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How financially literate are you?

MONEY HABITS

How financially literate are you?

4 November 2020

Anybody who’s tried to get their finances under control knows how easy it is to get lost in the jargon. But, knowing your stuff can help you to feel more confident with your finances. Better yet, you don’t need a fancy economics or finance degree to know the basics. Want to test your knowledge? Test your know-how with our financial literacy quiz.

Question 1: What’s one difference between a transactions account and savings account?

a) Your parents have to sign you up for a savings account

b) You can usually access your transaction account with a card linked to your account

c) You can usually access your savings account with a card linked to your account

d) Transaction accounts are from France, and savings accounts are from England

e) A transaction account has more money in it

Nice one!

Answer: b) You can usually access your transaction account with a card linked to your account.

Transaction accounts are those that are designed for day-to-day things like groceries, rent and petrol. Savings accounts encourage you to put away money for the long term. As a result, many savings accounts don’t have transaction cards, making it easier to put your money away without dipping into it.

Sorry that is incorrect!

Answer: b) You can usually access your transaction account with a card linked to your account.

Explore Suncorp Savings Accounts

Question 2: What does it mean to refinance your home loan?

a) You take out a new loan to pay off an existing one

b) You add money to your home loan

c) You get a discount on your current loan

d) You changed to a fixed interest rate

e) You transfer your home loan to Mum and Dad

Spot on!

Answer: a) When you take out a new loan to pay off an existing one.

When you refinance your home loan, you look for a new loan to replace your existing one. You can refinance your loan with your existing lender, or look for a new loan with another lender. There are many reasons why you may want to refinance your home loan — perhaps you’re looking to restructure your debts, or just shopping for a better deal.

Sorry that is incorrect!

Answer: a) When you take out a new loan to pay off an existing one.

Question 3: What’s the definition of equity?

a) When you and your partner have an equal share in your home

b) When you take on a joint account with someone

c) The value of your home, minus the amount you still owe on your loan

d) The amount you still owe the bank on your loan

e) The name of a pirate ship in the Tasman sea

Bingo!

Answer: c) The value of your home, minus the amount you still owe on your loan.

In other words, equity is the difference between what your home is valued on the market, and the amount you have left to pay off. Generally, the more you pay off your home loan, the more you’ll increase your equity. You could use it to refinance your home loan, or use it as security to renovate, or even buy a second property.

Sorry that is incorrect!

Answer: c) The value of your home, minus the amount you still owe on your loan.

Question 4: What is compound interest?

a) When your interest rate is reduced

b) When you transfer banks and they have a different interest rate

c) When you earn interest on the interest already earned on your account balance

d) The bank’s average interest rate for the financial year

e) When your interest in finance is compounded with other hobbies

Fantastic stuff!

Answer: c) When you earn interest on the interest already earned on your account balance.

Compound interest is a one of the easiest ways to grow your savings. When you have your money in a savings account, interest is calculated on your closing balance daily. Then, monthly, you’ll earn interest on that interest. The longer you save, and the more you keep depositing, the more compound interest you can earn!

Sorry that is incorrect!

Answer: c) When you earn interest on the interest already earned on your account balance.

Question 5: What’s the benefit of an offset account?

a) It can help you pay your home loan quicker by reducing the interest you pay

b) It increases the interest on your savings by offsetting your daily interest calculated

c) It gives you a better home loan rate by offsetting the interest

d) You can have less bank accounts

e) It helps keep your fixed rate home loan from increasing by offsetting the interest

Well done!

Answer: a) It can help you pay your home loan quicker by reducing the interest you pay.

It can help you pay your home loan quicker by reducing the interest you pay.

If you’re the right financial fit, an offset account can help to shave years off your home loan. As a type of savings or transaction account that’s linked to your home loan, the account balance can be offset against the daily balance of your loan. This means the transaction or savings account balance is subtracted from the home loan account balance you have to pay interest on.

Sorry that is incorrect!

Answer: a) It can help you pay your home loan quicker by reducing the interest you pay.

Question 6: If you have $1,000 in your savings account for 12 months, with an interest rate of 1.9%p.a., how much interest will you earn in that time?

a) $100

b) $119

c) $19

d) $25

e) $236

Yes!

Answer: c) $19.

There are two elements to figuring out your monthly interest: your principal and your interest rate. The principal is the amount you have in your account, and the interest rate is the percentage of your principal that you’ll earn from the bank. If you’d like to work out yours, our Savings Calculator can help *.

Sorry that is incorrect!

Answer: c) $19.

Question 7: What’s a secured loan?

a) A loan where there’s an asset used as collateral which the bank may take possession of and sell to recover the loan if you can’t repay it

b) A loan that’s tied up in a secure bank account overseas

c) A loan for a security guard

d) A loan guarded with a secret handshake determined by you and the bank

e) A loan where you pay a secure amount for a set period of time before it changes

Yippee!

Answer: a) A loan where there’s an asset used as collateral which the bank may take possession of and sell to recover the loan if you can’t repay it

Loans are generally secured or unsecured, meaning you have an asset to provide to the bank as collateral or you don’t. For example, personal loans, especially car loans are often offered as a secured loan. Where the loan is secured and if you default on the debt, the bank may take possession of the asset used as collateral to pay out the loan. As a plus, banks can sometimes offer lower interest rates on the loan because of the security of the collateral you offer.

Sorry that is incorrect!

Answer: a) A loan where there’s an asset used as collateral which the bank may take possession of and sell to recover the loan if you can’t repay it

Question 8: When you scroll through your account via Internet Banking or the Suncorp App, what does the ‘current balance’ of your transaction or savings account mean?

a) The amount in your account you can withdraw/use

b) Your total balance, including pending transactions

c) The amount of interest you’ve earned on your account during this financial year

d) The total amount of all your bank accounts, including bonus interest and credit

e) The amount you owe the bank for being a customer

Nailed it!

Answer: b) Your total balance, including pending transactions

A ‘current balance’ is the money in your account that includes pending transactions due to come out of your account or that haven’t been cleared yet. Funds that are pending aren’t available for withdrawal. For example, transactions made using payWave can take a few days to clear in your account. It also includes cheques that haven’t been cleared yet, or funds debited to your account that haven’t been processed yet. Your available balance, on the other hand, is the amount in your account that is available for withdrawal.

Sorry that is incorrect!

Answer: b) Your total balance, including pending transactions

Question 9: What does the ASX stand for?

a) Annual Sales Expo

b) Australian Stock Experience

c) Annual Stock Exchange

d) Australian Securities Exchange

e) Australian Seagull Xylophone

Good on ya!

Answer: d) Australian Securities Exchange

If you or someone you know bought or sold stock, most likely they’ve engaged with the Australian Securities Exchange (ASX). This is where companies list their stock for exchange, and sell it off to people, who then become investors of the company. People can then trade stock by buying and selling shares.

Sorry that is incorrect!

Answer: d) Australian Securities Exchange

Question 10: How might you earn credit card rewards points?

a) By making purchases on your credit card

b) By recommending family and friends get the same credit card as you

c) By selling the interest you’ve accumulated on your credit card

d) By increasing your credit card limit

e) By trading points with other people

That’s correct!

Answer: a) By making purchases on your credit card

With some types of credit cards, every time you spend on certain transactions you could be earning rewards points. You may then be able to redeem them for things like household items, gift cards and even flights and accommodation. So if you have the financial discipline to use a credit card, you might be able to earn some sweet points using it even for everyday items such as groceries.

Explore Suncorp Clear Options Credit Cards

Sorry that is incorrect!

Answer: a) By making purchases on your credit card

Explore Suncorp Clear Options Credit Cards

Total Score: 0-3

Room for improvement

Don’t be discouraged, everyone has to start somewhere! There’s no time like the present to do your research and boost your financial confidence for the future — whether it’s home loans, savings or general finance know-how. Don’t know where to start? Check out these resources:

Home Jargon Explained
How to become a successful saver
What is compound interest (and why should I care)?

Total Score: 4-6

Rising Star

Hats off to you for having a grasp of the basics, but there’s always room for improvement! The more you know, the more confident you can feel in making financial decisions for a better future.

Total Score: 7-10

Financial Wizard

You’re pretty good with financial know-how — excellent stuff! However, don’t take this a sign to stop learning. The more you know, the more confident you can feel in your financial future.

Total Score

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*Calculations in the Savings & Term Deposit Calculator are intended as a guide only. The results may vary slightly from your actual total interest earned due to assumptions and rounding used in calculations.

Information is intended to be of a general nature only and any advice has been prepared without taking into account any person's particular objectives, financial situation or needs. You should make your own enquiries, consider whether advice is appropriate for you and read the relevant Product Information Document before making any decisions about whether to acquire a product.

National Australia Bank Limited (ABN 12 004 044 937, AFSL and Australian Credit Licence 230686) (“NAB”) is the credit provider and issuer of Suncorp Clear Options Credit Cards. Suncorp-Metway Ltd ABN 66 010 831 722 (“Suncorp Bank”) promotes and distributes Suncorp Clear Options Credit Cards on NAB's behalf under an agreement with NAB. NAB has acquired the business relating to this credit from Citigroup Pty Ltd (ABN 88 004 325 080, AFSL and Australian Credit Licence 238098) (“Citi”) and has appointed Citi to assist to administer the Credit Cards. Suncorp Bank will not guarantee or otherwise support NAB's obligations under the contracts or agreements connected with the Credit Cards (other than those relating to Suncorp Internet Banking and Suncorp Telephone Banking).