module 6 review & understanding credit cards

If you make a late payment on a 0% interest credit card, you're responsible for paying the entire interest from the time you opened the card. True False

True

Many credit card companies won't tell you your interest rate or tell you your credit limit until after they have issued you their credit card. term-21 True False

True

Okay, here comes a really tough question. Select the correct statement: A Because I have no credit and no one to help me get my first credit card, I may have to get a "secured" credit card. That's okay. That means I may have to keep some money in a savings account for a time that will help secure my credit card loans. B Because I have no credit and no one to help me get my first card, I decide to get one of those really cool "prepaid" cards I've read about on the web, designed just for students. C Because I have no credit and no one to help me get my first card, I am going to answer the offers I receive in the mail and receive a free football phone. D Because I have no credit I will never be able to get a credit card so I will live with my parents forever.

A Because I have no credit and no one to help me get my first credit card, I may have to get a "secured" credit card. That's okay. That means I may have to keep some money in a savings account for a time that will help secure my credit card loans.

Select the correct statement: A I plan to get my first credit card from the same institution that has my checking account. B I'm going to get my first card at one of those really cool student websites. C I plan to pick my credit card company based on which gift I like the best. D When I get lots of credit card offers, I should get all the cards!

A I plan to get my first credit card from the same institution that has my checking account.

Which of these choices shows the smartest thinking? A I use my credit card very carefully and I always pay my credit card bill the minute I get it. B I use my credit card very carefully and I always pay my credit card bill the day it is due. C I use my credit card for impulse shopping. D I use my credit card to help my friends buy stuff they cannot afford.

A I use my credit card very carefully and I always pay my credit card bill the minute I get it.

Which answer defines a credit card's "grace period"? A If I pay off my entire credit card bill before the grace period ends, I don't have to pay interest on the money I've borrowed from the credit card company every time I've charged something. B If my payment isn't credited before this date, my payment will be late. C A credit card's grace period is a very expensive way to borrow money. D If I act "gracefully" when I pay my bill I will not be charged interest on my credit card.

A If I pay off my entire credit card bill before the grace period ends, I don't have to pay interest on the money I've borrowed from the credit card company every time I've charged something.

Which defines a "credit limit"? A The total amount you are authorized to charge on a credit card. For instance, if your credit limit is $1,000, you could charge up to $1,000. B How much you owe on your statement each month. C The amount of time before your credit expires. D The amount of cash you can borrow on your credit card.

A The total amount you are authorized to charge on a credit card. For instance, if your credit limit is $1,000, you could charge up to $1,000.

What is the difference between a debit/ATM card and a credit card? A With a debit/ATM card you are spending your own money. With a credit card you are always borrowing money. B Debit/ATM cards can only be used to withdraw cash. C Credit cards can only be used for purchases. D They are the same thing; there is no difference.

A With a debit/ATM card you are spending your own money. With a credit card you are always borrowing money.

What could happen if you do not shop around for the right credit card company? A Your interest rate could increase even though you pay your bills on time. B Nothing would happen. All cards are the same. C As long as you pay your bills on time nothing happens. D All of the above.

A Your interest rate could increase even though you pay your bills on time.

If I pay off my entire credit card bill before this date, I do not have to pay interest on the money I have borrowed on my credit card. What is this called? A Forbearance period. B Grace period. C Default. D Probationary period.

B Grace period.

You pay off your full credit card bill every month. Should you ever borrow up to your credit limit? Choose the best answer. A Sure. That's why they gave it to me. B Smart people never borrow more than 80% percent of their credit limit, even if they are paying off their credit card bill in full each month. C Sure! I can always pay it off later when I get the money. D Yep...Because that is what all my friends do and they have cool stuff.

B Smart people never borrow more than 80% percent of their credit limit, even if they are paying off their credit card bill in full each month.

Select the correct statements: 1 "Store" credit cards have the name of the store on them. 2 Store cards have a "Visa" or "MasterCard" logo on them. 3 Usually, the store card can only be used at the store or at other businesses that store may own. 4 Store cards are accepted everywhere. A Statements 1 and 2. B Statements 1 and 3. C Statements 1 and 4. D Statements 2 and 3. E Statements 2 and 4. F Statements 3 and 4.

B Statements 1 and 3.

Okay, here comes a really tough question. Choose the correct statement: A Because I have no credit and no one to help me get my first credit card, I am going to answer the offers I receive in the mail and receive a free football phone. B Because I have no credit I will never be able to get a credit card so I will live with my parents forever. C Because I have no credit and no one to help me get my first credit card, I may have to get a "secured" credit card. That's okay. That means I may have to keep some money in a savings account for a time. D Because I have no credit and no one to help me get my first card, I decide to get one of those really cool "prepaid" cards I've read about on the web, designed just for students.

C Because I have no credit and no one to help me get my first credit card, I may have to get a "secured" credit card. That's okay. That means I may have to keep some money in a savings account for a time.

What statements best describe a store charge card? A Store cards do not have the name of the store on them. B Store cards have a "Visa" or "MasterCard" logo on them and can used as a debit card. C Usually, the store card can only be used at the store or at other businesses that store may own. D Store cards can only be used for sale items.

C Usually, the store card can only be used at the store or at other businesses that store may own.

Why do you think that we named this module "Sucker Punch"? Choose the one best answer. A Because we're big boxing fans. B Because we want to protect you from getting hurt. C Because we want you to be aware that credit cards can be as painful as an unexpected punch in the stomach. Most credit card companies are out for themselves - they're not really looking out for you. This means that you have to be on the alert for sucker punches when you apply for and use a credit card. D Because we all can be hit by a sucker punch in life.

C. Because we want you to be aware that credit cards can be as painful as an unexpected punch in the stomach. Most credit card companies are out for themselves - they're not really looking out for you. This means that you have to be on the alert for sucker punches when you apply for and use a credit card.

Why would you ever get a credit card from a company that would raise your rates, even though you pay your credit card bills as agreed? Choose the most correct answer. A I don't mind throwing away money. B I didn't know that credit card companies were different from one another. C I didn't carefully shop for the right credit card company. D Both B and C.

D Both B and C.

Credit cards are expensive ways to borrow money. True False

True

Select the correct statement: A I should never, ever, be late on a credit card payment. B I should always try to pay off my credit card bill in full each month. C If I can't pay my credit card balance off in full each month, I should pay as much as I can. D All of the above.

D All of the above.

Select the false statement: A It is OK to be late on a credit card payment. B I should not try to pay off my credit card bill in full each month, because it helps build good credit. C I should never pay more than my minimum payment on my credit card balance. D All of the above.

D All of the above.

You are a responsible person, but sometimes you have to charge things to your credit card and pay for them over several months rather than in one payment. Your card has a $1,000 limit. Since you are going to be financing your charges over several months, what is the maximum amount you should owe on your credit card at one time? A $200. B $400. C $800. D $1,000.

A $200.

Why should you never borrow up to your credit limit on a credit card? Choose the best answer. A Why not? That's why they gave it to me. B Borrowing up to your credit limit on your credit card increases your "debt-to-income" ratio. Having a high "debt-to-income" ratio is one reason some credit bureaus lower a person's credit rating. C My credit limit is mine to spend and I can always pay it off later. D Credit limits can always be increased with a quick phone call.

B Borrowing up to your credit limit on your credit card increases your "debt-to-income" ratio. Having a high "debt-to-income" ratio is one reason some credit bureaus lower a person's credit rating.

The maximum amount of money that you can charge on a credit card is called: A Monthly statement. B Credit limit. C Debt ratio. D None of the above.

B Credit limit.

You have a credit card with a $600 limit. You plan to always pay your card off in full each month before the grace period ends. What is the amount you can safely owe on your card? A $180. B $280. C $480. D $600.

C $480.

You have a credit card with a $1,000 limit. You plan to always pay your card off in full each month. What is the amount you can safely owe on your card? A $200. B $400. C $800. D $1,000.

C $800.

Which answer best describes a credit card? A A credit card is a cheap way to borrow money. B A credit card is a convenient way to pay for things sometimes and also allows you to spend like you're a millionaire. C A credit card is a very expensive way to borrow money. D A credit card gives you unlimited spending.

C A credit card is a very expensive way to borrow money.

What should I do if I cannot pay off my credit card bill in full? Choose the correct answer: A I should skip the payment and pay it in full next month. B I should not worry about it. I can pay it in full next month. C I should at least make the minimum payment, but should make the biggest payment I can afford. D I should talk to a loan shark and borrow the money until the next pay day

C I should at least make the minimum payment, but should make the biggest payment I can afford.

I should do my best to get a credit card from a company that will tell me both my interest rate and my credit limit before I commit to taking the card. True False

True

What should I do if I cannot pay off my credit card bill in full? A I should get a cash advance on another credit card and pay the bill. B I should stop using my credit card until I can pay off the bill. C What's to worry about? I'm going to charge just a little bit more and worry about it next month. D None of the above.

B I should stop using my credit card until I can pay off the bill.

Why should I probably get my first credit card from the same institution that has my checking and/or savings account? A Because building a relationship with a financial institution makes good sense. B You should not. You should get your first card at one of those really cool student websites. C A better idea is to pick your credit card company based on which gift I like the best. D Because local institutions offer better gifts.

A Because building a relationship with a financial institution makes good sense

Which of these choices shows the smartest thinking? A I always use my credit card to finance purchases. B I use my credit card to build my credit and for convenience. But I try to never finance purchases with it. If I really do need to finance an important purchase, I go to my credit union or bank and try to get a loan that is much cheaper than financing on my credit card. C I use my credit card to finance my vacations and pay for the vacation monthly. D I use my credit card when I really want something, even though I don't need it, and am short of cash.

B I use my credit card to build my credit and for convenience. But I try to never finance purchases with it. If I really do need to finance an important purchase, I go to my credit union or bank and try to get a loan that is much cheaper than financing on my credit card.

Select the correct statement: A Your interest rate on your loan with the credit card company can go up big time if you make late payments, or go over your credit limit. B Your interest rates on your loan with many credit card companies can go up big time if you make late payments on other bills that have nothing to do with your credit card. C Your interest rate on your loan with many credit card companies can go up big time for no reason at all. D All of the above.

D All of the above.

Which of these choices is NOT the smartest thing to do? A I use my credit card very carefully and I always pay my credit card bill the minute I get it. B I use my credit card very carefully and I always pay my credit card bill at least a week before it is due. C I pay off my credit card in full each month before the due date. D I use my credit card to help my friends buy stuff they cannot afford.

D I use my credit card to help my friends buy stuff they cannot afford.

Just because you apply for a card with a zero percent interest rate doesn't mean you'll get a credit card with a zero percent interest rate. True False

True

With a debit or ATM card, you are spending your own money. With a credit card, you are always borrowing money. True False

True

Your interest rate on your loan with the credit card company can go up big time if you make late payments, or go over your credit limit. True False

True

I should take any credit card I can get from a company regardless of terms and conditions. term-34 True False

False

If you have a credit card limit of $1,000, you should never carry a balance of more than $800. True False

False

If you make a late payment on a 0% interest credit card, you're only responsible for paying the interest from that point on. True False

False

Many credit card companies will let you determine your interest rate and your credit limit when they approve you for their card. True False

False

The interest rate a credit card company gives you when you first get your credit card can never be changed, even if your credit gets ruined and you don't make your credit card payments on time. True False

False