Financial Literacy Test questions with
complete solutions
Net income equals gross income minus - correct answer ✔✔ All payroll deductions including
taxes withheld
If you spend more than the net income you make in a month, you will have to - correct answer
✔✔ Any of the above
Your financial institutions may already offer some budgeting tools. - correct answer ✔✔ My
quarterly per capita payment is considered income and is taxable at the federal level
You should avoid spending money on wants. - correct answer ✔✔ False
If you are using an online budgeting tool that is linked to your financial accounts, reviewing how
your information is securely maintained is important. - correct answer ✔✔ True
The "principal" of a loan is the _______. - correct answer ✔✔ Original amount borrowed
Which of the following is a good reason to have a credit card? - correct answer ✔✔ A credit
card can be valuable in case an emergency exceeds your available funds on hand.
Having no credit profile can result in you being denied credit. - correct answer ✔✔ True
It is possible to use a credit card to earn more than you pay on it. - correct answer ✔✔ True
,To check your credit, you should get a credit report from just one of the three credit bureaus. -
correct answer ✔✔ False
What is the name for the credit card fee that is charged to you when you take money out of
your card? - correct answer ✔✔ Cash advance fee
Some credit cards target those with bad credit. These credit cards usually have which of the
following? - correct answer ✔✔ All of the above.
What is the minimum FICO score that is usually considered a safe risk? - correct answer ✔✔ 720
Why might it be a good idea to apply for your first credit card at your bank or credit union? -
correct answer ✔✔ It already has a sense of your financial health.
What is the main reason behind using a credit card to buy things that you already have cash for?
- correct answer ✔✔ It helps build a good credit record.
If the annual percentage rate on your credit card is 18%, you will pay 18% interest on each
month's balance. - correct answer ✔✔ False
An example of revolving credit is a(n) _______. - correct answer ✔✔ Credit card agreement
Some credit cards target those with bad credit. These credit cards usually have which of the
following? - correct answer ✔✔ All of the above
Having no credit profile can result in you being denied credit. - correct answer ✔✔ True
Credit cards may charge fees for which of the following? - correct answer ✔✔ All of the above.
, Having a card that does not report your payment history to the credit bureaus helps you build a
good credit history. - correct answer ✔✔ False
Which of the following is the largest part of your FICO score? - correct answer ✔✔ Payment
history
If you have to deposit a few hundred dollars into your bank in order to get a credit card, what
kind of card is that called? - correct answer ✔✔ Secured
When it comes to negative information in your credit report, most negative information will
appear in your credit report for _______. - correct answer ✔✔ Seven years
The various income tax filing statuses include _______. - correct answer ✔✔ All of the above
Only employees pay Social Security taxes on their earnings. - correct answer ✔✔ False
The difference between a tax deduction and a tax credit is that _______. - correct answer ✔✔ A
tax deduction reduces your taxable income, and a tax credit reduces your actual tax
Having taxes withheld from your paycheck means you do not need to pay any more taxes. -
correct answer ✔✔ Maybe
When you take time to engage in tax planning, you can save yourself money you would
otherwise pay to the government in taxes. - correct answer ✔✔ True
The W-4 federal tax form is used by _______. - correct answer ✔✔ Taxpayers to set their tax
withholding schedule
complete solutions
Net income equals gross income minus - correct answer ✔✔ All payroll deductions including
taxes withheld
If you spend more than the net income you make in a month, you will have to - correct answer
✔✔ Any of the above
Your financial institutions may already offer some budgeting tools. - correct answer ✔✔ My
quarterly per capita payment is considered income and is taxable at the federal level
You should avoid spending money on wants. - correct answer ✔✔ False
If you are using an online budgeting tool that is linked to your financial accounts, reviewing how
your information is securely maintained is important. - correct answer ✔✔ True
The "principal" of a loan is the _______. - correct answer ✔✔ Original amount borrowed
Which of the following is a good reason to have a credit card? - correct answer ✔✔ A credit
card can be valuable in case an emergency exceeds your available funds on hand.
Having no credit profile can result in you being denied credit. - correct answer ✔✔ True
It is possible to use a credit card to earn more than you pay on it. - correct answer ✔✔ True
,To check your credit, you should get a credit report from just one of the three credit bureaus. -
correct answer ✔✔ False
What is the name for the credit card fee that is charged to you when you take money out of
your card? - correct answer ✔✔ Cash advance fee
Some credit cards target those with bad credit. These credit cards usually have which of the
following? - correct answer ✔✔ All of the above.
What is the minimum FICO score that is usually considered a safe risk? - correct answer ✔✔ 720
Why might it be a good idea to apply for your first credit card at your bank or credit union? -
correct answer ✔✔ It already has a sense of your financial health.
What is the main reason behind using a credit card to buy things that you already have cash for?
- correct answer ✔✔ It helps build a good credit record.
If the annual percentage rate on your credit card is 18%, you will pay 18% interest on each
month's balance. - correct answer ✔✔ False
An example of revolving credit is a(n) _______. - correct answer ✔✔ Credit card agreement
Some credit cards target those with bad credit. These credit cards usually have which of the
following? - correct answer ✔✔ All of the above
Having no credit profile can result in you being denied credit. - correct answer ✔✔ True
Credit cards may charge fees for which of the following? - correct answer ✔✔ All of the above.
, Having a card that does not report your payment history to the credit bureaus helps you build a
good credit history. - correct answer ✔✔ False
Which of the following is the largest part of your FICO score? - correct answer ✔✔ Payment
history
If you have to deposit a few hundred dollars into your bank in order to get a credit card, what
kind of card is that called? - correct answer ✔✔ Secured
When it comes to negative information in your credit report, most negative information will
appear in your credit report for _______. - correct answer ✔✔ Seven years
The various income tax filing statuses include _______. - correct answer ✔✔ All of the above
Only employees pay Social Security taxes on their earnings. - correct answer ✔✔ False
The difference between a tax deduction and a tax credit is that _______. - correct answer ✔✔ A
tax deduction reduces your taxable income, and a tax credit reduces your actual tax
Having taxes withheld from your paycheck means you do not need to pay any more taxes. -
correct answer ✔✔ Maybe
When you take time to engage in tax planning, you can save yourself money you would
otherwise pay to the government in taxes. - correct answer ✔✔ True
The W-4 federal tax form is used by _______. - correct answer ✔✔ Taxpayers to set their tax
withholding schedule
