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.