27. Which of the following instruments is NOT typically associated with spending?
a.) Debit card.
b.) Certificate of deposit. Few of us would not be able to answer this question, and I was almost tempted to drop it from the list. But it offers an opportunity to discuss the real costs of spending. While a certificate of deposit, often referred to as a CD pays interest to the saver who commits the money to a certain amount of time with the bank or other issuing institution, it is not a way to spend but to save.
Cash is the least expensive method of spending and probably the most realistic. If you have no cash, you have no way to spend. Debit cards offer you access to your cash in savings and checking, giving you the opportunity to spend what you have in reserve. A word of caution about debit cards: never let them leave your sight and beware of writing checks on accounts where you have used you debit card especially if you have failed to write down or keep track of how much you have withdrawn. A good method would be to call the bank three times a week, access their automated system and enter each withdrawal or deposit directly into your check register.
Credit cards require a certain level of debt management sophistication that many of us have failed to develop. Which is too bad.
c.) Cash.
d.) Credit card.
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