pers finance ch 7

Randy Ice starts the month with a balance on his credit card of $1000. On the 10th day of the month, he purchases $200 in clothes with his credit card. On the 15th day of the month he makes a payment on his credit card of $500. The average daily balance for the month including the new purchase is $883. The average daily balance for the month excluding the new purchase is $750. The bank charges 1.5 percent per month and uses the average daily balance excluding new purchases method. What would Randy’s finance charges be for the month? 11.25
Anthony Newton wants to buy a new sail boat. He makes a down payment of $10,000 which represents 20% of the value of the sail boat he is purchasing. In which way is Anthony reducing his lender’s risk? He is taking a larger stake in the asset he is purchasing
The average U.S. household has ______ credit cards. 9
Membership in credit unions has been: growing steadily
Banks often encourage you to make the maximum payment. false
The most expensive loans are available from: finance companies
Which one of these methods is the fairest of calculating interest? average daily including purchases method
The rule of 78s formula dictates that you pay less interest at the beginning of a loan. false
When more than one payment is made on a simple interest loan, the method of computing interest is known as the declining balance method. true
The fairest method of calculating interest is the adjusted balance method. false
Sandra Jennings gets a loan from General Motors Acceptance Corporation. Which type of lending institution is this? finance company
Which interest formula may be used by creditors to determine how much interest you have paid at any point in a loan? the rule of 78s
Which form of bankruptcy allows a debtor with a regular income to extinguish his or her debts from future earnings or other property over a period of time? Chapter 13
Sarah Parker’s husband goes out with the ‘boys’ for a night on the town and gets home at 4 am waking everyone in the house. In response, Sarah goes out the next day and spends $500 in new clothes for herself putting it all on her credit card. Which one of the answers best explains Sarah’s spending? the use of money to punish
Chapter 7 bankruptcy is also known as straight bankruptcy. true
Credit unions rarely offer the same range of consumer loans that banks and other financial institutions do. false
The total dollar amount you pay to use credit is called the: finance charge
The Consumer Credit Counseling Service will refinance all of your existing debts for you. false
You can often obtain medium-priced loans from: commercial banks and credit unions
There is never a charge for any service provided by a Consumer Credit Counseling Service office. false
What is(are) the signal(s) of potential debt problems? All of these are danger signals
The most basic method of calculating interest is the compound interest calculation. false
If you receive a phone call from a debt collector: expect follow-up written communication
The annual percentage rate is the percentage cost of credit on a yearly basis. true
Two key concepts that you should keep in mind when borrowing are the finance charge and the annual percentage rate. true
Parents or family members are often the source of the least expensive loans. true
Who financially supports the Consumer Credit Counseling Service? Community-minded firms and individuals
If you find that you cannot make your payments, the first thing you should do is: contact your creditors and try to work out a modified payment plan with them.
One of the drawbacks of borrowing from parents or family members is that such loans: may create tension within the family
Which method of payment is likely to be the least expensive in the long run? cash

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