Look, nobody really wants to worry about money. But, if you don’t know how to manage your finances, chances are that you’ll end up stressing about it. If you’re using the Our Money Matters platform, you’ve probably got everything under control. But if not, then take this short quiz to test your knowledge. See how well you know how to earn, keep, and invest your coins. Answers are at the end of the quiz.
1. Which credit score is considered very good?
A. 480 to 540
B. 550 to 630
C. 670 to 739
D. 740 to 799
E. None of the above
2. Which of the following are major credit reporting agencies? Check all that apply.
A. Equifax
B. TransUnion
C. American Express
D. Wells Fargo
E. None of the above
3. You must pay to get your credit report. True or False.
4. What does APR stand for?
A. Annual Percentage Rate
B. Annual Pension Report
C. Auto Property Record
D. Annual Percentage Return
5. Which is higher?
A. APR
B. APY
6. What does compounded interest mean?
A. The total amount of monthly interest in an entire calendar year.
B. The interest rate of your loan multiplied by the number of years of the loan.
C. The addition of interest to the principal sum of a loan or deposit. In other words, interest on interest.
7. Which of the following factors into the calculation of your credit score? Check all that apply.
A. Payment history B. Amount of debt owed C. Length of credit history
D. Living expenses E. Savings
8. What is a 401k?
A. It is a retirement plan offered by an employer
B. It is a savings plan offered by your bank
C. It is an investment account offered by banks and investment firms.
9. How much is the student loan debt in the U.S. today?
A. $500 million
B. $1 billion
C. $2.25 billion
D. $1.5 trillion
10. What is the best way for you to learn about managing your finances?
A. Ask family and friends
B. Talk to a credit bureau
C. Go to Our Money Matters.com
Answers:
1. D is the correct answer. Although ranges vary depending on the credit scoring model, generally credit scores from 580 to 669 are considered fair; 670 to 739 are considered good; 740 to 799 are considered very good; and 800 and up are considered excellent.
2. A and B are the correct answers. Equifax, Experian, and TransUnion are the three main credit reporting agencies.
3. False. You can get a copy of your free credit report here.
4. The correct answer is A. Annual percentage rate (APR) refers to the yearly interest generated by a sum that's charged to borrowers or paid to investors.
5. The correct answer is B. Though an APR only accounts for simple interest, the annual percentage yield (APY) takes compound interest into account. As a result, a loan’s APY is higher than its APR. The higher the interest rate—and to a lesser extent, the smaller the compounding periods—the greater the difference between the APR and APY.
6. The correct answer is C. Compound interest is the interest you earn on interest. This can be illustrated by using basic math: if you have $100 and it earns 5% interest each year, you'll have $105 at the end of the first year. At the end of the second year, you'll have $110.25. Not only did you earn $5 on the initial $100 deposit, you also earned $0.25 on the $5 in interest.
7. The correct answers are A, B and C. Your credit score is a mathematical representation of your risk to lenders.
Your credit score is computed using the five following categories:
Payment history, 35 percent
Amounts owed, 30 percent
Length of credit history, 15 percent
New credit, 10 percent
Credit mix, 10 percent
8. The correct answer is A. A 401(k) is a retirement plan offered by an employer that allows you to take a percentage of your paycheck (you decide how much) and put it aside for your retirement. This money usually gets invested on your behalf in a variety of stocks and bonds so that your money can create more money. You choose your investments, either directly or by picking a mix that reflects how much risk you’re comfortable with. The money that goes into your 401(k) is taken from your paycheck before taxes, reducing your taxable income. The bottom line is if your employer offers a 401(k), take advantage of it.
9. The correct answer is D. Nearly one-third of all American students now have to go into debt to get through college, and the average student loan debt reached a record high of $38,792 in 2020. Collectively, that debt equals about $1.58 trillion as of November 2021, according to the Federal Reserve Bank of New York.
10. The correct answer is C. OurMoneyMatters.com is a comprehensive platform that provides personalized and innovative tools like a student loan snapshot, car loan calculator, investment analyzer, online courses, access to certified financial planners, and much more. OMM can even help you discover your "money personality” along with a customized program that's most likely to work for you so you can achieve financial freedom.
Our Money Matters is supported through a generous financial grant by the Wells Fargo Foundation.
To read more Our Money Matters blogs, click here.