Quiz: How Financially Literate Are You?
|April 8, 2011|
In honor of Financial Literacy Month, I’ve combed through the CCG archive and put together a short quiz based on Smith’s reporting. Try it now and see how much you remember.
1. True or False: If you overdraw your checking account, you will automatically be charged an overdraft fee, unless you opt out.
2. True or False: Most card issuers cap balance transfer fees at $75-$100.
3. True or False: Credit card issuers aren’t allowed to offer students tangible gifts, such as water bottles or T-shirts, in exchange for signing up for credit cards.
4. True or False: If you currently pay for payment protection on your credit card, you’re automatically covered in case something happens.
5. True or False: Stay-at-home moms can list their partner’s income on their credit card application and still obtain a credit card.
6. True or False: Since provisions in the Credit CARD Act took effect, most new cardholders pay a higher interest rate than the rate that they were originally offered when they applied for the card.
1. False. It’s the other way around. Banks are no longer allowed to charge consumers overdraft fees, unless consumers opt in for overdraft protection.
2. False. Most card issuers used to cap balance transfer fees at about $50-$100. However, that’s no longer true. If you transfer a large balance from one card to another, expect to pay the full fee — which typically ranges from 3 to 5 percent.
3. True. Sort of. Card issuers aren’t allowed to offer tangible items to students on or within 1,000 feet of campus. But they can offer gifts to students off campus (say, through students’ email accounts). And many card issuers are doing just that.
4. False. Think you’re automatically covered if you made all of your payments on time? Think again. Card issuers have gotten in trouble recently for enrolling consumers in payment protection plans, and then refusing coverage because the consumers weren’t eligible.
5. True. For now. The Federal Reserve recently modified some of the Credit CARD Act’s key provisions. Beginning in October, applicants without an independent source of income (such as stay-at-home moms and dads) will no longer be able to list total household income on their applications. Instead, they will have to sign up for a joint account with their spouse.
6. False. That used to be the case before the Credit CARD Act went into effect. But according to new research, the CARD Act has forced card issuers to be more transparent on pricing. Now, if you apply for a card with a 14 percent APR, you’re less likely to get stuck with a 15 percent APR after you receive the card.