Most Americans Can’t Pass This Tricky Finance Quiz — Can You?

Think you know your stuff when it comes to money, banking, and personal finance? You wouldn’t be the only one. Plenty of people are confident in their money smarts, but as it turns out, that confidence is often misplaced.

GOBankingRates came up with the following six questions about the fundamentals of finance. Fewer than half of the people surveyed could answer five correctly, which is a B grade of 83 percent. Most couldn’t even get a passing grade because they answered only four or fewer questions correctly for a grade of 66 or less.

Now it’s your turn.

Here are the exact same six questions with the same possible answers. Some are multiple-choice, others are true and false. All deal in primary, nuts-and-bolts basics that affect the lives of average people every day.

Maybe you’re as sharp as you think you are — or maybe you’ll find it’s time to brush up on your financial fundamentals.

Take the quiz, see how you do.

What Are the 3 Major Credit Bureaus? 

• Capital One, Bank of America and JP Morgan
• Deloitte, KPMG and Ernst & Young
• Fannie Mae, Freddie Mac, and Sallie Mae
• FICO, Moody’s, and Fitch
• Transunion, Equifax, and Experian
• Visa, MasterCard, American Express

Transunion, Equifax and Experian

The three big credit bureaus gather financial information about individuals, maintain that information in databases, and package it into credit reports. Creditors, lenders, and sometimes even employers purchase those reports to learn about a person’s debts, payment histories, and other critical information.

True or false: A 401k refers to a tax credit for retirement.

False.

Although it’s not a tax credit, 401k plans certainly come with tax benefits. The most common and popular employer-based retirement plan in America, 401ks allow workers to contribute pre-tax earnings directly to these special accounts — often backed up by matching funds from their employers.

Of the following, which describes what “APY” is?

• Adjusted prices for inflation
• Annual rate charged for borrowing or earned by an investment
• Annual rate of return accounting for compound interest
• Annualized principal payment amounts
• Annuity payout per year
• Automated payment

Annual rate of return accounting for compound interest.

APY stands for “annual percentage yield,” and it factors in both the interest rate and the compounding period on an investment.

True or false: Income does not impact your credit score.

True.

Your income will always play a role in how much money you can borrow, but it doesn’t factor into your creditworthiness. Lenders are concerned with things like your on-time payment history and outstanding debt, which have the biggest impact on your credit score.

What does a CD offered by a bank stand for?

• Capital deferment  
• Certificate of deposit
• Collateral default
• Collateralized discount
• Commodity dividend
• Credit dividend

Certificate of deposit

Banks issue CDs to customers looking for a safe place to park their cash for an extended period of time. In exchange for the deposit, banks pay them a modest interest rate.

What’s the difference between a checking account and a savings account? Select all that apply.

• Only savings accounts earn interest
• A savings account can’t be used for automatic bill pay
• Only checking accounts have overdraft fees
• You can only transfer money from checking accounts to savings
• Checking accounts are designed for regular use
• Savings accounts are designed for investing long term

You can only transfer money from checking accounts to savings and savings accounts are designed for investing long term.

A checking account is your go-to daily spending account — it’s linked to your debit card and you can write checks from it. Savings accounts pay higher interest rates, but you can only make so many withdrawals per month because they’re meant to be safe havens for accumulating cash over time.