Personal Finance Chapter 11

Though using a credit card as a type of financing is ______________, it is also _________________. A) recommended; time-consuming C) convenient; expensive w it is also B) risky; uncommon D) wise; costly (letter)

C

Which of the following happens when a pre-paid cash card is not used by a consumer? A) The consumer receives a cash refund. B) The balance of the card grows through compound interest. C) The business that issued the card keeps the cash. D) A credit is added to one of the consumer's other cards.

The business that issued the card keeps the cash.

A home equity loan uses the borrower's home as collateral.

True

Many credit card companies will extend credit to individuals with a currently low cash inflow but a potentially high future cash inflow.

True

A tax anticipation loan is based on which of the following? A) an individual's net income B) an individual's expected income tax refund C) an individual's gross income D) an individual's expected total tax payment

an individual's expected income tax refund

(annual fee, grace period, cash advance, or credit limit) a charge for the privilege of using a company's credit card.

annual fee

(pawnshop loan or payday loan) Brokers of this type of loan often specialize in certain types of items

pawnshop loan

(pawnshop loan or payday loan) this is an older type of loan

pawnshop loan

(payday loan or pawnshop loan) items such as jewelry, tools, or electronic equipment used as collateral for a high interest loan

pawnshop loan

(home equity loan or payday loan) a short-term loan paid for with a check dated some time in the near future

payday loan

(pawnshop loan or payday loan) delay in receiving your expected money may result in additional fees from a bounced check

payday loan

(pawnshop loan or payday loan) this type of loan lasts for one to two weeks

payday loan

The last resort in dealing with high credit card debt is ________ A) a home equity loan B) debt consolidation C) a new line of credit D) personal bankruptcy

personal bankruptcy

A credit card provides the cardholder with ______________. A) installment credit C) revolving open-end credit B) noninstallment credit D) a secured loan

revolving open-end credit

Payday loans are typically _______ and last for_________. A) large; 2 weeks to 1 month C) small; 1 to 7 days B) large; 3 to 6 months D) small; 7 to 14 days

small

most credit cards charge interest rates of _________________on balances carried from one month to the next. A) 3% to 7% B) 12% to 15% C) 15% to 22% D) 7%to 12%

15% to 22%

A payday loan is a better financial option than a high-interest credit card.

False

Almost all gift cards are redeemed for their full amount.

False

If your cash inflows are not enough to cover a month's credit card bill, you should carry the balance on to the next month instead of drawing upon your savings to pay the bill.

False

Which of the following is an advantage of a payday loan? A) It does not require a credit check. B) It offers options for small payments made over a period of time. C) It involves low fees. D) It offers a grace period for a loan repaid within 20 days.

It does not require a credit check.

Which of the following is the LEAST risky credit arrangement? A) a bank loan B) a payday loan C) a pawnshop loan D) a tax rebate loan

a bank loan

Which of the following is LEAST likely to be part of a credit card application process? A) a check of personal references B) a credit check C) an evaluation of assets D) a check of personal cash inflows and outflows

a check of personal references

Which of the following is NOT typically charged by a credit card? A) a transaction fee for cash advances B) interest rates that change as market interest rates change C) increased interest rates for borrowers who make late payments D) a fee for paying off the card's balance each month

a fee for paying off the card's balance each month

Which of the following is necessary to pay off debt? A) a credit check C) debt consolidation B) a low interest rate D) a greater cash inflow than outflow

a greater cash inflow than outflow

Most bankruptcy debt workouts involve ___________________ repayment plan. A) a six-month to one-year C) no repayment plan. B) a one-year to three-year D) a three-year to five-year

a three-year to five-year

The option of debt consolidation works best when you have a(n) ____________________. A) personal reference B) policy of carrying no balance on credit cards C) greater cash outflow than inflow D) asset you can pledge as collateral

asset you can pledge as collateral

(bonus incentive or overdraft protection) an offer of cash-back or points toward a gift provided as encouragement to use a credit card.

bonus incentive

Cash-back and airline miles are both examples of _________ offered by credit cards. A) bonus incentives C) merchant fees B) grace periods D) prestige cards

bonus incentives

(annual fee, grace period, cash advance, or credit limit) the use of a credit card to receive money from a bank or ATM

cash advance

A pawnbroker holds a pawned item as _______ for a loan. A) credit B) collateral C) principal D) interest

collateral

(credit limit or cash advance) the maximum total amount a cardholder can borrow at any one time.

credit limit

(tax refund loan or debt consolidation) a low interest rate loan used to pay off several other loans

debt consolidation

Combining several small accounts into one larger account that can be financed at a lower rate is called _________________--. A) overdraft protection B) debt consolidation C) bankruptcy D) credit limiting

debt consolidation

During a weak economic period, creditors are likely to extend more credit to more applicants.

false

Each financial institution that issues MasterCard or Visa credit cards must follow the credit card companies' standard arrangements for billing and financing.

false

Without access to a credit card, you cannot buy something today for which you do not have available cash.

false

You will not have to pay interest on credit card debt as long as you pay the minimum amount due on time each month.

false

credit card companies usually set your maximum credit limit at a level you can afford to pay back.

false

nstead of trying to negotiate new terms with your credit card company, you should transfer you balance to a different card if you find yourself with high credit card debt.

false

your credit score will not be affected by how much of your credit limit you are using

false

overdraft protection (fee or no fee)

fee

Which of the following would likely only be offered by a prestige card? A) a bonus incentive B) free travel insurance C) a grace period D) overdraft protection

free travel insurance

(annual fee, grace period, cash advance, or credit limit) a set time during which you are not charged interest on your credit card purchases

grace period

(home equity loan or debt consolidation) A loan using the borrowers home as collateral

home equity loan

Which one of the following is NOT a form of credit? A) a cash advance C) a payday loan B) land-line telephone service D) a cell phone lease

land-line telephone service

A savings account generally earns _______________ credit companies charge for balances. A) more interest than B) a variable rate of interest, like the rate that C) the same interest as D) less interest than

less interest than

Credit card billing occurs _______

monthly

credit limit (fee or no fee)

no fee

(bonus incentive or overdraft protection) a feature that prevents you from being denied use of your credit card for a purchase that will take you over your limit

overdraft protection

Which of the following will allow you to exceed your credit limit? A) overdraft protection B) credit equity C)a grace period D) a cash advance

overdraft protection

(pawnshop loan or tax refund loan) also known as "rapid Refund Loan"

tax refund loan

(tax refund loan or payday loan) consumers should be cautious of scams and identity theft

tax refund loan

Which of the following would you be wisest to use as a guide to determine a credit limit for yourself? A) 20% of your monthly wages B) the credit limit of the credit card you use most frequently C) the total amount of credit extended to you by all of your credit cards D) the amount you can afford to repay each month

the amount you can afford to repay each month

Which of the following would you NOT find on your credit statement? A) the total amount of interest paid on the card B) the total amount borrowed with the card C) the minimuin payment due D) purchases you made with the card during the billing period

the total amount of interest paid on the card

A credit card company will often lower interest rates or help a customer work out more favorable repayment terms if the customer calls and requests assistance.

true

A tax refund loan is typically offered by an income-tax preparer.

true

A typically payday lender fee ranges between $15 and $30 for every $100 loaned.

true

An easy way to establish credit is to apply for a credit card

true

An overdraft of your credit card will likely cause you to be charged a higher interest rate on any balance you may be carrying on the card.

true

Cash advances do not have grace periods, so you will pay interest on a cash advance even if you pay off your card's balance when you are billed.

true

If you always pay your credit card balance within the grace period, you essentially have a short-term fee line of credit

true

If you are carrying a credit card balance, you should pay that loan off before paying off a personal bank loan.

true

If you take a pawnshop loan, you agree that the pawnbroker may sell your pawned item if you do not repay the loan within a specified period of time.

true

The interest rate a credit card company charges you can change if your credit rating changes.

true

The process of applying for a credit card is very similar to the process of applying for a personal loan.

true

a credit company will make money on the use of your credit card even if you pay off your balance every month

true

when a card's teaser rate expires, the card usually reverts to a typical high interest rate

true

Which of the following types of credit cards would be accepted at most retail outlets a. visa b. a sears card c. a shell card d. a target card

visa