Family Finance Chapter 7

Federal law states that bills must be mailed to cardholders at least ____ days before payments are due.

21

If you are a person who always pays off the total outstanding balance on your credit card each month, which of the following aspects of the credit card agreement will you be least interested in? (Assume there is a 21-day grace period.)

APR

The total cost of credit on a yearly basis stated as a percentage rate is its

APR

Which of the following credit contract clauses requires that all remaining payments on an installment debt be paid on demand of the creditor after a specific number of payments are unpaid?

Acceleration

Raynelle, an active environmentalist, has a MasterCard with the Sierra Club logo on it. What type of card is this?

Affinity card

Jason took his friend Jennifer out for her 21st birthday. He paid for the dinner with his Visa card and purchased a dozen red roses using his American Express green card. John will have to pay his ____ bill upon receiving the statement, but he will have the option of paying his ____ bill over several months.

American Express; Visa

Which type of credit card is issued through commercial banks and other financial institutions?

Bank credit card accounts

Miako has just applied for a credit card that offers a 1.9 percent interest rate for 12 months. At the end of 12 months, the interest rate will be "prime plus 9 percent." Which of the following characteristics does this card have?

Both variable interest rates and teaser rates

Cash advance checks can be used for which of the following purposes?

Cashed to obtain liquid funds Pay the balance of another credit card Make a purchase or pay a bill

Which type of credit card is issued through retail sellers and businesses?

Retail credit cards

Which of the following should not be done when you find an error on your credit card statement?

Send all original documentation to the credit card issuer.

Which of the following is not an example of an open-end credit account?

Single-payment loans

Hillary borrowed $2,000 from her credit union to purchase a new computer. This is an example of

a cash loan.

If you purchase an item using a credit card and later take it back for a refund you will receive

a credit receipt and the amount will be charged back to the merchant by your card issuer.

You might find yourself obligated to pay an entire debt in full if you miss several payments because of the ____ clause found in most installment loan contracts.

acceleration

Charge accounts are referred to as open-end credit because they

allow repeated borrowing without having to reapply for the credit each time.

Credit card costs can include

annual fees interest transaction fees

The sum of outstanding balances owed each day during the billing period divided by the number of days in the period is the

average daily balance.

A cash advance can be obtained by using

bank credit card accounts.

Before applying for a preapproved credit card, you have already

been granted credit

The time period between billing dates on your credit cards is the

billing cycle

The last day of the month on which any transactions are reported on the credit statement is called the

billing date

Noninstallment credit includes

both single-payment loans and open-end credit

Installment purchase agreements are also called

collateral installment loans or chattel mortgage loans.

A line of credit is structured much like a

credit card account

The declining-balance method is widely used to calculate interest on installment loans made by

credit unions.

A borrower who has failed to make a payment of principal or interest when due or meet any other requirement of a credit agreement is said to be in

default

The borrower will not receive the full amount of a loan when the ____ method is used to calculate interest.

discount

Letters from a creditor demanding immediate payment for a past due account are referred to as

dunning letters.

A secured loan requires

either collateral or a cosigner

Revenues for depository institutions that issue bank credit cards are generated from

finance charges. annual membership fees. fees paid by participating merchants.

The legal right to seize and dispose of property to obtain payment of an unpaid claim is called a(n)

lien

Failure to pay the balance in full in a given month on a credit card with a grace period means that you

must pay interest on all new borrowings with the card since the last billing statement.

An unsecured loan requires

none of these.

Single-payment, open-end, and service credit are lumped together under the category of

noninstallment credit.

A line of credit acts very much like

open-end/revolving credit.

When the declining-balance method is used to calculate interest on an installment loan, the periodic interest rate is applied to the

outstanding balance each period.

"Gold," "silver," or "platinum" cards are all examples of ____ cards.

prestige

The outstanding balance owed on a debt is the

principal.

The contract supporting an installment loan is called a(n)

promissory note.

With a(n) ____, a customer asks to have a purchase put on his or her account for repayment at a later date without using a credit card.

retail charge account

Which of the following is an example of an unsecured debt?

signature loan

An installment purchase agreement provides a measure of protection for

the borrower

If no payment is received by the due date on a credit account,

the company may begin collection efforts. a credit bureau may be notified of slow payment. the cardholder may be declared in default.

A requirement of the federal Truth in Lending Act (TIL) requires that all installment loan lenders disclose to credit applicants

the interest rate (as an APR) and the finance charge (in dollars).

Credit interest rates that go up and down according to interest rates in the economy as a whole are referred to as

variable rates

Under the Fair Credit Billing Act, you must make billing error complaints ____ to protect your legal rights.

within 60 days after the first bill containing the error was mailed to you

Most credit cards have a grace period only if

you paid the balance in full the previous month.