764 Exam 2

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accounts are covered by the FDIC up to $_____

$250,000

five C's of credit management

- character - capacity - capital - collateral - conditions

three types of credit insurance

- credit life - credit accident & health - credit property

financial institutions must disclose the following information on savings accounts (4)

- fees - interest rate - annual percentage yield (APY) - any other terms and conditions of the plan

three most common types of closed-end credit

- installment sales credit - installment cash credit - single lump sum credit

places you should never go for a loan (5)

- pawnshop - check-cashing outlets - payday loans - rent-to-own centers - car title loans

debt payments-to-income ratio should not exceed _____%

20%

the prime rate is usually _____% higher than the discount rate

3

debt-to-equity ratio should not exceed _____%

30%

credit scores are generally between _____ and _____

300 - 850

EE Bonds are _____-year bonds and are a tax-__________ investment

30; deferred

if your credit application is denied, you can get a free copy of your credit report within _____ days

60

you must notify the creditor of a billing error in writing within _____ days of the error and the creditor must acknowledge your letter within _____ days

60; 30

you must wait _____ years between bankruptcies to file again

8

places the burden of proof for accurate credit information on the credit reporting agency rather than you

Consumer Credit Reporting Reform Act of 1997

places new restrictions on credit card lending and eliminates certain fees

Credit Card Accountability, Responsibility, and Disclosure Act 2009

money deposited into a credit union is not insured by the FDIC but by the __________

NCUA (National Credit Union Association)

the Fair Debt Collections Practices Act prohibits certain practices by __________ that collect debts for __________ but does not apply to __________ who collect debt themselves

agencies; creditors; creditors

the __________ rate is always higher than the interest rate

annual percentage (APR)

the _______________ adds in any additional fees charged by the lender

annual percentage rate (APR)

funds __________ covered by the Federal Deposit Insurance Corporation and accounts __________ covered (are/are not)

are not; are

an _______________ account or _______________ account is warranted when you have so much that you cannot manage it so a firm manages all of it and charges you for this service

asset management; cash/wealth management

definition of callable

can be called back at any time

use Kelly's Blue Book for __________ price negotiations

car

check issued by bank removing funds from your account plus a fee and the recipient knows the check is valid

cashier's check

a savings plan requiring that a certain amount of funds be left on deposit for a stated time period ranging from 30 days to five years or longer

certificate of deposit

personal check but funds are removed from your account at the time the bank certifies your check

certified check

two types of credit

closed-end and open-end

APY can also be viewed as the frequency of __________

compounding

interest that is earned on previously earned interest

compounding

credit used for personal needs

consumer credit

commercial banks are organized as a __________ with __________

corporation; investors

an arrangement to receive cash, goods, or services now and pay for them in the future (obligating future earnings)

credit

ensures the repayment of your loan in the event of death, disability, or loss of property

credit insurance

mutual savings banks are owned by __________

depositors

the Federal Reserve changes the __________ rate

discount

the rate financial institutions are charged to borrow funds from the Federal Reserve

discount rate

the rate of return or yield is the same thing as your __________

earnings

electronic EE bonds are purchased at __________ value

face

I bonds have an interest rate based on two components: a __________ rate for the life of the bond and an __________ rate that changes twice a year

fixed; inflation

the __________ (further apart/closer together) the interest rate and APR, the __________ (less/more) fees you are paying for that loan

further apart; more

the __________ (further apart/closer together) the interest rate and the APY, the __________ (less/more) frequently it will be compounded and the __________ (smaller/greater) the yield

further apart; more; greater

one of the biggest advantages of credit is the __________ period

grace (float)

the yield (earnings) on your savings usually will be __________ than the stated interest rate (lower/higher)

higher

consumer credit does not include a _______________

home mortgage

credit arrangement that has no extra costs and no specific repayment plan

incidental credit

when interest rates are rising, take advantage of _____-term loans and _____-term savings (short/long)

long; short

debt payments-to-income ratio

monthly debt payments (not including mortgage) / net monthly income

occurs when the value of an asset is less than the outstanding balance on the loan

negative or upside-down equity

mediation

negotiation to resolve differences conducted by some impartial party

who can obtain your credit report?

no one without your written consent unless court-ordered

one of the biggest disadvantages of credit

overspending

a checking account is an example of a __________ service

payment

__________ for withdrawing the funds from a certificate of deposit before maturity are significant

penalties

with closed-end credit, you have a fixed __________ , fixed __________ , and fixed __________

period of time; payment; interest rate

with open-end credit, you have no fixed __________ , no fixed __________ , and no fixed __________

period of time; payment; interest rate

if your identity is stolen, make sure to file a __________

police report

beware of __________ sales agreements when it comes to purchasing a vehicle

pre-printed

an indication of the rate banks charge large corporations

prime rate

FDIC and NCUA provides insurance for certain __________ accounts

retirement

a mistake commonly made is using __________ to pay current expenses

savings

savings and loans banks specialize in __________ and __________

savings and home mortgages

another name for extended warranty

service contract

arbitration

settling a dispute by agreeing to accept the decision of an impartial outsider (legally binding)

at a credit union, an example of a savings account would be a __________ account

share

when interest rates are falling, take advantage of _____-term loans and _____-term savings (short/long)

short; long

the __________ (shorter/longer) the loan, the __________ (lower/higher) the interest

shorter; lower (and vice versa)

plastic card with a built-in microprocessor, used typically for electronic processes such as financial transactions and personal identification

smart-card

debt-to-equity ratio (does not include the value of your home or the mortgage)

total liabilities / net worth

a __________ is a legal agreement that provides for the management and control of assets by one party for the benefit of another

trust

law in which creditors are required to state the cost of borrowing as a dollar amount so that consumers know exactly what the credit charges will be

truth in lending law of 1969

earnings from savings bonds are taxable income unless used for _______________ at a college, university, or technical school for you or a dependent

tuition and fees (unless you make too much money)

credit unions are _____-owned, _____ profit (for/non) cooperative financial institutions

user; non

__________ interest rates change during the life of the loan

variable

a written guarantee from the manufacturer or distributor that specifies the conditions under which the product can be returned, replaced, or repaired

warranty

a merchant will take something back if it doesn't perform the function it was advertised to perform under this warranty

warranty of merchantability

a guarantee by a seller to a buyer that the seller has the right to transfer ownership and no one else has rights to the property

warranty of title

an expressed warranty is a __________ warranty

written


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