"Everyday banking: accounts, cards, and security"

A checking account is for everyday use (paycheck, automatic payments, debit card); a savings account is for storing money you do not need immediately so that it earns interest. Explain the difference and decide where you would place each item: weekly allowance, $\$300$ saved for a laptop, money for the monthly bus pass.

Bank A offers a fee-free account but charges $\$0.50$ per bank transfer; Bank B charges a $\$3$ monthly maintenance fee with free transfers. Nora makes about $4$ transfers a month.

1. a) Calculate how much she would pay per year at each bank.
2. b) Explain what else you would compare before choosing (free ATMs, minimum age, app quality, nearby branch) and how to deal with a bank when you are young (asking about student accounts, reading the fine print).

Compare three bank account offers for young people in the Spanish market:

• Account Alfa: 0 dollars maintenance fee and free online transfers. It has no ATMs of its own in your town: it allows 2 free withdrawals per month at ATMs of any institution if at least 60 dollars is withdrawn each time; if you withdraw less or from the 3rd withdrawal onwards, the full ATM fee is passed on (between 1.50 dollars and 2.50 dollars per transaction).

• Account Beta: Monthly maintenance fee of 2 dollars (100% waived if a paycheck of at least 400 dollars is direct-deposited or an average balance over 1,000 dollars is maintained). It offers a wide network of free ATMs and branches in your city.

• Account Gamma: 0 dollars maintenance fee, but mandatorily linked to a credit/revolving card that charges a 25 dollars annual fee starting in the second year unless a minimum of 6 deferred-payment purchases are made per year.

1. a) A 16-year-old student receives a 50 dollars monthly cash allowance, makes digital payments of 10 dollars to 15 dollars using their phone, and usually withdraws 20 dollars in cash two or three times a month. Calculate and quantify the estimated real annual cost that each option would entail, and point out any legal or suitability hurdles some of them present for a minor.
2. b) Design the financial user profile for which Account Alfa is the most efficient alternative and the profile for which Account Beta would be, justifying your proposals with opportunity cost and payment habit criteria.

There are three types of payment card: debit (the payment comes out of your account immediately), credit (you pay even if you do not have a balance and repay it later, sometimes with interest), and prepaid (you top up only what you want to spend beforehand). State which card describes each situation: (a) paying for groceries and having it deducted immediately from your account; (b) buying headphones online after topping up only $\$60$ beforehand; (c) paying for a trip at the end of the month even if you do not have the balance today. Then explain the risk of a credit card if you defer payments.

Mark financed a 1,200 dollars computer using a credit card with deferred payments (revolving credit). The terms on his statement are:

• Interest rate: 21.5% nominal interest rate (23.75% effective annual rate, EAR).

• Fixed monthly payment chosen by Mark: 30 dollars per month.

• Breakdown of the first payment: 21.50 dollars corresponds to accrued interest and 8.50 dollars to principal repayment.

• Outstanding debt after paying the first month: 1,191.50 dollars.

Mark states: "It's a bargain: I enjoy a new computer paying only 30 dollars a month, what I spend on a dinner, without hurting my checking account."

1. a) Refute Mark's perception using calculations and financial arguments: deduce why this repayment schedule generates the effect known as "perpetual debt" or "snowball effect" and why courts have declared similar contracts void on grounds of usury.
2. b) Model and compare this situation with two alternatives: (1) paying the entire amount in a single lump sum at the end of the month, and (2) financing the 1,200 dollars over 12 months with constant payments of principal plus interest. Justify which option is the most rational for a responsible consumer and what psychological biases revolving credit exploits.

To make a transfer you need the recipient's account number and routing number (their bank account details). An ordinary ACH transfer takes one business day and is usually free; an instant one arrives in seconds and may carry a fee.

1. a) Explain when you would choose each one: paying the rent that is due tomorrow versus helping out a friend today.
2. b) Argue why it is worth re-reading the account number and routing number twice before confirming (transfers are very hard to undo).

Phone-to-phone payments (such as Venmo, Zelle, or instant bank transfers) move money from your account to another person's using their phone number, and arrive instantly.

1. a) Explain two safety rules when using them (sending money only to known contacts, checking the recipient's name before confirming).
2. b) Common scam: a stranger texts you saying "I sent you a cell phone payment by mistake, please send it back", but no money has been credited to your account. Explain what they are trying to do and what you should do.

Emma has to pay $\$300$ for the end-of-year trip. Options: an instant transfer ($\$1$ fee, arrives in seconds), an ordinary transfer (free, arrives tomorrow) or Venmo (free and instant, but the recipient must have it activated).

1. a) Recommend one option for each case: the deadline ends today and the organizer has Venmo; the deadline is the day after tomorrow and they only gave their bank account and routing numbers.
2. b) Explain why paying $\$1$ for the instant one can work out cheap if it stops you from losing your spot (the cost of the alternative is much greater).

Taking money out at your own bank's ATM is usually free; at another bank's it can cost around $\$2$ per withdrawal.

1. a) Explain why that fee exists (your bank pays the ATM's owner) and how to avoid it.
2. b) Calculate how much you would pay a year in fees if you take out $\$20$ every week at other banks' ATMs at $\$2$ a time, and say what you would rather spend that money on.

Going overdrawn means spending more than you have: the account goes into the negative (for example, $-\$30$) and the bank charges you for that automatic "loan."

1. a) Explain the difference between having a zero balance and being overdrawn.
2. b) Argue why a $\$30$ overdraft over a few weeks can end up costing several dollars in interest and fees, and which two habits prevent it (checking the balance before paying, turning on low-balance alerts).

Mateo's account has $\$45$ and today the gym automatic payment is charged: $\$60$. The bank pays it anyway and leaves his account overdrawn, charging him a $\$4.50$ overdraft fee plus interest of $\$0.10$ for each day it stays overdrawn.

1. a) Calculate how much Mateo owes the bank right after the charge and the fee.
2. b) If he takes $10$ days to deposit money, calculate the total cost of the mishap (fee plus interest).
3. c) Explain what he should have done to avoid it (warning the gym, keeping a small cushion, low-balance alerts).

The bank's app is the door to your money. Write five security rules for using it and explain what risk each one prevents: a unique password that isn't the school one, two-factor authentication, not logging in on the station's public Wi-Fi, not leaving your phone unlocked for anyone, and keeping the app updated.

Vera receives this text message: "BANK: Your account has been blocked. Verify it immediately at bnc-security.example.com with your username and password."

1. a) Point out three clues showing that this is a scam (sense of urgency, threat, unofficial URL, asking for login details).
2. b) Explain step by step what Vera should do and what scammers gain if someone enters their details there.

Mateo's mother gets a call "from the bank": they say there are suspicious charges and, to block them, they need her to read out the code that has just arrived by text message.

1. a) Explain what vishing is and why the text message code is the key they are after: the real bank never asks for it over the phone.
2. b) Write the correct script: what she should say, what she should do after hanging up (calling the official number on her card herself or checking the app) and who to warn if she already gave the code.