personal finance chapter 9
Which of the following is not one of the national credit reporting agencies?
National Credit Union Administration
The Equal Credit Opportunity Act prohibits discrimination in the granting of credit on the basis of all except
ability to repay
When comparing credit terms, it is important to consider
all of the above
The annual cost of credit a lender charges.
annual percentage rate (APR)
A legal state in which the courts excuse a debtor from repaying some or all debt. In return, the debtor must give up certain assets and possessions.
bankruptcy
Credit cards that allow consumers to use credit at many places can be obtained through
banks, credit unions, and credit card issuers
A consumer should check out his or her credit rating periodically to
be sure the information on file is correct
Property that a borrower promises to give up in case of default.
collateral
A person who signs a loan along with a borrower and agrees to repay the loan if the borrower fails to repay it.
cosigner
An arrangement that allows consumers to buy goods or services and pay for them later.
credit
Allows consumers to make purchases or borrow money on a time-payment plan.
credit card
A record of a person's credit history and financial behavior.
credit report
When a borrower fails to pay the debt owed.
default
Which of the following is not an advantage of using credit?
ease of spending money you do not have
Credit cards are used primarily to obtain cash loans.
false
Credit is only available to those with high incomes and valuable property.
false
Credit reporting agencies automatically send credit reports to consumers each month.
false
Filing bankruptcy is the easiest and most practical solution for people who have credit problems.
false
Finance charges remain the same regardless of the amount of credit used or the length of time you take to repay.
false
For the most part, it is a good idea to use credit any time you want something and do not have enough cash to pay for it.
false
Most consumers have no need to use consumer credit
false
Open-end credit is used for loans.
false
Regardless of where you shop for credit, the cost of a given amount of credit will be the same.
false
There is one central reporting agency that keeps a running record of the financial and credit transactions of credit users.
false
The forced sale of a property.
foreclosure
A legal procedure requiring a portion of a debtor's pay to be set aside by the person's employer to pay creditors.
garnishment
The time between the billing date and the start of interest charges.
grace period
You can damage a good credit rating by
ignoring bills you cannot pay until the creditors take collection action
As the percentage rate of interest on a credit transaction increases, the finance charges
increase
Which of the following is a type of closed-end credit?
installment loan
A legal claim on a borrower's property by a creditor who is owed money.
lien
Consumer credit counseling services sponsored by the National Foundation for Consumer Credit
offers reliable low cost help and advice to debt troubled consumers
Allows the borrower to use a certain amount of money for an indefinite period of time.
open-ended credit
A business that gives customers high-interest loans with personal property, such as jewelry, held as collateral.
pawnshop
A short-term, high interest loan that must usually be repaid on the borrower's next payday.
payday loan
Credit is available most readily to
people with a good credit rating
The amount borrowed on a loan.
principal
The amount you pay to use credit depends on all of the following except
reasons for using credit
When a lender takes back collateral if a borrower fails to repay a loan.
repossession
A loan that requires collateral
secured loan
A loan made using the borrower's car as collateral.
title loan
A chief advantage of using credit is the opportunity to use goods and services while paying for them.
true
A sound credit rating is an important financial asset.
true
According to the Equal Credit Opportunity Act, a person who is denied credit has the right to a written explanation of why credit was denied.
true
Consumer credit provides the extra buying power needed to support mass production and distribution of goods and services.
true
Credit is more costly than using cash.
true
Possessing credit cards tempts many people to spend more than they can afford.
true
The Electronic Funds Transfer Act puts a $50 limit on cardholder liability for unauthorized transfers
true
The Truth in Lending Law requires creditors to tell consumers what credit will cost them before they use it.
true
Using credit can simplify telephone, mail, and Internet shopping and make necessary returns and exchanges easier
true
You should never sign a credit contract without knowing the exact meaning of all the terms it contains.
true
If your credit card is lost or stolen,
you are responsible for only $50 in charges per card