Wise Financial Literacy Test Study Guide
ACTUAL UPDATED Questions and
CORRECT Answers
Commercial Banks - CORRECT ANSWER - Offer a wide range of financial services,
including checking and savings accounts, loans, and investment services.
Credit Unions - CORRECT ANSWER - Member-owned financial institutions that provide
similar services as banks but often with lower fees and better interest rates.
Savings and Loan Associations - CORRECT ANSWER - Specialize in savings accounts
and mortgage loans.
Consumer Finance Companies - CORRECT ANSWER - Provide personal loans but
usually at higher interest rates than banks.
Savings Accounts - CORRECT ANSWER - Earn interest over time and are designed for
storing money rather than daily transactions.
Checking Accounts - CORRECT ANSWER - Used for everyday transactions with high
liquidity but typically earn little or no interest.
FDIC & NCUA Insurance - CORRECT ANSWER - Protects deposits in banks (FDIC)
and credit unions (NCUA) up to $250,000.
Certificates of Deposit (CDs) - CORRECT ANSWER - Fixed interest rates for a set
period; penalties apply for early withdrawals; higher interest rates than standard savings
accounts.
Money Market Accounts - CORRECT ANSWER - Offer higher interest rates than savings
accounts; allow limited check-writing privileges; FDIC insured up to applicable limits.
, Safe Deposit Boxes - CORRECT ANSWER - Secure storage for valuable documents and
items; only accessible by the owner or authorized individuals.
Personal Loans - CORRECT ANSWER - Unsecured loans for various expenses.
Auto Loans - CORRECT ANSWER - Loans used for purchasing vehicles.
Mortgages - CORRECT ANSWER - Long-term loans for buying homes.
Student Loans - CORRECT ANSWER - Loans for education expenses, often with
deferred payment options.
Interest Rates (APR) - CORRECT ANSWER - The cost of borrowing money on a credit
card.
Minimum Payments - CORRECT ANSWER - The lowest amount that must be paid each
month.
Impact on Credit Score - CORRECT ANSWER - Timely payments improve scores, while
missed payments lower them.
Credit Scores - CORRECT ANSWER - Range: 300-850, with higher scores indicating
better creditworthiness.
Factors Affecting Credit Scores - CORRECT ANSWER - Payment history, credit
utilization, length of credit history, types of credit, and new credit inquiries.
Certified Check vs. Cashier's Check - CORRECT ANSWER - Both guarantee funds, but a
cashier's check is drawn from the bank's funds.
ACTUAL UPDATED Questions and
CORRECT Answers
Commercial Banks - CORRECT ANSWER - Offer a wide range of financial services,
including checking and savings accounts, loans, and investment services.
Credit Unions - CORRECT ANSWER - Member-owned financial institutions that provide
similar services as banks but often with lower fees and better interest rates.
Savings and Loan Associations - CORRECT ANSWER - Specialize in savings accounts
and mortgage loans.
Consumer Finance Companies - CORRECT ANSWER - Provide personal loans but
usually at higher interest rates than banks.
Savings Accounts - CORRECT ANSWER - Earn interest over time and are designed for
storing money rather than daily transactions.
Checking Accounts - CORRECT ANSWER - Used for everyday transactions with high
liquidity but typically earn little or no interest.
FDIC & NCUA Insurance - CORRECT ANSWER - Protects deposits in banks (FDIC)
and credit unions (NCUA) up to $250,000.
Certificates of Deposit (CDs) - CORRECT ANSWER - Fixed interest rates for a set
period; penalties apply for early withdrawals; higher interest rates than standard savings
accounts.
Money Market Accounts - CORRECT ANSWER - Offer higher interest rates than savings
accounts; allow limited check-writing privileges; FDIC insured up to applicable limits.
, Safe Deposit Boxes - CORRECT ANSWER - Secure storage for valuable documents and
items; only accessible by the owner or authorized individuals.
Personal Loans - CORRECT ANSWER - Unsecured loans for various expenses.
Auto Loans - CORRECT ANSWER - Loans used for purchasing vehicles.
Mortgages - CORRECT ANSWER - Long-term loans for buying homes.
Student Loans - CORRECT ANSWER - Loans for education expenses, often with
deferred payment options.
Interest Rates (APR) - CORRECT ANSWER - The cost of borrowing money on a credit
card.
Minimum Payments - CORRECT ANSWER - The lowest amount that must be paid each
month.
Impact on Credit Score - CORRECT ANSWER - Timely payments improve scores, while
missed payments lower them.
Credit Scores - CORRECT ANSWER - Range: 300-850, with higher scores indicating
better creditworthiness.
Factors Affecting Credit Scores - CORRECT ANSWER - Payment history, credit
utilization, length of credit history, types of credit, and new credit inquiries.
Certified Check vs. Cashier's Check - CORRECT ANSWER - Both guarantee funds, but a
cashier's check is drawn from the bank's funds.
