Test your personal finance knowledge by answering these top 5 personal finance questions.
1. If a late payment is sent to a collections agency, how long will it remain on your credit history, even if you pay it off?
- A) less than a year
- B) 2-5 years
- C) 6-7 years
- D) 10-15 years
ANSWER:C- 6-7 years
If you think you may miss a payment or have a late payment contact the institution immediately. You may be able to develop alternative payment solutions without effecting your credit.
2. True or False: Carrying a balance on credit cards boosts your credit score?
Maintaining a lower credit utilization reflects a better credit score. Pay off your balance in full each month- or at least keep your total amount carried on cards as low as possible compared to your credit limit.
3. How high should your credit score be to qualify for the best rates?
- A) 650
- B) 800
- C) 700
- D) 750
A credit score in the mid 700’s will usually qualify you for the best interest rates. If you need help getting your credit up to par start here.
4. Over the last 25 years which investment strategy has generated the worst returns for long-term investors?
- A) Investing a large amount when the market peaks
- B) Investing a large amount when the market is low
- C) Not investing at all
ANSWER:C- Not investing at all
Even investors with terrible timing, entering the market when the prices were highest came out ahead compared to those that did not invest at all. Start investing today!
5. What is the difference between a Traditional IRA and a Roth IRA?
- A) How withdrawals are taxed
- B) How contributions are taxed
- C) The age you withdrawal money
- D) All of the above
ANSWER:D- All of the above
Both of these retirement accounts are a great way to save for the future. Choosing which one is right for you is deciding if you want to pay taxes now or later.