly payment?
APR of 6.99 percent and $2,000 cash rebate
APR of 3 percent
Both deals result in exactly the same monthly payment.
True or false: Since generic medications are cheaper, they are allowed by the U.S. Food and Drug Administration to be less effective than the name-brand equivalent?
Credit card deals are notoriously hard to decipher, especially those offering cash back on every purchase. Which is the better deal: A card that gives you 1.5 percent cash back on all purchases, but charges a $100 annual fee, or a card with no annual fee, but zero cash back on every purchase?
cash back card
no annual fee
It depends how much you charge on the card.
What was the name of the original host of the American TV game show "Let's Make a Deal"?