Personal Finance Chapter 7

If you have funds available on your credit card, you can obtain a cash advance from:

- an ATM - a bank or credit union

The pros and cons of T&E credit cards, such as American Express, include:

- annual fees are typically high - no finance charge is incurred as full payment of the balance owed is due each month - full payment is due each month

The major provisions of the Credit Card Accountability, Responsibility, and Disclosure Act of 2009:

- set a consistent due date for each month - limits the issuer's ability to increase the interest rate in the first year - state that a teaser rate must be good for at least six months

Installment loans are a cheaper alternative to credit cards because:

- they are cheaper over many months or years when an extended payment period is needed - their interest rates are often lower than credit card rates

An example of a travel and entertainment card is:

Diners Club

Which of the following statements is not true?

Finance companies offer inexpensive loans

True or false: In most cases it is less expensive to borrow money using your certificate of deposit as collateral for a loan than if you use your used car.

True

Most credit cards carry a special ______, based on the percentage of the amount borrowed, that is applied when a cash advance is taken out. This is a one word answer.

fee, charge, or rate

A married couple that does not talk about money could be

having debt problems

Simple interest (I) is calculated as follows: ______ X Rate of Interest X Time. This is a one word or one letter answer.

principal or P

The costs of Chapter 13 bankruptcy include court costs, lawyer fees, and ____ fees.

trustee, trustees, or trustees'

What would be the interest cost (simple interest) for a $2,000 loan with a 6% rate for a Half of a year?

$60

The Fair Debt Collection Practices Act ______ to creditors that collect debts themselves.

does not apply

The Truth in Lending law of 1969 requires lenders to state the cost of borrowing as a specific ______ amount so that consumers know exactly what the credit charges are.

dollar, currency, monetary, cash, or $

After Chapter 13 bankruptcy, people may find obtaining credit ______.

easier

The interest rate on cash advances is often ______ than the rate on purchases. This is a one word answer.

higher, greater, bigger, larger, or more

Credit life insurance is generally ____ expensive compared to equivalent term life insurance.

more

Family members may only charge interest they would have earned on the money if they had deposited it in a ______ account.

passbook

The new Credit CARD Act requires creditors to include a warning on the monthly statement about making only the minimum ____.

payment

There are several reasons that you should borrow from a credit union, including their patience in dealing with borrowers who have good reasons for missed payments, and they provide ______ service.

personal, personalized, quality, great, good, customer, caring, or customized

In Chapter 7 bankruptcy, a debtor is required to draw up a ____ listing his or her assets and liabilities.

petition

The three types of credit insurance are:

- credit accident and health - credit life - credit property

Which of the following are advantages of borrowing from a credit union?

- Patient with borrowers - Personalized service

Which of the following types of loans are offered by life insurance companies?

Cash value of whole life

True or false: Loans from finance companies and appliance stores tend to be the highest cost loans.

True

True or false: The purpose of the Truth in Lending law of 1969 was to give consumers the information needed to compare credit costs on various loans.

True

True or false: The rule of 78s is a mathematical formula to determine how much interest has been paid at any point in a loan.

True

True or false: You should avoid credit when you don't need the purchase and when you can afford to pay cash to acquire the item.

True

The two major categories or types of credit are ______-end and open-end credit.

closed or close

Cash advances are obtained through your ______ card at a bank or through an ATM machine. This is a one word answer and found in the discussion of cash advances.

credit

The most commonly purchased type of credit insurance is

credit life insurance

True or false: The Fair Debt Collection Practices Act prohibits certain practices by agencies that collect debts for creditors.

True

True or false: The reason why people choose long-term financing is because it is cheaper in the long run.

False

True or false: The two types of credit are closed-end and free credit.

False

If you borrow $200 and it cost you $22 in interest with a service charge of $5, what is the finance charge?

$27

If you borrow $200 and it cost you $27 in interest with a service charge of $6, what is the finance charge?

$33

The interest rate on cash ______ is often higher than the rate on purchases.

advances, advance, loan, loans, or borrowing

The first thing a debtor must do in a Chapter 7 bankruptcy is to draw up a petition listing ____ and liabilities or debts for submission to the court.

assets

A reason why people tend to choose long-term financing is:

they want to make smaller monthly payments

Which of the following best explains why credit cards are more dangerous than installment loans?

A credit card is easier to use than taking out an installment loan.

Which of the following is generally considered to be expensive sources of loans?

- Bank credit cards - Department stores - Finance companies - Appliance companies

True or false: Family loans are simple arrangements and can benefit both parties and no documentation is recommended.

False

True or false: Most credit card companies do not charge a fee when a cash advance is made.

False

What is the best strategy if you can't make a payment on a debt?

Notify the creditor as soon as possible in an attempt to work out a modified payment plan.

The two major categories or types of credit are ______-end and closed-end credit.

Open or opened

One of the intangible costs of bankruptcy is the difficulty obtaining ____ in the future.

credit, loans, or loan

If you cannot make a payment on a debt when due, contact the ____ at once to work out a modified payment plan. This is a one word answer.

creditor, lender, bank, or financier

The rule of 78s formula favors ____.

lenders

Two situations when you should avoid credit are: when you don't ______ or really want the purchase, and when you could pay cash but choose to finance the needed item.

need or require

A credit counseling organization usually provides credit management classes and helps you devise a credit management ____.

plan, arrangement, scheme, strategy, or system

The costs to Chapter 13 bankruptcy include:

- attorneys' fees - trustees' fees and costs - court costs

The two main activities of the CCCS are:

- teaching families how to avoid heavy debt burdens in the future - helping families with debt problems by helping them manage debts

Which of the following are signs of possible debt problems?

- having little in savings - borrowing money to pay old debts - using up savings - getting a credit card revoked

What would be the interest cost (simple interest) for a $3,000 loan with a 8% rate for nine months of a year?

$180