WISE Financial Literacy Test New Practice
Questions and Answers (2026) | Complete
Prep Resource | Grade A+
• discretionary income . Answer: also called budget surplus; not allocated for food or
shelter
• money order . Answer: a payment order for a pre-specified amount of money and is
purchased at a different types of stores- it is used like a check. They are usually limited
in maximum face value to some specified figure. (For example, the United States Postal
Service limits domestic postal money orders to US $1,000.00); US Postal money orders
are hard to counterfeit.
• why does US currency have value . Answer: there is a belief that money has value and
therefore is accepted.
• opportunity cost . Answer: next best alternative; it is what is given up when a choice is
made.
• inflation . Answer: hurt: lenders (banks) and people living on fixed income. Least hurt:
those who owe large amounts of money;
a general increase in prices and fall in the purchasing value of money.
• treasury department . Answer: collects taxes, prints money, issues treasury bonds.
• pay yourself first . Answer: strategy for saving for the future by putting money aside
before paying regular monthly bills
• certificate of deposit . Answer: it is a time deposit offered at financial institutions-
penalty if cashed before maturity.
• institutions that give loans . Answer: banks, credit unions, financial companies, payday
lenders, tax preparers
• institutions that charge high intrest . Answer: pawnshops, payday lenders, tax refund
lenders, tax refund lenders, finance companies.
• credit union . Answer: member owned co-operative financial institution- advantage is
lower interest rates on loans.
• overdraft protection . Answer: a feature offered by banks to keep your checking
account from over drafting when you write a check or swipe your debit card but don't
have enough money in your account. It is a loan that is paid back.
, • compound interest . Answer: interest added to principal- interest earned on interest.
• time value of money . Answer: calculated by value of money with given amount earned
over a period of time; the longer you keep your money invested, the more interest you
will earn.
• liquid financial product . Answer: savings and checking accounts are most liquid,
certificate of deposit and money market accounts are less liquid
• rule of 72 . Answer: technique for estimating the number of years required to double
your money at a given rate of return
• reconciling a checking account . Answer: to view what activity has occurred in your
account. Keep current with your check register to know what your current balance is at
all times. When you receive your bank statement, you reconcile your check register
against the statement to be sure no errors have been made and to record any bank fees
and/or interest earned in your register
• repayment of student loans . Answer: 6 month grace period after leaving school before
you start making payments
• tax anticipation loans . Answer: a short term consumer loan secured by a taxpayer's
expected tax refund
• credit card cash advances . Answer: provided by credit card companies- withdraw
cash with credit card- you pay a higher interest rate
• truth in lending act . Answer: An act which requires lenders to inform borrowers of all
direct, indirect and true costs of credit; outlaws the use of threatened or actual violence
to collect debts
• consequences of paying the minimum payment due on a credit card bill or paying a bill
late . Answer: impacts credit score if paid late. If you are only paying minimum payment
each month you will take much longer time to pay off balance- you will greatly
increasing the total amount paid back due to the APR charged each month
• risk influence on interest rate charged for credit . Answer: if you have a low credit
score, it demonstrates that you are a poor credit risk, and you will pay a much higher
interest rate on loans
• debt to credit ratio . Answer: amount of available credit you have relative to the amount
of debt you carry
• credit reports . Answer: a number representing the creditworthiness of a person, and
the likeliness that they will pay back their debts. lenders use credit scores to evaluate
potential risk posed by lending money to consumers
Questions and Answers (2026) | Complete
Prep Resource | Grade A+
• discretionary income . Answer: also called budget surplus; not allocated for food or
shelter
• money order . Answer: a payment order for a pre-specified amount of money and is
purchased at a different types of stores- it is used like a check. They are usually limited
in maximum face value to some specified figure. (For example, the United States Postal
Service limits domestic postal money orders to US $1,000.00); US Postal money orders
are hard to counterfeit.
• why does US currency have value . Answer: there is a belief that money has value and
therefore is accepted.
• opportunity cost . Answer: next best alternative; it is what is given up when a choice is
made.
• inflation . Answer: hurt: lenders (banks) and people living on fixed income. Least hurt:
those who owe large amounts of money;
a general increase in prices and fall in the purchasing value of money.
• treasury department . Answer: collects taxes, prints money, issues treasury bonds.
• pay yourself first . Answer: strategy for saving for the future by putting money aside
before paying regular monthly bills
• certificate of deposit . Answer: it is a time deposit offered at financial institutions-
penalty if cashed before maturity.
• institutions that give loans . Answer: banks, credit unions, financial companies, payday
lenders, tax preparers
• institutions that charge high intrest . Answer: pawnshops, payday lenders, tax refund
lenders, tax refund lenders, finance companies.
• credit union . Answer: member owned co-operative financial institution- advantage is
lower interest rates on loans.
• overdraft protection . Answer: a feature offered by banks to keep your checking
account from over drafting when you write a check or swipe your debit card but don't
have enough money in your account. It is a loan that is paid back.
, • compound interest . Answer: interest added to principal- interest earned on interest.
• time value of money . Answer: calculated by value of money with given amount earned
over a period of time; the longer you keep your money invested, the more interest you
will earn.
• liquid financial product . Answer: savings and checking accounts are most liquid,
certificate of deposit and money market accounts are less liquid
• rule of 72 . Answer: technique for estimating the number of years required to double
your money at a given rate of return
• reconciling a checking account . Answer: to view what activity has occurred in your
account. Keep current with your check register to know what your current balance is at
all times. When you receive your bank statement, you reconcile your check register
against the statement to be sure no errors have been made and to record any bank fees
and/or interest earned in your register
• repayment of student loans . Answer: 6 month grace period after leaving school before
you start making payments
• tax anticipation loans . Answer: a short term consumer loan secured by a taxpayer's
expected tax refund
• credit card cash advances . Answer: provided by credit card companies- withdraw
cash with credit card- you pay a higher interest rate
• truth in lending act . Answer: An act which requires lenders to inform borrowers of all
direct, indirect and true costs of credit; outlaws the use of threatened or actual violence
to collect debts
• consequences of paying the minimum payment due on a credit card bill or paying a bill
late . Answer: impacts credit score if paid late. If you are only paying minimum payment
each month you will take much longer time to pay off balance- you will greatly
increasing the total amount paid back due to the APR charged each month
• risk influence on interest rate charged for credit . Answer: if you have a low credit
score, it demonstrates that you are a poor credit risk, and you will pay a much higher
interest rate on loans
• debt to credit ratio . Answer: amount of available credit you have relative to the amount
of debt you carry
• credit reports . Answer: a number representing the creditworthiness of a person, and
the likeliness that they will pay back their debts. lenders use credit scores to evaluate
potential risk posed by lending money to consumers
