Personal finance chapter 6 review

When you cosign a loan, you are being asked to guarantee this debt.

True

Although credit allows more immediate satisfaction of needs and desires, it does not increase total purchasing power.

True

Consumer credit is based on trust in people's ability and willingness to pay bills when due

True

Using a bank credit card such as visa or MasterCard, is an example of closed end credit.

False

With closed-end credit, loans are made on a continuous basis and youre billed periodically for at least a partial payment.

False

With open-end credit you pay back one-time loans in a specific period of time in payments of equal amounts

False

Perhaps the greatest disadvantage of using credit is the temptation to overspend

True

Shopaholics and young adults are most vulnerable to misusing credit.

True

A home equity loan is usually set up as a revolving line of credit. Typically with a fixed interest rate

False

A lender requires a co-signer even when a borrower meets the lenders criteria for making a loan

False

All economists do not recognize consumer credit as a major force in the American economy.

False

In the 5 C's of credit, capacity refers ti the borrowers attitude towards his or her credit obligations.

False

The debt-payment-to-income ratio is calculated by dividing your total liabilities by your net worth.

False

Consumer credit refers to the use of credit for personal needs by an individual or family.

True

Credit is an arrangement to receive cash, goods, or services now and pay for them in the future.

True

Credit when effectively used, can help you have more and enjoy more

True

Department stores and gasoline companies are good places to obtain your first credit card

True

It is safer to use credit, since charge accounts and credit cards let you shop and travel without carrying large amounts of cash.

True

The credit cardholders who pay off their balances in full each month are known as convenience users.

True

To protect yourself against credit card fraud, you should shred anything with your account number before throwing it away

True