Financial Literacy Flashcards
6 cards from real NEDP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Financial Literacy flashcards as text
What is the purpose of an emergency fund?
Answer: To cover unexpected expenses without going into debt
An emergency fund provides a financial cushion for unplanned expenses like medical bills or job loss without borrowing.
A credit card has an APR of 24%. If you carry a $500 balance for one month, approximately how much interest will you owe?
Answer: $10.00
Monthly interest rate = 24% ÷ 12 = 2%. Interest = $500 × 0.02 = $10.00.
Which of the following best describes 'net income'?
Answer: Take-home pay after taxes and deductions are subtracted
Net income is gross pay minus taxes, Social Security, and other deductions — the amount you actually receive.
What does FDIC insurance protect?
Answer: Bank deposits up to $250,000 per depositor per bank
The Federal Deposit Insurance Corporation (FDIC) insures eligible bank deposits up to $250,000 per depositor per institution.
Which of the following is a fixed expense in a monthly budget?
Answer: Monthly rent payment
Fixed expenses stay the same every month, like rent or a car loan payment. Variable expenses change month to month.
Which action will most directly improve a low credit score?
Answer: Making all payments on time consistently
Payment history is the largest factor in credit scores (about 35%). Consistent on-time payments rebuild credit over time.