Unit – Consumer Credit

When you receive goods and services now, and pay for them later, you’re using: A lease Opportunity costs Credit Credit
An advantage of using credit is: Less impulse buying Ability to obtain needed items now Lower chance of overspending Ability to obtain needed items now
College loan Single payment credit Installment credit Revolving credit Installment credit
With an installment loan, the amount of money borrowed is known as the Principle
Using the 20-10 rule, a person earning $1,500 net income a month should not have monthly credit payments that exceed $20 $15 $150 $150
A disadvantage of using credit is impulse buying. True False True
A car loan is an example of a secured loan. True False True
Using the 20-10 rule, a person earning $40,000 net income a year (excluding mortgage or rent) should have no more than $8,000 in outstanding debt. True False True
All loans are long term. True False False
Credit is about earning money. True False False
Credit is free. True False False
Credit used for an investment, such as a house, is good credit. True False True
A credit card deducts money from your checking account. True False False
Credit is granted to those who have demonstrated their ability to manage their money over time. True False True
MasterCard and Visa used on vacation Single payment credit Installment credit Revolving credit Revolving credit
All credit card companies charge an annual fee and offer rewards. True False False
All credit cards charge the same annual fees and interest rates. True False False
All credit cards have the same grace period. True False False
The interest rate, or fee for paying off credit card debt in monthly installments, can be as high as 30 percent. True False True
The fine print on a credit card agreement, which outlines interest rates, late payment fees, and annual fees, can be changed at any time by the credit card company. True False False
Finance charges are levied on consumers who carry balances from month to month. True False True
The days between the last statement and the current statement cycles is called Billing Cycle Grace Period Balance Transfer Period Billing Cycle
Time allowed to pay your balance without being charged a finance charge is the Billing Cycle Grace Period Finance charge calculation period Grace Period
What is the fee charged by the card issuer for being a card holder? Annual Fee Finance Charge Late Payment Fee Annual Fee
The fee charged for the use of the credit card if not paid off in full each month? Annual Fee Interest Fee Finance Charge Finance Charge
The act of moving whole or a partial balance of a card to another credit card is called Balance Transfer Cash Advance Finance Charge Balance Transfer
The smallest amount of the balance a cardholder is required to pay is called the Balance Grace Period Minimum Payment Minimum Payment
Which of these credit limits is reasonable for a college student? $100 $1,000 $10,000 $1,000
Which of these APRs offers the best long-term deal? 2% introductory APR, which goes up to 23% after 6 months 10% APR, which goes up 1% every month for 10 months 15% fixed APR 15% fixed APR
A low interest rate that is offered for a limited time as an incentive is a(n) Low ball rate Introductory rate Minimum balance rate Introductory rate
Lenders consider what’s happening in the local economy. Capital Capacity Conditions Conditions
Lenders consider employment record and length of time at each position. Capital Capacity Character Character
Lenders consider debt-to-income ratio. Capital Capacity Character Capacity
Lenders consider your net worth. Capital Capacity Collateral Capital
Lenders consider what is pledged for repayment of loan. Capital Capacity Collateral Collateral
Collateral is used to “secure” a loan something of value you can deduct from your taxes not part of the “Five Cs” used to determine creditworthiness used to “secure” a loan
Which is not one of the Five Cs of credit? Capacity Credit rating Conditions Credit rating
The category that considers your current income level and current borrowing level is capital capacity character capacity
A bank that is looking at your past payment records on your loans by examining your credit report is most likely examining which aspect of the 5 C’s of lending? Character Capacity Capital Capital Character
Refers to a person’s assets Refers to a person’s assets Capacity Capital Capital
The finance charge is equal to the total of all monthly payments: Plus amount financed Less amount financed Divided by amount financed Multiplied by amount financed Less amount financed
Most companies calculate the finance charge on credit card accounts as a percentage of the: Daily balance Weekly balance Average daily balance Average weekly balance Average daily balance
The average daily balance is equal to the sum of daily balances: Plus number of days in billing cycle Less number of days in billing cycle Divided by number of days in billing cycle Multiplied by number of days in billing cycle Divided by number of days in billing cycle
Your bank granted you a single-payment loan of $2,500 for 90 days at 10 percent ordinary interest. What is the interest on the loan? $33.50 $62.50 $64.75 $72.33 $62.50
You obtained an installment loan of $1,400 with an annual percentage rate of 12 percent. You must repay the loan in 12 months. What is your monthly payment?http://www.franklinsavings.com/Calculator_Installment.html $124.38 $130. 67 $137.19 $146.22 $130. 67 WRONG
Bought a new delivery truck for $18,000 with a down payment of $4,000; paid $270 monthly for 60 months. The total finance charge is $2,000 $2,020 $2,200 $4,000 $2,200
You bought a new car for $20,000. You put down $6,000 and paid $280 for 60 months. The total finance charge is $2,800 $2,850 $3,250 $3,250 $2,800
What is the maturity value on a single-payment loan of $3,000 for 60 days at 11 % ordinary interest? $3,055 $3,330 $3,550 $3,660 $3,055
You bought a new boat for $16,000 and put a $3,000 down payment on it. The bank’s loan was for 60 months. Finance charges totaled $4,800. Your monthly payment is $269.67 $296.67 $346.67 $364.76 $296.67
Calculate the average daily balance on a credit card account for the month of May. Previous balance was $600. On May 4 a payment of $200 was made. On May 8 charged$55 for gas. On May 15 returned an item for $95. On May 20 purchased groceries for $110. $452.42 $470 $600 $1,425 $470 WRONG
Amortization is a payment process, True False True
The monthly payment is calculated by totaling the finance charge and amount financed divided by the number of payments of the loan. True False True
Revolving charge accounts must be completely paid off by end of the month. True False False
The daily balance is the previous balance plus cash advances plus purchases less any payments. True False True
Paying only the minimum down on a credit card will save you the most money. True False False
A credit report is: Your monthly credit card statement A loan and bill payment history Your credit line with your financial institution A loan and bill payment history
A credit score is: a three-digit number summarizing the state of your credit an alphabetical score grading your creditworthiness a numerical score reporting how much money you owe a three-digit number summarizing the state of your credit
A credit score helps a lender determine: how much money you owe how much money you make whether you’re a good financial risk whether you’re a good financial risk
The biggest factor in your credit score is: whether you pay your bills on time how much debt you have how long you’ve had credit whether you pay your bills on time
The three national credit bureaus (credit-reporting agencies) are: TransUnion, Enterprise and Capital One TransUnion, Equifax and Experian TransUnion, Moody’s and Experian TransUnion, Equifax and Experian
Credit scores range from: zero to 100 300 to 850 100 to 1,000 300 to 850
Inquiries from lenders to the credit bureau will: raise your score lower your score not affect your score lower your score
Are missed payments a factor used to calculate a credit score? Yes No Yes
Is carrying a high balance on a credit card a factor used to calculate a credit score? Yes No Yes
Is personal bankruptcy a factor used to calculate a credit score? Yes No Yes
If I find incorrect information on my credit report, I must hire an attorney to fix it. True False False
It is my responsibility to make sure that my credit report is correct and up to date. True False True
I need to pay my bills on time to maintain a good credit history. True False True
I need to check my credit report at least once a year. True False True
Credit reporting bureaus decide whether or not I can get credit. True False False
How do lenders find your credit history? From bank records From employer records From credit bureaus From credit bureaus
What is the most commonly used credit score? The FICO score Acme credit score Vantage Score The FICO score
Which of the following is NOT considered when calculating your credit score? Your payment history The types of credit you are using Your income Your income
Unpaid tax liens remain on your credit report for 15 years. True False True
Your credit report indicates if any accounts are in collection status. True False True
What right or responsibility is included in the Fair Debt Collection Practices Act? Debt collectors cannot use unfair or deceiving practices to collect overdue money on a loan that a creditor has forwarded to them. You cannot be denied credit based on your race, sex, marital status, religion, national origin, age, or because you are on public assistance. Debt collectors cannot use unfair or deceiving practices to collect overdue money on a loan that a creditor has forwarded to them.
What right or responsibility is included in the Equal Credit Opportunity Act? You cannot be denied credit based on your race, sex, marital status, religion, national origin, age, or because you are on public assistance. A creditor must give you written notice of the cost of credit and terms of repayment before you get a loan or credit card. You cannot be denied credit based on your race, sex, marital status, religion, national origin, age, or because you are on public assistance.
What right or responsibility is included in the Truth in Lending Act? You can get a free copy of your credit report every year from the three major reporting agencies. A creditor must give you written notice of the cost of credit and the terms of repayment before you get a loan or credit card. A creditor must give you written notice of the cost of credit and the terms of repayment before you get a loan or credit card.
What right or responsibility is included in the Fair Credit Reporting Act? Debt collectors cannot use unfair or deceiving practices to collect overdue money on a loan that a creditor has forwarded to them. You have the right to find out information on your credit report. You have the right to find out information on your credit report.
The Fair Debt Collection Practices Act makes it illegal for banks and businesses to discriminate against potential creditors debt collectors to impersonate government officials you to seek the services of a credit repair organization you to be denied credit debt collectors to impersonate government officials
If you lose your credit card or fear it has been stolen, the first call you should make is to: The credit card issuer The Attorney General s Office The Better Business Bureau Your insurance company The credit card issuer
Which act prohibits discrimination? Equal Credit Opportunity Act Fair Credit Billing Act Fair Credit Reporting Act Fair Discrimination Policy Act Equal Credit Opportunity Act
Selling your assets to pay creditors occurs under which of the following bankruptcy filings? Chapter 7 Chapter 11 Chapter 13 Chapter 15 Chapter 7
Allowing the courts to arrange a repayment schedule to pay creditors occurs under which of the following filings? Chapter 7 Chapter 11 Chapter 13 Chapter 15 Chapter 13
Under the Credit Card Act, how much advance notice must be given to consumers when there are significant changes in credit card terms? 15 days 30 days 45 days 60 days 45 days
To protect yourself from falling into debt, you should save enough money to last you through Two weeks One month Three to six months One to two years Three to six months
The Fair Debt Collection Practices Act applies to which of the following: Banks Collection agencies Credit unions Finance companies Collection agencies
You borrow $20,000 from First State Bank to buy a car. This transaction is subject to the Credit Card Act Fair Credit Reporting Act Car Equity Act Truth-in-Lending Act Truth-in-Lending Act
Your application for a credit card is denied. You can obtain information on your credit history under the Credit Card Act Equal Credit Opportunity Act Fair Credit Reporting Act Fair Debt Collection Practices Act Fair Credit Reporting Act
The credit department of E-Electronic Stores often calls you at work about your overdue bill. This is a violation of the Credit Card Act Fair Credit Reporting Act Fair Debt Collection Practices Act Truth-in-Lending Act Fair Debt Collection Practices Act
Larry pays off credit card in full each month. Yes No
In determining character, the lender may ask how long you have lived at your present address. True False True
APR measures the interest rate charged by a credit card True False True
Most credit cards have a credit limit. True False True
Which of these is in a credit report? Your educational history The amount of tax withheld from your paycheck The names of everyone who has requested your credit history in the past six months The names of everyone who has requested your credit history in the past six months
Monthly telephone bill Single payment credit Installment credit Revolving credit Single payment credit
Asking if you have a savings account is an example of: Character Capital Collateral Capacity Capital
What is your liability if you have lost your credit card? You must pay for all charges until you find the credit card. You are liable for the first $50 of charges if your card is used. You are liable for all charges until you report the card lost. You are liable for the first $50 of charges if your card is used.
For credit card users who do not pay the balance in full every month, the interest rate matters less than the annual fee and the rebates they earn. True False False
In terms of credit, what does APR stand for? Annual Percentage Rate Annual Payment Rate Annual Payoff Rate Annual Percentage Rate
This government organization publishes guidelines on how to avoid consumer scams: ScamLine America The Central Intelligence Agency The Federal Trade Commission The Federal Trade Commission
A person’s regular income is referred to as: Character Collateral Capacity Conditions Capacity
Debit card is a buy now, pay now tool; credit card is a buy now, pay later tool. True False True
Which of these things should you avoid if you want to protect yourself against credit card fraud? Sign your new card immediately when it arrives Lend your credit card only to family or close friends Be aware of your billing cycles and contact your creditor if your bill is late Be aware of your billing cycles and contact your creditor if your bill is late
Negative financial information can stay on your credit report for:? 2 years 5 years 7 years 7 years
When you receive goods and services now, and pay for them later, you’re using: A lease Opportunity costs Credit Credit
Three customers receive dealer financing to buy the same type of car at the same price. Each of the customers was granted the loan, but each at a different interest rate. Which customer likely received the highest interest rate? The recent high school graduate who just landed her first job. The 50 year old administrative assistant who has been an editor at the same company for 25 years The 65 year old retiree from a 40 year career with the Post Office The recent high school graduate who just landed her first job.
Monthly payment on a car loan Single payment credit Installment credit Revolving credit Installment credit
The credit department of E-Electronic Stores often calls you at work about your overdue bill. This is a violation of the Credit Card Act Fair Credit Reporting Act Fair Debt Collection Practices Act Truth-in-Lending Act Fair Debt Collection Practices Act
The length of time I’m borrowing money is called the A. term B. principal C. credit limit D. interest A. term
Which of the following is an example of a secured loan? An automobile loan A credit card loan A student loan An automobile loan
A steady employment record helps a person s credit history. True False True
A business that collects and sells information about how consumers repay debt is a Credit card insurance company Payday loan office Credit bureau Credit bureau
What is a credit card? A loan that has to be paid off every month. An arrangement by which you can buy something now, with the promise that you will pay for it in the future. A money substitute for items you cannot afford. An arrangement by which you can buy something now, with the promise that you will pay for it in the future.
How can you build a good credit history? Only use your credit card when you know you can afford to use it. Establish other forms of credit like a checking account, debit card and car payments that can help demonstrate that you are responsible. Be reliable, stay within your affordable budget. All of the above. All of the above.
Using a credit card to buy a new jacket from a department store Single payment credit Installment credit Revolving credit Revolving credit
Property you possess that is worth more than your debts is called A. Principal B. Capital C. Collateral D. Interest C. Collateral
Most lenders’ policies for extending credit are based on the “five Cs of credit.” What are the five Cs of credit? Credit history, crime record, commitment, collateral and capacity Credit history, cost of credit, credit opportunity, collateral and commitment Credit history, character, capacity, capital and collateral Credit history, character, capacity, capital and collateral
The interest or money that is charged a borrower for the use of credit is the A. Collateral B. Finance charge C. All of these D. Proration B. Finance charge
Ideally, monthly payments should not exceed 10 percent of your monthly net income. True False True
The Truth in Lending Law is also called the Fair Credit Reporting Act Fair Credit Billing Act Consumer Credit Protection Act Fair Debt Collection Practices Act Consumer Credit Protection Act

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