Personal finance chapter 6 review
When you cosign a loan, you are being asked to guarantee this debt.
True
Although credit allows more immediate satisfaction of needs and desires, it does not increase total purchasing power.
True
Consumer credit is based on trust in people's ability and willingness to pay bills when due
True
Using a bank credit card such as visa or MasterCard, is an example of closed end credit.
False
With closed-end credit, loans are made on a continuous basis and youre billed periodically for at least a partial payment.
False
With open-end credit you pay back one-time loans in a specific period of time in payments of equal amounts
False
Perhaps the greatest disadvantage of using credit is the temptation to overspend
True
Shopaholics and young adults are most vulnerable to misusing credit.
True
A home equity loan is usually set up as a revolving line of credit. Typically with a fixed interest rate
False
A lender requires a co-signer even when a borrower meets the lenders criteria for making a loan
False
All economists do not recognize consumer credit as a major force in the American economy.
False
In the 5 C's of credit, capacity refers ti the borrowers attitude towards his or her credit obligations.
False
The debt-payment-to-income ratio is calculated by dividing your total liabilities by your net worth.
False
Consumer credit refers to the use of credit for personal needs by an individual or family.
True
Credit is an arrangement to receive cash, goods, or services now and pay for them in the future.
True
Credit when effectively used, can help you have more and enjoy more
True
Department stores and gasoline companies are good places to obtain your first credit card
True
It is safer to use credit, since charge accounts and credit cards let you shop and travel without carrying large amounts of cash.
True
The credit cardholders who pay off their balances in full each month are known as convenience users.
True
To protect yourself against credit card fraud, you should shred anything with your account number before throwing it away
True
