Personal Finance (CH 5)

During the grace period, finance charges are assessed at only half the normal rate False
Although credit allows immediate satisfaction of needs and desires, a greater advantage is that it increases total purchasing power False
Installment sales credit is a loan that allows a consumer to purchase high-priced items such as large appliances or furniture True
A credit card holder who pays the full balance during the grace period each month is actually getting a free loan from the credit card company. True
A secured credit card is most appropriate for someone with a strong credit history False
FICO and VantageScore are two scores used by creditors to predict how likely it is that you will repay a loan. True
The expected rate of inflation should not be considered when determining the amount of interest a lendor should charge. True
Which of the following is a valid reason for using credit? A)Purchasing a car so a homemaker can return to workB)Borrowing for a college educationC)Purchasing an item that costs less now than it will laterD)Paying for a medical emergency**E)All of these are valid reasons for borrowing
A typical grace period offered by many credit card issuers is 20-25 days
Which of the following can result from a failure to repay a loan? A)Bankruptcy.B)Loss of income or valuable property.C)Loss of a good reputation.D)Damage to family relationships.**E)All of the above may result from the failure to repay a loan
Consumer credit Dates back to colonial times.
Before buying goods and services on credit, a consumer should consider all of the following except A)Whether purchasing now will increase efficiencyB)Whether purchasing now will increase productivityC)Whether purchasing now will result in a more satisfying lifeD)Whether the benefits of purchasing now will outweigh the costs**E)Whether the good or service will be worth more because it was purchased with credit instead of cash.
Which of the following is an example of open-end credit? A department store credit card
A line of credit is The maximum dollar amount of credit the lender has made available to a borrower.
Which of the following is often considered to offer the least expensive loans (loans with low interest)? Parents or family members.
If you miss payments on a home equity loan, you can lose your House
Which of the following electronically subtracts money from your savings or checking account to pay for goods and services? A debit card
Bankruptcy courts treat gift cards The same way they handle unsecured debt.
A loan officer is examining whether or not to offer you a loan today. Specifically, she is examining your income and debts. Which of the five Cs of credit is the loan officer reviewing? Capacity
Information about a personal bankruptcy may be reported in your credit file for 10 years
If you are denied credit, You are entitled to a free copy of your credit report.
Under Chapter 7 of the U.S. bankruptcy code, Certain assets receive some protection.
Suppose you borrow $300 for one year and pay a finance charge of $20. If you repay this loan all at once after one year, what is your average balance? $300

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