Skill Quest Chapter 6
A(n) _____ is an agency that provides credit information about individual borrowers to lenders. a. credit bureau b. credit scoring house c. insurance company d. consumer bureau e. bank
a
For a person who uses his or her credit card very frequently, which calculation method would produce more interest income? a. Two-cycle average daily balance including new purchases b. Annual percentage rate method including new purchases c. Double declining average daily balance excluding new purchases d. Average daily balance including new purchases e. Effective daily balance excluding new purchases
d
Interest will usually begin to accrue immediately when you use a bank credit card to: a. get cash advances. b. send payments. c. meet a financial emergency. d. make purchases. e. compute finance charges.
a
Personal insolvency can be legally satisfied by: a. Chapter 13 bankruptcy b. not taking any credit in the future. c. relinquishing all credit cards. d. Chapter 4 bankruptcy. e. canceling loans availed so far.
a
What does a lender look at before granting credit? a. Age of the borrower b. Religious affiliations of the borrower c. Political interests of the borrower d. Friend circle of the borrower e. Lifestyle of the borrower
a
With a bank credit card, one can often avoid interest charges if: a. the account balance is paid in full every month. b. at least half the account balance is paid every month. c. the account is a revolving credit account. d. the minimum payment is made every month. e. the account balance is below the credit limit.
a
Anna uses her credit card regularly, but she pays off the total balance monthly. Anna should look for a credit account with: a. no rebate programs. b. no annual fees. c. no grace period. d. low interest rates. e. no reward points.
b
Any credit card purchase will effectively be an interest-free loan if you: a. pay the minimum payment. b. pay the entire balance on or before the due date. c. receive a cash advance. d. pay the previous balance by the due date. e. pay for the purchase within six months.
b
As a percent of take-home pay, monthly consumer credit payments should not exceed _____. a. 25% b. 20% c. 10% d. 15% e. 5%
b
Chapter 7 bankruptcy will: a. sell only the home of the borrower. b. eliminate most of the financial obligations of the borrower. c. require the debtor to pay back the debt in the future. d. result in the loss of all of one's assets. e. restore all the losses incurred by the borrower.
b
Joe and Jane have a tendency to build up large balances on their credit cards. Which of the following would be least important to them? a. High reward points b. Long grace period c. Low interest rates on balances d. Method of calculating balances e. No annual fee
b
Retail charge cards are advantageous to merchants because: a. they help the merchants get loans. b. they help build consumer loyalty. c. they help the merchants file for bankruptcy. d. they help the merchants in saving taxes. e. they help the merchants in giving loans to their suppliers
b
When comparing credit cards, a person who pays his total outstanding balance off monthly would want a card with: a. a low required minimum payment percentage. b. no annual fee c. a high interest rate. d. no grace period. e. high over-the-limit fees.
b
Which of the following is true about phishing? a. Stealing wallets b. Pretending to be an employee of a financial institution c. Using false pretense to get information from financial institutions d. Using bills in the trash to obtain personal information e. Rerouting bills to a different address
b
William uses his bank credit card frequently; however, he always pays off the total balance on the card each month. What should William look for in a credit card given the way he uses one? a. Low annual fee and short grace period b. No annual fee and long grace period c. Low annual fee and low interest rate d. No annual fee and short grace period e. High annual fee and low interest rate
b
Which of the following is true about credit scoring systems? a. Credit unions calculate and sell credit scores to lenders. b. Scoring systems are based on statistical studies. c. Lower scores are better than higher scores. d. Stronger the personal traits of a person, lower will be his credit score. e. Females receive higher scores than males.
b
A payment made by _____ is equivalent to paying by cash a. a reward card b. a retail credit card c. a debit card d. an affinity card e. a student credit card
c
Clare's annual gross salary is $36,000 and her after-tax income is $28,800. What is Clare's maximum recommended monthly consumer credit payment? a. $360 b. $200 c. $480 d. $600 e. $450
c
To establish creditworthiness and to have a good credit score, one should probably first: a. use credit extensively. b. pay cash for all purchases. c. open savings and checking accounts. d. arrange for a large loan from close relatives. e. arrange for a small loan.
c
When canceling a credit card, you should cut up the card and _____ that you are canceling your account a. call the credit bureau and tell them b. inform the credit bureau in writing c. inform the issuer in writing d. call the issuer and tell them e. inform the future lender in writing
c
Which of the following information can be excluded from a monthly credit card statement? a. Annual percentage rate b. Payment due date c. Type of goods purchased d. Finance charge, if any. e. Size of the payment
c
Which of the following will lead to poor credit rating? a. Opening checking and savings accounts b. Making payments ahead of scheduled time c. Applying for a long-term loan and occasionally being late with a payment d. Discussing with the lender if you foresee difficulty in making a payment e. Opening and using a charge account
c
cards offer the cardholder a way to contribute to a worthy cause and are sometimes described as "credit cards with a cause." a. Rebate b. Credit c. Affinity d. Debit e. Student
c
Which of the following modes of identity theft involves thieves obtaining your personal information from financial institutions and other sources under false pretenses? a. Dumpster diving b. Phishing c. Pretexting d. Old-fashioned stealing e. Skimming
c
Mike has a MasterCard with an annual fee of $25, an 18% interest, and a $1,000 credit limit. He always pays the total outstanding balance monthly. His most recent monthly statement lists last month's payment, new charges this month totaling $1,500, and a $30 fee. The fee is most likely the result of: a. his annual fee. b. transaction fees on purchases. c. a late payment. d. an over-the-limit fee. e. interest charges.
d
Which of the following cards provide direct access to your checking account? a. Reward cards b. Affinity cards c. Retail charge cards d. Bank debit cards e. Student credit cards
d
Which of the following credit problems is a consequence of a wallet full of credit cards? a. Safety from identity theft b. Easy loan approval c. Safety from bankruptcy d. FICO score reduced e. Wise spending of credit
d
Which of the following is an improper use of credit? a. Buying a home b. Spreading payments within a budget c. Meeting a financial emergency d. Buying a short-lived service e. Purchasing a big-ticket item
d
Russ and Lois have a home valued at $96,000 with an outstanding mortgage of $60,000. If their lender is willing to provide a home equity loan of up to 75% of the market value of the home, how much could they borrow using a home equity loan? a. $28,000 b. $27,000 c. $36,000 d. $12,000 e. $0
d
Ann Marie accumulated a large balance on her credit card while in college. She is trying to get it paid off as quickly as possible and wants to roll the balance onto a new credit card. She now uses a credit card only for emergencies. What should Ann Marie look for in a credit card given the large balance and the way she plans to use the card? a. Average daily balance method excluding purchases b. Long grace period c. Low annual fee d. Two-cycle average daily balance method e. Low annual percentage rate
e
Finance charges on two credit cards with the same stated annual percentage rate (APR): a. will be determined by the type of credit card used. b. will always be the same. c. will be the same as the rate calculated in the federal law. d. will be decided by the credit bureau. e. will be determined by the method used to calculate balances.
e
If your monthly before-tax income is $2,000 and your monthly take-home pay is $1,500, your maximum monthly consumer credit payments should not exceed: a. $400. b. $200. c. $600. d. $450. e. $300.
e
Which of the following cards is issued as a form of credit by department stores and oil companies? a. Debit card b. Credit card c. Student credit card d. Gift card e. Retail charge card
e
Which of the following information can be excluded from a monthly credit card statement? a. Size of the payment b. Payment due date c. Annual percentage rate d. Finance charge, if any. e. Type of goods purchased
e
is a benefit of using credit cards. a. Being able to buy inexpensive goods while spreading the payments over time b. Providing payments for living beyond one's means c. Making impulse purchases d. Being able to meet everyday living expenses e. Being able to meet a financial emergency
e
Which of the following information is redundant when the lender when analyzes the creditworthiness of a borrower? a. Housing b. Personal/family matters c. Employment d. Income e. Lifestyle
e
