Personal Finance - Intro to Credit and Credit Cards
What is the APR (interest rate) on this card for Purchases made during the first six months that a cardholder has this card? A) 0% B) 15.24% C) 23.24% D) 25.24%
0%
After watching the video and comparing the cards, which one of the three would be the best option for you as your day-to-day payment method? Explain why.
A debit card would be best for day-to-day purchases because of its accessibility and how easy transactions are.
As you will see from this agreement, there are different A.P.R.s applied based on how the credit card is used. Which transaction type has the highest A.P.R.? A) A.P.R. triggered by a late payment B) A.P.R. applied on Purchases made during the Introductory Period C) A.P.R. applied to a Balance Transfer D) A.P.R. applied to a Cash Advance
A) A.P.R. triggered by a late payment
Josephine decided to get this Platinum card since she saw the ads touting the "0% A.P.R. Platinum. Sign Up Now." After reading this agreement, which of the following statements is TRUE? A) Her A.P.R will change after six months and be between 15.24% to 23.24% assuming that she has been making on-time payments during those first six months. B) She will not pay interest on any of the purchases she makes on this credit card for the first year. C) All her purchases on this credit card are FREE for the first six months. D) All her purchases on this card are FREE.
A) Her A.P.R will change after six months and be between 15.24% to 23.24% assuming that she has been making on-time payments during those first six months.
Delara is opening a credit card because her budget is really tight right now and she's struggling to pay all of her expenses based on her income. A) Why might a card with a long grace period be in her best interest? B) She knows she'll be making only the minimum monthly payments each month until she can find a job where she'll earn more income. This means some of her payment every month will go toward paying interest rather than paying down her principal. What other factor(s) might be most important to Delara? Why?
A) It will give Delara more time each billing cycle to come up with the minimum monthly payment she owes B) APR since she will need to the know the interest rates she will be paying with monthly and Penalty Fees/Rates so she'll know the amount to dedicate to it since she will be only be able to pay minimum at most.
Which of the four factors directly impact your total cost of using the credit card?
Annual Free, APR, Penalty Fees and Rates, the Grace Period, and billing cycle
After the introductory period, all consumers who have this Platinum Card will... A) Pay the same A.P.R. B) Qualify for an A.P.R. based on their creditworthiness C) Pay the Penalty A.P.R. of 30.24% D) Be charged an Annual Fee
B) Qualify for an A.P.R. based on their creditworthiness
Which of the following statements is TRUE? A) Assume that Josie has had this credit card for a year. The A.P.R. on her card will remain the same as long as she has the card. B) If Josie misses a payment during the Introductory Period, her late payment fee will be waived for this period since she is a new customer. C) Assume that Josie only uses her credit card to make purchases. She pays the balance on her credit card in full and on time every month. As a result, she pays no interest to the credit card company. D) Josie pays an annual fee to use this credit card.
C) Assume that Josie only uses her credit card to make purchases. She pays the balance on her credit card in full and on time every month. As a result, she pays no interest to the credit card company.
Each of these statements describes a variable rate loan EXCEPT... A. Typically starts with a lower interest rate than a fixed rate loan B. Is riskier to the borrower because the interest rate could increase substantially C. Is almost always a better option D. Can increase or decrease the interest rate over the course of the loan
C. Is almost always a better option
Which of the suggestions do NOT rely on the support of a parent or guardian?
Chipping away at student loans and get a secured credit card.
Tamara goes on a spring break trip with her school to visit historical sites in Italy. She purchases $200 of souvenirs while on the trip. She gets back to the U.S. and opens her credit card statement. What will be the balance in her account, assuming she had a zero balance prior to making these purchases and didn't make any other purchases? A) $0.00 B) $200.00 C) $206.00 D) $6.00
D) $6.00
Jordan gets confused and uses his credit card to get $40 in cash from an ATM instead of using his debit card. Based on this agreement, what is the impact of this decision? A) There is no impact since credit card and debit card terms tend to be the same. B) A $10 cash advance fee will be charged ONLY. C) An A.P.R. of 25.24% will be applied on the $40 until it is paid back ONLY. D) A $10 cash advance fee will be charged AND an A.P.R. of 25.24% will be applied on the $40 until it is paid back.
D) A $10 cash advance fee will be charged AND an A.P.R. of 25.24% will be applied on the $40 until it is paid back.
Devon forgets to pay his credit card bill for three months. Which of the following statements is TRUE? A) A Late Payment fee will not be charged to his account. B) A Balance Transfer fee will be charged to his account. C) His A.P.R. (interest rate) will rise to 30.24% until he pays back the amount he owes. D) His A.P.R. (interest rate) will rise to 30.24% and stay there until he makes six consecutive minimum payments.
D) His A.P.R. (interest rate) will rise to 30.24% and stay there until he makes six consecutive minimum payments.
All of the following actions lead to the payment of a credit card fee EXCEPT... A) Using your credit card to get cash from an ATM. B) Using your credit card to purchase items in a foreign country. C) Paying your credit card bill ten days after the Due Date. D) Paying your credit card bill in full and on time every month.
D) Paying your credit card bill in full and on time every month.
Assume that Louisa carried an average balance of $1,000 from her credit card purchases over the past year. The A.P.R. on her credit card for the past year was 19.99%. Approximately how much interest would Louisa have paid over the course of the year? A) She would have paid interest charges of $2,000. B) She would have paid interest charges of $20. C) The credit card company would have paid Louisa $20. D) She would have paid interest charges of $200.
D) She would have paid interest charges of $200
Having a good credit score, making a larger down payment, and finding a cosigner with good credit are all ways to...
Decrease your interest rate
Sometimes, lenders allow or require a downpayment before they extend you the loan. What would be the advantage to the lender? What would be the advantage to the borrower?
For the borrower, it is beneficial for them to pay the down-payment because you minimize the amount borrowed, lowered monthly payments & less interest expense. For the lender, it allows for faster approval, flexibility on payments & tax advantages.
If you're trying to gain access to a credit card before you turn 21, which of the suggestions rely on the support of a parent or guardian?
Getting a co-signer, getting a secured credit card, and tagging onto another credit card rely on the support of a parent or guardian.
Your friends and you notice a neighbor who always has brand new clothes, shoes, and electronics. What would you need to know in order to tell if this neighbor is actually wealthy?
Grand total of assets and liabilities
There's not one target net worth value that is universally considered to be "rich" or "wealthy." But right now, Sanya's net worth is $12,000. Her goal is to have a net worth of at least $100,000 before she turns 35. Explain one way that using credit could help and hurt Sanya achieve her goal.
Help: Use a student loans to finance education in order to earn a higher salary Hurt: Overspend on an auto loan or credit bills she cannot afford to pay down quickly.
What are the major types of credit and their characteristics?
Installment Credit, Revolving Credit, Secured Debt, Unsecured Debt, Variable Rate, and Fixed rate
Why might young adults, in particular, value credit in case of emergency?
It takes time to build up and emergency fund of scanning, high student loan bills make it hard to pay out of pocket, and it's difficult to find a job with low starting salaries which makes budgeting tricky.
Why are secured loans considered less risky to the lender?
Lenders can take valuable collateral if you fail to repay your loan
When applying for credit, is it preferable to receive a low or high interest rate?
Low, so you will have to pay less with the amount you borrow.
What is net worth and how is it calculated?
Net worth is a measurement of your assets (money you've saved or things of value you own) minus your liabilities (money you owe others); it is calculated by subtracting your liabilities by your grand total of assets.term-13
What are the pros and cons of a debit card?
Pros: Accessible and affordable, Easier transactions through ATMS, Less Fees, Approved by Federal Law, Manages money well. Cons: High Interest Rates and Overdraft fees, limited to how much is in your checking account,
What are the pros and cons of a predebit card?
Pros: Anyone can own a predebit card, Good for traveling since you can use it in lots of different places, If lost or stolen it can't access your account, Cons: Zero effect on a credit score, More Fees (activation, transaction, reload, and maintenance), Limited to the amount loaded onto the card, Majority of the times Money is lost if card is stolen or lost.
What are the pros and cons of a credit card?
Pros: Helps build credit, Provides good reward programs, Good Credit Limit, Approved by Federal Law, Cons: Special approval process, High Interest rates and overdraft fees, High Debt possibility,
Miles is planning to open a credit card, charge only his monthly streaming service subscriptions (less than $50 per month), and pay his entire bill in full each month so that he never has to pay interest. Which of these factors do you think is most important for Miles to consider when selecting a card? Why?
The annual fee since it is an unnecessary fee added onto his cost of credit when it could be 0 with another company.
The details of any loan will include the following 3 components
The principal, the interest rate, and the loan term
Why do people sometimes use credit to pay for items instead of just using cash?
They want to build credit, they just don't have cash on hand, or want the rewards that rewards and safety that come along with credit cards.
