How "Lit" Are You?
This knowledge quiz is designed to give you a better understanding of your current level of financial literacy and help identify areas where you can improve.
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Category: Financial Awareness & Risk
1. If you take out a $500 payday loan with a $75 fee and pay it back in two weeks, what is your annual percentage rate (APR)?
Why it matters: Payday loans trap borrowers with sky-high APRs.
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Category: Credit & Debt
2. What happens if you make a credit card payment 31 days late?
Why it matters: Late payments can have long-term consequences on credit scores.
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3. Which debt should you pay off first if you have limited funds?
Why it matters: Paying off high-interest debt first saves money in the long run.
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Category: Budgeting & Expenses
4. Under the 50/30/20 rule, what percentage of your income should go to savings and debt repayment?
Why it matters: This method helps balance needs, wants, and savings goals.
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5. If you can’t save 3-6 months of expenses, what’s the best alternative?
Why it matters: Many LMI individuals struggle to save, so emphasizing small, consistent steps is key.
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6. You need to borrow $500. Which option will likely have the lowest fees?
Why it matters: Payday loans and overdraft fees trap people in cycles of debt.
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7. You have a $1,000 credit limit and a $500 balance. What is your credit utilization rate?
Why it matters: Staying under 30% utilization is key for maintaining a healthy credit score.
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Category: Banking & Savings
8. If your bank charges a $35 overdraft fee and you overdraw by $5, how much do you owe?
Why it matters: Overdraft fees add up quickly, making small mistakes expensive.
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Category: Ai Literacy
9. Before using AI for money decisions, what is most important?
Why it matters: Helps understand budgeting and necessary expenses.
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10. If inflation is 5% and your savings account earns 1% interest, what happens to your money’s purchasing power?
Why it matters: Inflation means money loses value over time, making saving and investing essential.
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11. You receive a call saying you owe money and must pay immediately via gift card. What should you do?
Why it matters: Scammers often demand gift cards or wire transfers—a major red flag.
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12. What impacts your credit score the most?
Why it matters: Many think income matters for credit scores, but payment history and credit use are more important.
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13. Which bank account is the safest for storing emergency funds?
Why it matters: Savings accounts keep money safe and accessible while earning interest.
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14. You have no credit history. What’s the best way to start building credit?
Why it matters: A secured credit card is a safe way to build credit with low risk.
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15. Which of the following is a fixed expense?
Why it matters: Fixed expenses remain the same each month, which helps with budgeting.
