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Unit 2 Credit
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Unit 2 Credit in America
Flashcards
31 cards
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Practice quiz
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Questions
31
Answers
1
Which of the following is often the first step people take to establish a good credit record?
open a store credit account
open a savings account
apply for a credit card
apply for a car loan
2
The total dollar amount of all interest and fees you pay for the use of credit is called the
Finance Charge
Collateral
Balance Due
Principal
3
It is vital that you follow the 20/10 Rule when you take out a mortgage loan.
False
True
4
Having a credit card protects you from the risk of identity theft.
True
False
5
Money borrowed against your line of credit is called a cash advance.
False
True
6
Which of the following is the main advantage of Chapter 7 bankruptcy?
it is easiest form of bankruptcy to qualify for
it provides immediate relief
is better for the debtor in terms of reestablishing credit
debtors get to keep most of their property
7
Exercising good credit management means
using credit for at least 80% of your purchases
always getting someone to cosign your loans
following an individual plan for using credit wisely
never using credit under any circumstances
8
Your financial position is based on your
Collateral
Capital
Income
Age
9
Sam wants to buy a stereo for $500 She has $250 borrows the rest from parents Who's the debtor?
Sam's Parents
Sam
Best Buy
Her Bank
10
Donna's assets are $4,500; her liabilities are $1,750. Find Donna's capital.
$47.50
$4750
$27.50
$2750
11
On a FICO score, new credit is rated based on
the average age of all of a consumer's credit accounts
number of opened accounts and number of credit inquiries
whether accounts are past due or paid as agreed
the mix of credit accounts a consumer has
12
One way to minimize the cost of credit is to
pay cash for small purchases
apply for more credit than you need
make less than minimum monthly payment
carry at least five or six credit cards
13
Don't increase spending when income increases; instead use extra income to pay off credit card
True
False
14
In bankruptcy, most of a debtor's assets will probably be used to repay unsecured debt.
False
True
15
Law requires lenders to fully inform consumers about costs of a credit purchase before signed
the Credit CARD Act
the Fair Credit Billing Act
The Fair Credit Reporting Act
the Consumer Credit Protection Act
16
Voluntary bankruptcy, the most common type of bankruptcy, is initiated by the debtor.
True
False
17
Credit is the most commonly used method of purchase in the US?
True
False
18
Payments on a credit account include both principal and interest.
True
False
19
Both creditors and debtors have responsibilities to each other.
False
True
20
All of the following are danger signs that you are overextending your credit
except
your credit cards are all near the limit
you skip some payments in order to make other payments
hour credit score is rising
you often pay one credit card by using another credit card
21
You will receive a payback in the form of points that can be redeemed if your credit account
has a good customer program
has a rewards program
has a rebate program
has a profit-sharing plan
22
Credit problems usually happen quite suddenly.
False
True
23
Which of the following is a reorganization form of bankruptcy for businesses?
Chapter 13 bankruptcy
involuntary bankruptcy
Chapter 11 bankruptcy
voluntary bankruptcy
24
Storing your credit card info on a merchant's website can make shopping easier & poses no risk
False
True
25
Balance: $547.98 Charges: $238.31 Payments: $299 Finance Charge: $8.21 What is the new balance?
$600.46
490.90
$495.50
$289.89
26
Your annual interest rate on your credit card is 21%. What is the monthly rate?
1.25%
2.3%
.98%
1.75%
27
A scam that uses online pop-up messages or email to deceive you into giving personal info is
phreaking
encrypting
phattening
phishing
28
Credit reports are issued by
your employer
banks and savings and loans
credit unions
credit bureaus
29
A legal process where property used as collateral is sold to pay off a debt is called
garnishment
foreclosure
bankruptcy
defaulting
30
Balance on your credit card is $300 a month, APR is 18% what is your finance charge this month?
$45.00
$4.75
$4.50
$0.45
31
Which of the following might be included in your credit report?
your address
all of the above
Your martial status
your occupation
