Weeks 8-9 Quiz- Personal Finance

Which of the following could have a NEGATIVE impact on your credit score? Question options: Paying your bills on-time Paying down balances on your credit card accounts Decreasing your utilization of credit Applying for multiple credit cards in a short period of time (e.g., a week)

Applying for multiple credit cards in a short period of time (e.g., a week)

Melvin is 19 years old and wants to begin establishing a credit history. Which action should he take to meet that goal?

Ask his parents to cosign a credit card or add him as an authorized user on their credit card

Which of the following financial products will NOT help you build a credit history? Question options: Secured credit card Debit card Auto loan Credit card

Debit card

Your friend confides in you that he has a low credit score. What is the single best way for him to improve his score?

Make on-time payments

Select the statement below that accurately describes characteristics of a credit card. Question options: You owe the same payment every month You must have money deposited into a checking account to use the credit card for purchases Making full payments on time every month is the only way to avoid interest charges They do not charge interest

Making full payments on time every month is the only way to avoid interest charges

Which of these credit payback strategies would lead to the HIGHEST interest charges? Question options: Paying off your credit card bill in full every month Paying 20% of your credit card balance every month on time Making the minimum payment (3% of your credit card balance) every month on time Making the minimum payment (3% of your credit card balance) every month with an occasional late payment

Making the minimum payment (3% of your credit card balance) every month with an occasional late payment

You have a credit card and want to know the best way to use it to boost your credit score. Which step will have the greatest impact?

Not using more than 30% of the credit limit on your card and paying it off in full every month by the due date

Reading through a credit card disclosure (also known as the Schumer Box), you see the A.P.R. for a specific card is set at 9.99%-23.99%. Indicate which of the following statements is true. Question options: When given a range of A.P.R.s like this, you can assume most cardholders pay the lowest rate listed One of the primary factors determining your cards A.P.R. is your credit score With credit card A.P.R.s, cardholders like higher A.P.R.s because they earn more The A.P.R. on credit cards is usually fixed so they won't be adjusted as long as you are a cardholder

One of the primary factors determining your cards A.P.R. is your credit score

What are the two most important factors in calculating your credit score?

Payment history and amounts owed

Which of the following would NOT appear on a credit report? Question options: Salary of your current job Payment history of your car loan Credit card payment history Student loan activity

Salary of your current job

Credit card disclosure: "Your due date is at least 25 days after the end of the billing cycle. We will not charge you interest on new purchases provided that you have paid your previous balance in full by the due date each month." Identify the true statement. Question options: If you make the minimum payment on your card within the 25 day period, the credit card company will not charge you interest If you pay your previous balance in full after the due date, the credit card company will not charge you interest If you make your credit card payment before the due date, you will be charged interest regardless of the amount of your payment The 25 days after the end of the billing cycle is referred to as the grace period

The 25 days after the end of the billing cycle is referred to as the grace period

What is the relationship between a credit score and credit report?

The information in your credit report is used to calculate your credit score

Which of the following statements comparing credit and debit cards is TRUE? Question options: Far more businesses accept credit cards than debit cards Credit cards pull money directly from your account, while debit cards get their money from Visa or Mastercard Credit card companies provide you with a monthly statement, while debit cards do not With debit cards, you're spending your own money at point of sale, while with credit cards, you're promising to pay back monthly eventually

With debit cards, you're spending your own money at point of sale, while with credit cards, you're promising to pay back monthly eventually

How can your credit score impact your financial situation?

Your credit score can determine whether you are approved for a loan and what the interest rate on that loan will be