Foolproof Financial Literacy Quiz
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Knowing your financial position and manipulating it to your favor is something wise. When it comes to credit, ignorance can be expensive! A person may take up too much credit and find that they cannot sustain their life. Take this quick test to see how financially literate you are and get to learn more about the economy you are living in.
- 1.Matt and Eric are young men. Each has a good credit history. They work at the same company and make approximately the same salary. Matt has borrowed $6,000 to take a foreign vacation. Eric has borrowed $6,000 to buy a car. Who is likely to pay the lowest finance charge?
- A.
Matt will pay less because people who travel overseas are better risks.
- B.
They will both pay the same because they have almost identical financial backgrounds.
- C.
Eric will pay less because the car is collateral for the loan.
- D.
They will both pay the same because the rate is set by law.
- 2.Which of the following instruments is NOT typically associated with spending?
- A.
Cash
- B.
Credit Card
- C.
Debit Card
- D.
Certificate of Deposit
- 3.Which of the following credit card users is likely to pay the GREATEST dollar amount in finance charges per year, if they all charge the same amount per year on their cards?
- A.
Vera, who always pays off her credit card bill in full shortly after she receives it.
- B.
Jessica, who only pays the minimum amount each month.
- C.
Megan, who pays at least the minimum amount each month and more, when she has the money.
- D.
Erin, who generally pays off her credit card in full but occasionally, will pay the minimum when she is short of cash.
- 4.Which of the following statements is true?
- A.
Your bad loan payment record with one bank will not be considered if you apply to another bank for a loan.
- B.
If you missed a payment more than 2 years ago, it cannot be considered in a loan decision.
- C.
Banks and other lenders share the credit history of their borrowers with each other and are likely to know of any loan payments that you have missed.
- D.
People have so many loans it is very unlikely that one bank will know your history with another bank.
- 5.If you had a savings account at a bank, which of the following would be correct concerning the interest that you would earn on this account?
- A.
Sales tax may be charged on the interest that you earn.
- B.
You cannot earn interest until you pass your 18th birthday.
- C.
Earnings from savings accounts interest may not be taxed.
- D.
Income tax may be charged on the interest if your income is high enough.
- 6.Under which of the following circumstances would it be financially beneficial to you to borrow money to buy something now and repay it with future income?
- A.
When some clothes you like go on sale.
- B.
When the interest on the loan is greater than the interest you get on your savings.
- C.
When you need to buy a car to get a much better paying job.
- D.
When you really need a week vacation.
- 7.Which of the following statements best describes your right to check your credit history for accuracy?
- A.
All credit records are the property of the U.S. Government and access is only available to the FBI and Lenders.
- B.
You can only check your record for free if you are turned down for credit based on a credit record.
- C.
Your credit record can be checked once a year for free.
- D.
You cannot see your credit record.
- 8.If your credit card is stolen and the total debt reaches a $1,000, but you notify the issuer of the card as soon as you discover it is missing, what is the maximum amount that you can be forced to pay according to Federal law?
- A.
Nothing
- B.
$50
- C.
$500
- D.
$1,000
- 9.Mike and Dave work together in the finance department of the same company and earn the same pay. Mike spends his free time taking work-related classes to improve his computer skills; while Dave spends his free time socializing with friends and working out at a fitness center. After five years, what is likely to be true?
- A.
Mike will make more money because he is more valuable to his company.
- B.
Mike and Dave will continue to make the same amount of money.
- C.
Dave will make more because he is more social.
- D.
Dave will make more because Mike is likely to be laid off.
- 10.Which of the following statements is NOT correct about most ATM (Automated Teller Machine) cards?
- A.
You can get cash anywhere in the world for no fee.
- B.
You must have a bank account to have an ATM Card.
- C.
You can generally withdraw cash 24 hours a day.
- D.
You can generally obtain information concerning your bank balance at an ATM machine.
- 11.Barbara has just applied for a credit card. She is an 18-year-old high school graduate with few valuable possessions and no credit history. If Barbara is granted a credit card, which of the following is the most likely way that the credit card company will reduce its risk?
- A.
It will make Barbara’s parents pledge their home to repay Barbara's credit card debt.
- B.
It will require Barbara to have both parents co-sign for the card.
- C.
It will charge Barbara twice the finance charge rate it charges older cardholders.
- D.
It will start Barbara out with a small line of credit to see how she handles the account.
- 12.When are you entitled to receive a free credit report?
- A.
Never, it is proprietary information of the credit bureaus.
- B.
Only when you pay a $39 fee each time.
- C.
Only when you have been denied credit.
- D.
Once a year for free.
- 13.Which type of financial institution is member owned and generally has the lowest overhead with the best interest rates?
- A.
Local Bank
- B.
National Bank
- C.
Credit Union
- D.
Savings and Loan Institution
- 14.Negative financial information (excluding bankruptcy) can stay on your credit report for:
- A.
2 years
- B.
5 years
- C.
7 years
- D.
10 years
- 15.In terms of credit, what does APR stand for?
- A.
Annual Percentage Rate
- B.
Annual Penalty Rate
- C.
Annual Payment Rate
- D.
Annual Payoff Rate
- 16.How many days does a creditor have to acknowledge your written complaint about a billing error?
- A.
30 days
- B.
60 days
- C.
90 days
- D.
120 days
- 17.A credit card can increase your interest rate when:
- A.
Your payment is late.
- B.
You go over your credit limit.
- C.
They merge with another company.
- D.
All of the above.
- 18.If you buy a computer for $2,000 on your credit card (at 24% APR) and makes minimum payments of $60 each month, how long will it take you to pay off the computer?
- A.
33 months (2.7 years)
- B.
Just under 5 years
- C.
7 years 3 months
- D.
13 years and 1 month
- 19.When you are charged an “over-the-limit” fee on your credit card, which of the following would happen?
- A.
You will be charged a fee every month until you reduce your balance to under the credit card limit.
- B.
You will be charged a one-time fee and your credit card will be suspended.
- C.
You will be charged a one-time fee and your interest rate will be raised to the highest level.
- D.
You will be charged a one-time fee and your credit card limit will be raised.
- 20.How does a debit card differ from a credit card?
- A.
There is no dispute resolution with a debit card under federal law.
- B.
A debit card does not usually appear on your credit report.
- C.
You may be responsible for the total amount of all unauthorized transactions on your debit card.
- D.
All of the above.
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