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Financial Literacy Final Exam Review Flashcards | StudBud
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Financial Literacy Final Exam Review
Financial Literacy Final Exam Review
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1
When you use a credit card, you
pay in cash
pay interest on purchases
buy now, pay later
buy now, pay now
2
What is a credit score?
Number that is used to process your credit findings
Number that you use to project future earnings
Number that represents how well you pay your bills
3
The best advice for managing your credit card debt is to:
Make only the minimum monthly payments
Cease all payments and hide from your creditors
File for bankruptcy
Pay off the highest interest debts first
4
Using the debt snowball method, you make...
one large payment on one loan
minimum payments on small loans; pay extra on large loans
minimum payments on large loans; pay extra on small loans
minimum payments on all of your loans
5
Which of the following is TRUE about a credit report?
Credit reports are maintained by the 5 main credit bureaus
You can get a credit report only when you're 21 years old
You can get a copy of your credit report for free
It is a complete history of one type of credit you have
6
Where can you get a free copy of your credit report?
getmycreditreport.com
annualcreditreport.com
creditreport.gov
freecreditreport.com
7
Wants, needs, and ______________________ contribute to the financial decisions you make.
values
money
school
football
8
What is the benefit(s) of direct deposit?
The funds from your paycheck are available 3-5 days later
You don't have to spend time and energy depositing a check.
Any overdraft fees are waived.
You get a tax benefit from the Federal government.
9
Your net worth...
is what you own minus what you owe
is your assets - your liabilities
is what you owe minus what you own
is your liabilities - your assets
10
All of the following may access your credit report EXCEPT...
Colleges and universities
A landlord
A future employer
Insurance companies
11
How are credit cards and debit cards different?
A credit card can offer perks such as purchase protection
They're both linked to a checking account in different ways
With a credit card, you are borrowing from yourself
Some debit cards say VISA on them; credit cards don't
12
What information can you find on a credit report?
Your parents' and siblings' contact information
Your education level
Inquiries you've made on new lines of credit
Your medical insurance information
13
What is budgeting?
Tracking income and expenditure
A financial plan
All of the above
Financial management
14
Joe moved money from his checkings to savings account. What type of transaction did he make?
Deposit
Withdrawal
Transfer
Interest
15
By law you can get your credit report
once a year from annualcreditreport.com
twice a year from whocares.com
never, you must pay for that service
16
What qualifies as needs for budgeting?
Water
iPhone X
Food
Electricity
17
A federal law that prohibits discrimination in credit transactions?
RESPA
Equal Credit Opportunity Act
Regulation X
Regulation Z
18
Why is financial literacy important?
to know the basics of personal fiance and money management
to better understand credit scores, risk, interest rates
All of the above
to understand how to build wealth
19
How do you avoid paying interest on your credit card (or any other loan for that matter)?
Always make the minimum payment on time
Always make the full payment on time
Pay interest 1st, then pay what you can on leftover balance
Pay the principal 1st, then pay what you can on interest
20
A checking account is best used for...
Saving money
Placing money you earn
Investing money
Storing money to spend
21
Which of the following are credit agencies?
Transfax
Equifax
Experian
TransUnion
22
A shorter auto loan term means ____ monthly payments & ____ total interest you'll pay.
higher, less
higher, more
lower, more
lower, less
23
assets=$20,000 liabilities=$50,000 what is the net worth ?
30,000
-30,000
-80,000
80,000
24
What Influences your financial decisions
Dryness of pepper
Dankness of memes
Values, Needs, Wants
How spicy your mayonaise is
25
What information can you find on a credit report?
Your parents' and siblings' contact information
Your education level
Inquiries you've made on new lines of credit
Your medical insurance information
26
How would you organize your debts in the debt snowball method?
Pay them all off at once
Throw snow at your paperwork
Largest debt to smallest debt
Smallest Debt to Largest debt
27
An excellent credit score would be
300-579
800-850
740-799
28
What does the Rule of 72 determine?
how long it takes to pay off a debt
the interest rate needed to triple your money
the interest rate needed to compound your money
how long it takes to double an investment
29
What information on a Schumer Box should you focus on when choosing a credit card?
Fees
The term of the credit card
Grace Period
Annual Percentage Rate (APR)
30
Net worth is the same as
Financial Position
Wealth
Income
Cash
31
Your ___________________ _______________ helps determine whether or not you get credit.
Credit Score
Hourly Wage
Years Worked
Annual Salary
32
How can you build a positive credit history as a college student?
Get a credit card but don't use it to avoid more debt
Make only the minimum payment each month
Become an authorized user on an adult's card
Spend up to your credit limit each month
33
Aisha wants to improve her credit utilization rate. Which of the following can she do?
Keep her spending all to 1 card; don't use the other 2
Make several payments in the month instead of a large one
Keep her credit utilization rate to 55%
Spread her spending among her 3 credit cards
34
T/F: A negative credit event (bankruptcy) can have a WORSE impact on a higher credit score.
False
True
35
All of the following are benefits of having a good credit score EXCEPT
Better car insurance rates
Easier approval for rental apartments and houses
Higher interest rate on credit cards and loans
You can get a higher return on your Retirement fund
36
You put $500 in a savings act that earns 9%, by following the rule of 72, what will you EARN?
$40
$545
$500
$45
37
What is the first step of the budgeting process?
List expenses in order of importance
make changes to the budget if neccesary
write down an estimated cost
record income for the budgeted time
38
The biggest difference between a debit card and a credit card is:
A debit card can't be used to rent cars
A debit card doesn't proves you are responsible with money
You can't make online purchases with a debit card
A debit card only allows you to use money you already have
39
The purpose of the Federal Deposit Insurance Corporation (FDIC) was to...
ensure Americans in poverty had money when they retired
inspect the financial transactions of important businesses
insure bank depoists of individual citizens
increase governmental control over the economy
40
How do you avoid paying interest on your credit card (or any other loan for that matter)?
Always make the minimum payment on time
Always make the full payment on time
Pay interest 1st, then pay what you can on leftover balance
Pay the principal 1st, then pay what you can on interest
41
Credit cards are directly linked to your bank account
false
true
42
How can you protect your checking account when using online and mobile banking?
Connect to a secure WiFi network
Share your pin # with only 1 person in case you forget it
Use a strong password
Opt-out of alerts to notify you of unusual activity
43
Zero based budgeting is
Starting the budget from base zero
Not considering the previous year's figure
All of the above
Justifying all expenses completely
44
What is interest?
A place to buy on credit
The price paid for using someone else's money
Dictates whether a bank will service you in any matter
How much you like your money
45
Define Direct Deposit
Paycheck automatically deposited electronically bank account
receiving 24 paychecks per year
a set amount for each hour employee works
pay day fall on the same day of the week
46
How are a credit score and credit report related?
A credit score is determined by the factors in your report
They're not related at all
A credit report is determined by the factors in your score
Credit reports are less important than your credit score
47
Have a credit score of 0 means
You never pay your bills on time
You have no debt
Means you have zero of nothing
48
A shorter auto loan term means ____ monthly payments & ____ total interest you'll pay.
higher, more
lower, less
lower, more
higher, less
49
Overdraft protection...
can keep you from overdrawing but charges a high fee.
is a service offered only for premium checking accounts.
is a fee-free service that prevents you from overdrawing.
brings in a few hundred dollars each year to banks.
50
equal credit opportunity supports all types of....
age and race including gender
gender and race
race and age
age race gender and height
51
People who are unbanked are most likely to...
Incur lots of fees at Check Cashers to access their money
Use a mobile banking app
Receive a monthly statement of their transactions
Deposit their checks at the ATM
52
How much money is insured by the FDIC?
$200,000
$150,000
$250,000
$1,000,000
53
What does the Rule of 72 determine?
the interest rate needed to compound your money
how long it takes to double an investment
the interest rate needed to triple your money
how long it takes to pay off a debt
54
Behavioral finance means
the complexity of psychology to make financial decisions
the application of psychology to make financial decisions
the input of psychology to make financial decisions
the output of psychology to make financial decisions
55
How does the 50/30/20 rule of thumb for budgeting allocate your income?
50% Wants, 30% Needs, 20% Savings & Debt Repayment
50% Needs, 30% Savings & Debt Repayment, 20% Wants
50% Needs, 30% Wants, 20% Savings & Debt Repayment
50% Savings & Debt Repayment, 30% Wants, 20% Needs
56
Which of the following does NOT contribute to your credit score?
Your debt-to-credit ratio
Your payment history
Which banks issued your credit cards
Length of credit history
57
What makes up your credit score?
Credit Bureaus determine your score through your credit report
Credit score is done through the FDIC
Credit formula is done through a formula
58
To improve an UNFAVORABLE credit rating, a person should
apply for more credit
increase the number of payroll deductions
open a checking account
pay bills on time
59
Saving accounts differ from checking accounts in that...
Checking accounts offer higher interest rates
Saving accounts let you withdraw $ an unlimited # of times
Saving accounts come with more fees than checking accounts
Money in a saving account can be used to fund a bank's loans
60
Employees prefer direct deposits because:
There is a small fee for the service
The danger of losing a paycheck is slightly reduced
The money is deposited sooner than it would be in person
Direct deposits earn a higher rate of interest
