college personal finance semester test
Which of the following statements comparing credit and debit cards is TRUE?
With debit cards, you're spending your own money at point of sale, while with credit cards, you're promising to pay back the money eventually
What was the net (or take-home) pay for this employee for this pay period?
$1,502.10
How much did this person pay towards Medicare in this pay period only?
$19.62
You have been working for five years after college and are ready to buy your first home. Homes in the area you want to live in cost $550,000. The biggest mortgage you can afford is $300,000. What is the down payment you will need to pay?
$250,000
Your friend Laila is talking to you about the benefits of tax filing software. Which of the following is true?
You can avoid the costs of having to pay a professional, though you may have to pay for the software and/or e-filing online.
According to the Equal Credit Opportunity Act, which of the following factors CAN a lender legally use to charge you a higher interest rate?
your credit score
What is one benefit of selecting an income-based repayment plan for your student loans?
your monthly loan payment will be set based on your income, so that you're not paying more than 20% of income toward your loans
Which of the following is most likely to represent a fixed rate, secured debt?
A dealer-financed auto loan
Each of the following financial products will help you build a credit history EXCEPT...
Debit card
Elizabeth is considering buying a $30,000 car. Which of these financing options will likely lead to the LOWEST monthly payment?
$3000 down payment, 6% interest, 84 months
Juanita has a part-time job that pays $12/hour and works about 50 hours every month. Her withholdings are Social Security (6.2%), Medicare (1.45%) and federal income tax (10%). What is her approximate net pay?
$500
What form am I? I am received when you start a job. You use me to prove that you are eligible to work in the U.S., and you must provide forms of identification when submitting me.
1-9
if you don't proactively choose a different repayment plan option, your Federal student loans will default to the Standard Plan, which has a term of __________.
10 years
Which of the following paycheck withholdings puts money into a retirement investment fund that you will manage?
401(k) contribution
Which statement accurately describes how the 50/20/30 Rule would break down your take-home pay?
50% on living expenses and essentials, 20% on financial goals, and 30% on flexible spending
I forgot to pay my credit card bill one month. For how long will that payment information show up on my credit report?
7 years
Which of the following individuals or groups would be the LEAST likely to look at your credit score?
A bank representative who is helping you open a savings account
Based on her current balance, how much credit does this cardholder have available to use?
About $1,600
Which of the following is true about fixed and adjustable-rate mortgages?
Adjustable-rate mortgages have a fixed interest rate for a short period, but then the interest rate fluctuates, which can lead to higher or lower interest rates for the homeowner
Amy and Chuck each buy a house in the same neighborhood for $250,000. Amy's monthly mortgage payment is $400 more per month than Chuck's. Which one of the following statements could explain this difference?
Amy chose a shorter term for her mortgage, so her monthly payments are higher.
Which of the following could have a NEGATIVE impact on your credit score?
Applying for multiple credit cards in a short period of time (e.g., a week)
Melvin is 19 years old and wants to begin establishing a credit history. Which action should he take to meet that goal?
Ask his parents to cosign a credit card or add him as an authorized user on their credit card.
As you make decisions during college, you should focus on...
Balancing your academic, social, and financial decisions to make the most out of the entire experience while setting yourself up for success post-college.
What is the best advice to prevent identity theft?
Be careful with your credit and bank account numbers, create strong passwords, and beware of phishing emails.
Aaron realizes he has a budget deficit of roughly $175 at the end of two months in a row. Which of these options makes the most sense for him to fix his problem?
Cancel his cable TV subscription and go out to dinner three fewer times each month with friends.
You'll need a budget once you get to college, so that you aren't overspending each month. Which piece of advice is MOST useful?
Have a conversation with your parent(s) beforehand, so you understand who will pay for which monthly expenses.
Who tracks all of your credit information?
Companies named Equifax, Experian and TransUnion
John wants to buy a car and is trying to decide whether he wants to accept a pre-qualified auto loan from his credit union or if he wants to directly finance the car from the dealership. What should he do?
Compare the two offers and choose the one through which he'd pay the least amount of money overall.
Elaine is an employee. Which of the following steps is she responsible for?
Complete a W-4
When loans are amortized, monthly payments are _______ , while the interest portion of the monthly payment ________ and the principal portion of the monthly payment _______ over time.
Constant, Decreases, Increases
Why do so many people continue to use payday loans despite the financial risk?
Consumers need quick access to money that is not provided by other financial institutions.
You find an error on your credit report: your credit card account indicates that you are 60 days late on your payment but you have bank records indicating that you have always made on-time payments. What should you do FIRST?
Contact the credit card company to have them fix it
You're paying your credit card bill and your student loan payment each month, but you're falling behind on your auto loan payment. Which friend's advice could have a NEGATIVE impact on your credit score?
Debbie says, "Stop making the credit card payment for a few months until you're caught up on the auto loan."
Each of the following organizations offers grants to college students EXCEPT...
FAFSA
What is one advantage of Federal student loans?
Federal student loans have lower credit standards (are easier to get) than private loans, which may require a co-signer.
Which of these two documents are the same?
Financial Aid Package and Financial Aid Offer
Fred is comparing different financial aid offers he has received. He notices that some of the letters do not contain sufficient information for him to determine the net price for that school. What is the BEST course of action that Fred can take?
Fred should contact the financial aid office at each school to ask for the missing information.
Heather receives a phone call, in which an automated voice states that her credit card has been used fraudulently and that she must enter her 16-digit credit card number, using the keypad of her phone, to clear up the error. What should Heather do next?
Hang up and call her credit card company using the 1-800 number on the back of her card to inquire about the issue or report the attempted phone fraud.
Which of the following are the three largest categories of federal government spending?
Health, Military, and Interest on Debt
isaiah works for the summer at a technology company and has a salary for the summer of $3,000. After Federal and state taxes, Social Security, and Medicare are deducted, his take-home pay is $2,500. Which of the statements below is correct?
His gross pay is $3,000 and net pay is $2,500.
Which of the following statements below is TRUE?
If the cardholder pays $523.20 by the due date on the bill, she will pay NO interest to the credit card company.
Your financial aid package at your dream school includes eligibility for a work-study job. Which of these is a valid reason for rejecting that opportunity?
If you cannot handle the time commitment of academics and the work-study job, your grades might suffer.
What is an advantage of using a credit card?
If you pay off your balances every month in full, it's like getting a short-term interest-free loan
You see on a commercial that OrangeCo is offering a credit card with a 5% cashback program for all cardholders. What is ONE question you might ask to evaluate how good this offer is?
Is there an annual fee on this credit card and how much is it?
What does the term "withholding" mean in reference to your paycheck?
It is how much is being taken out of your paycheck in taxes.
Which of the following statements about credit scores does this bar graph support?
It is more difficult for young people to borrow (i.e., get a loan) because they have less payment history for a lender to rely upon.
Select the statement below that accurately describes a characteristic of a credit card.
Making full payments on time every month is the only way to avoid interest charges
Frank and Jasmere are both shopping for a new car. They are looking for a $20,000 loan to pay for the new car that they will pay back over a five year period. Frank has a credit score of 730 and Jasmere has a score of 600. Which of the following statements is TRUE?
Jasmere's monthly payment on the loan will be about $100 more than Frank's payment.
Keith's tuition, room & board, and fees for freshman year total $26,000. Using scholarships, grants, and Federal student loans, his financial aid package is $26,500. What option below is both realistic and financially responsible?
Keith should pick up a part-time job (during the academic year or during breaks) to cover remaining expenses.
Which statement best describes why payday loans are sometimes referred to as "predatory lending?"
Lenders "prey" on low-income borrowers who have little to no other options for obtaining a loan.
Which of the following statements about this W-2 is true?
Lily paid state income taxes of $1,189.90
Which best describes the Debt Snowball method for paying off debt?
Make the monthly minimum payments on all your debts and put any extra cash toward the debt with the lowest balance.
Which of these credit payback strategies would lead to the HIGHEST interest charges?
Making the minimum payment (3% of your credit card balance) every month with an occasional late payment
How frequently is this employee paid?
Monthly
Sarah lives on campus. Which of the following cost categories can she most likely remove from her budget?
Monthly on-campus parking permit
Which of the statements about this W-4 is TRUE?
Mr. Khan's paycheck will have less money withheld from his paycheck since he is claiming a dependent.
Janine is considering what auto costs she is going to have after buying a new Honda Civic. She has budgeted enough money for the monthly auto loan payment, gas, and auto insurance. Has Janine factored in all of the costs associated with car ownership?
No, she needs to factor in other costs such as maintenance, emergency repairs, etc.
Typically, when should you first file the FAFSA?
October or November of your last year of high school
As a young adult, all of the following are good strategies for building credit, EXCEPT:
Open a checking account, and start using a debit card
What are the two most important factors in calculating your credit score?
Payment history and amounts owed
When filing your FAFSA, you'll need each of the following documents EXCEPT...
Proof of employment.
All of the following would show up on a credit report EXCEPT...
Salary of your current job
Which of the following is a good strategy to use when it comes to paying for college?
Save your earnings from your summer job so that you can reduce the amount of loans you need to take.
What financial product am I? I am a type of credit card that requires cardholders to make a security deposit equal to the credit limit on their account. Due to this deposit requirement, I am often a good choice for young people looking to establish a credit history.
Secured credit card
Which of the following describe what a "dependent" is for tax purposes?
Someone under the age of 19 who you financially support
Which of the formulas below equates to net price?
Sticker price minus grants and scholarships = net price
If you are having trouble making auto loan payments, and are really following a tight budget, which recommendation below represents the WORST advice?
Stop making payments on some of your debts so you can focus on getting the most expensive or largest debts under control
Which type of financial aid am I? I have limits on the amount that you can borrow based on your year in college. The federal government makes the interest payments on me while you are in college, and you make the interest payments on me after you graduate.
Subsidized federal loan
Upon completing your 1040, you realize that you owe the IRS $427. Each of the following is a possible way to pay the taxes you owe EXCEPT...
Tell the IRS to take out more taxes next year to pay back the $427.
Why is it important to be extremely careful when completing your 1040 form?
The 1040 form determines whether you owe additional taxes or are entitled to receive a refund from the government
Credit card disclosure: "Your due date is at least 25 days after the end of the billing cycle. We will not charge you interest on new purchases provided that you have paid your previous balance in full by the due date each month." Identify the true statement.
The 25 days after the end of the billing cycle is referred to as the grace period
Which of these statements best explains why it's often a good idea to pay more than the monthly amount due on an amortized loan?
The extra payment will be applied to the principal amount you owe, which will pay down your debt more quickly
As a result of completing the FAFSA, you get a student aid report that indicates your EFC is $10,000. What does this mean?
The government expects that your family can contribute about $10,000 to the cost of your education.
Which of the following statements is CORRECT about secured loans?
They require collateral, in the form of assets like a car or a home, to be exchanged for the loan
You have a credit card and want to know the best way to use it to boost your credit score. Which step will have the GREATEST impact?
Using less than 30% of the credit limit on your card and paying it off in full every month by the due date
Which of these represents a potential consequence of neglecting to pay your credit card or loan debts?
Wages or tax refunds can be garnished
When determining whether you NEED to file a federal tax return, each of these questions matters EXCEPT...
What state do you live in?
Which of the following is a BAD budgeting strategy to use if you want to save money at the grocery store?
When comparing similar products, focus on the price only.
When do you start paying taxes?
When you make more than the minimum income requirement
Which of the following statements about applying for grants and scholarships is FALSE?
While the FAFSA is required for federal loans or grants, you don't need to complete it for university, community, or professionally sponsored funds.
You are starting your first job and you are asked to complete some paperwork on your first day. Which form will determine how much money is withheld from your paycheck for federal and state income taxes?
w-4
You are putting together your first post-graduation budget. Your take-home pay will be $2,500 per month. You estimate your monthly costs to be rent of $900, car related expenses to be $550, entertainment of $200, food expense of $250, cable bill of $75, mobile phone of $100, student loan payment of $400 and other expense of $150. How would you describe your budget after analyzing all of your income and expenses?
You have a deficit of $125.
Which of the following statements is true about this Schumer Box?
You may be charged an APR as high as 28.99% for a late payment
Which of the statements below is TRUE about filing your taxes, assuming your only income comes from the salary you earn at BigTech Company?
You must file your tax return by April 15th of the following year or request an extension by that date
Which of the following statements about the W-2 form is TRUE?
You need a separate W-2 form from EACH of your employers in order to file your taxes
Which of the following is a sign that you have a budget deficit?
You overdraw your checking account on a consistent basis (with a $34 cost per overdraft).
What is a good rule of thumb to consider when it comes to student loan debt?
You should generally limit your borrowing to what you expect to earn as a starting salary when you leave college.
When Emmanuel receives his Student Aid Report, it lists an Expected Family Contribution of $8000. His family had only budgeted to give him $2000, so they are $6000 short. Which piece of advice is LEAST useful in this situation?
You should start the semester, hope the college doesn't notice the shortage, and then deal with the consequences later if they catch you."
Which of the following best describes what Two Factor Authentication (2FA) is?
You type in your account password on your laptop and are prompted to enter a one-time code you receive via text message.
Before submitting an application to rent an apartment, you would like to go and inspect the property. Which of the following reasons is the LEAST important reason for why you would go and inspect the apartment?
You want to show the apartment to your family and friends.
Which response best completes the sentence "It's best to begin establishing credit when you're young because ________" ?
You will likely need a credit history to rent your first apartment, finance your first car, or open an unsecured credit card.
Reading through a credit card disclosure (aka the Schumer Box), you see the APR for a specific card is set at 9.99% - 23.99%. Which statement is true?
Your APR will be within that range, depending on the strength of your credit history
How can your credit score impact your financial situation?
Your credit score can determine whether you are approved for a loan and what the interest rate on that loan will be.
You will find each of the following pieces of information on your student Aid Report (SAR) except...
a record of all scholarships you have applied for.
Your teacher tells you about the importance of checking your credit report. Which government-run website allows you to download your credit report for free on an annual basis?
annualcreditreport.com
The shorter your term length, the _______ your monthly payments, and the _______ the total interest you will pay.
higher, lower
Review this partial credit report, and then choose the response below that accurately depicts the information on the report.
his borrower was 30 days late on their February 2007 payment
your friend confides in you that he has a low credit score. What is the single best way for him to improve his score?
make on-time payments
How much does it cost to file the FAFSA?
nothing, it is free
When you complete your 1040 form, if you overpaid your taxes and the government owes you money, that is called a __________.
refund