Credit

When loans are amortized, monthly payments are _____, while the interest portion of the monthly payment ____ and the principle portion of the monthly payment ____.

Constant, decreases, increases

What is the first thing you should do if you find an error on your credit report stating that you are 90 days late paying your credit card bill?

Contact the credit card company to have them fix it.

What is the difference between credit and debit cards?

Credit cards get their money from a company like Visa or MasterCard. Debit cards pull money directly from your bank account.

True or False. If you receive a phone call saying that your credit card has been used fraudulently and that you must enter your 16-digit credit card number to clear up the error you should do this immediately.

FALSE. Never ever do this

True or False. A good question to ask yourself when evaluating whether or not a certain credit card is a good offer is, "Can I choose the picture that is on the front of my credit card?"

False

True or False. If you are having trouble making auto loan payments and are really following a tight budget, some good advice is to stop making payments on some of your debts so you can focus on getting the most expensive or largest debts under control.

False

True or False. The best way to prevent identity theft is to avoid buying anything online because that's how most identity theft occurs.

False

True or False. The best way to use a credit card to boost your credit score is to always carry a balance from month to month.

False-pay off your balance each month

True or False. You are making payments on a credit card, a student loan, and a car loan. You begin falling behind on your payments for your car. The best thing to do would be to stop making your credit card payment for a few months until you catch up on your auto loan payments.

False. You will be charge fees, more interest, and it will lower your credit score.

True or False. An advantage of using a credit card is if you need to carry a balance, the interest rates are generally quite low (less than 5%)

False...they are high

If you are having trouble making auto loan payments and are really following a tight budget, what can you do?

Find an extra source of income by taking a second job, working longer hours, or asking for a raise

Which things help you build a credit history? How? Which card doesn't?

Loans and credit cards help build if you pay them off. Debit cards don't.

When borrowing money for a loan, is it better to have a higher or lower interest rate?

Lower

Will a larger down payment result in a (higher/lower) monthly payment on a loan?

Lower

Will a lower interest rate result in a (higher/lower) monthly payment on a loan?

Lower

Will a smaller loan amount result in a (higher/lower) monthly payment on a loan?

Lower

Your credit score impacts your financial situation in that consumers with high scores get (higher/lower) interest rates on loans than those with low scores.

Lower

What is the best way to improve your credit score if you have a low credit score?

Make on-time payments

Is a student loan a fixed rate, secured debt?

No

How do you avoid paying fees or interest on a credit card?

Pay off in full on time every month

What are two factors that are considered when calculating your credit score?

Payment history and amounts owed

It is a good idea to pay more than the monthly amount due on a loan because the extra payment will be applied to the ____ that you owe, which will reduce the overall cost of your loan.

Principle

What is amortization?

Schedule that states monthly payment on your loan and breaks it down by principle and interest

A type of credit card that requires cardholders to make a security deposit equal to the credit limit on their account

Secured credit card

Do secured credit cards help you build a credit history?

Yes

If you are 18 years old and want to establish a credit history, what is a good way to do this?

1. Ask your parents to co-sign a credit card 2. Ask your parents to add you as an authorized user on their credit card

What is the best way to use a credit card to boost your credit score?

1. Not use more than 30% of your credit limit on your card 2. Pay it off in full every month by the due date

What are 3 ways you can get a credit card when you are young? Explain them.

1. Use parent's account 2. Secured credit card 3. Parents co-sign

Give an example of a fixed rate, secured debt

Auto loan

When using a credit card, do you owe the same or different payment every month?

Different-depends on what you purchased

The period of time you have to pay your bill before interest starts being added to it

Grace period

When borrowing money through a loan, a (higher/lower) credit score indicates good credit and will lead to a lower interest rate.

Higher

Will a shorter term loan result in a (higher/lower) monthly payment on a loan?

Higher

The shorter your term length on a loan, the (higher/lower) your monthly payments, and the (higher/lower) the total interest you will pay.

Higher, lower

What is a requirement for a secured loan?

It requires collateral in the form of assets like a car or home to be exchanged for the loan.

Describe the way you are spending money with a credit card or a debit card.

With a credit card, you are promising to pay back the money eventually. With a debit card, you're spending your own money at point of sale.

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

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

True of False. It's best to begin establishing credit when you're young because you will likely need credit history to rent your first apartment or finance your first car.

True

True or False. A good strategy for building credit is to become an authorized user on a credit card used by your parent.

True

True or False. An advantage of using a credit card is if you pay off your balances every month in full, it's like getting a short-term interest-free loan.

True

True or False. It is a good idea to pay more than the monthly amount due on a loan because the extra payment will be applied to the principle amount you owe, which will pay down your debt more quickly.

True

True or False. Taking a loan out will help you build a credit history.

True

What would happen if you can't make your credit card or loan payments on time?

Your credit score can go down and the object can be repossessed. There will also be extra fees.