pf chap 8 and 9 test
Which of the following best describes open-end credit?
An agreement that allows the borrower to use a specific amount of credit over a period of time.
What law requires debtors to get counseling before filing for bankruptcy?
Bankruptcy Abuse Prevention and Consumer Protection Act
Permits debtors with regular incomes to pay all of a portion of their debts under the protection and supervision of the court.
Chapter 13 bankruptcy
Eliminates most types of debt and stays on a person's credit report for up to ten years.
Chapter 7 bankruptcy
Which governmental agency was created as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act?
Consumer Financial Protection Bureau
Which law prohibits credit card companies from offering free T-shirts or other incentives to sign up at university-sponsored events?
Credit Card Accountability and Disclosure Act
Which law limits how credit card companies can charge consumers?
Credit Card Accountability and Disclosure Act of 2009
Which of the following actions helps protect against credit fraud?
Destroy cards that have expired.
The _________________________ is a law that protects consumers in electronic funds transfers.
Electronic Funds Transfer Act
Total amount paid by a borrower to a lender for the use of credit.
FINANCE CHARGE
What did the Dodd-Frank Wall Street Reform and Consumer Protection Act do?
Increased regulation of the banking and financial services industry.
Which law protects debtors from being forced to pay for goods and services when they have a legitimate dispute with the seller of those goods and services?
Preservation of Consumers' Claims and Defenses Ruling
According to financial experts, how should credit cards be used?
Primarily for emergencies.
Which of the following is true regarding high-risk borrowers?
They will have trouble getting credit.
Which law requires creditors to tell consumers what credit will cost them before they use it?
Truth in Lending Act
The _________________________ of the Department of Justice maintains a list of credit counseling agencies approved for pre-bankruptcy counseling.
US Trustee Program
Which of the following is true regarding a debt management plan (DMP)?
Your creditors may agree to lower your interest rates or waive certain fees.
A statement in a contract that allows the creditor to require full and immediate payment of the entire balance if a payment is missed or the individual fails to abide by the terms of the contract is a(n) ______________________________.
acceleration clause
The annual cost of credit a lender charges for extending credit is the ______________________________.
annual percentage rate (APR)
Legal state in which the courts excuse a debtor from paying some or all debt.
bankruptcy
Which purchase is best served by the use of credit?
buying a new refrigerator
Loan against the available credit on an individual's account.
cash advance
Loan for an agreed amount for money that must be repaid with interest by a specified date or according to a defined schedule.
closed-end credit
Property that a borrower promises to give up in the event he or she can no longer repay the loan.
collateral
Business that specializes in debt collection.
collection agency
Credit granted to individual consumers by a retail business is _____.
consumer credit
Legally binding agreement between the borrower and the lender.
contract
A(n) ______________________________ is a responsible person who signs the loan along with the person to whom the loan is granted.
cosigner`
Agreement between two parties in which one party lends money or provides goods or services to another party with the understanding that payment will be made at a later date.
credit
_________________________ eliminates the need to carry large amounts of cash and provides a sense of security.
credit
An organization that collects information about the financial and credit transactions of consumers is a(n) ______________________________.
credit bureu
An organization that provides debt and financial management advice and services to people with debt problems at little or no cost is called a _________________________.
credit counseling service
The fraudulent use of someone else's credit information is _________________________.
credit fraud
Individual's credit and financial behavior over a period of years.
credit history
Creditor's evaluation of an applicant's willingness and ability to pay debts.
credit rating
A(n) ______________________________ is a record of a person's credit history.
credit report
A numerical measure of a loan applicant's creditworthiness is his or her ______________________________.
credit score
The ______________________________ is the party extending credit.
creditor
Something that is owed that will decrease future earnings.
debt
A _________________________ is the amount of debt a consumer has at a given point in time.
debt laod
A credit counseling service may recommend that you enroll in a(n) _________________________.
debt management plan (DMP)
Party receiving credit.
debtor
Portion of the purchase price paid up front.
down payment
______________________________ credit is a short-term loan at a high interest rate that is granted regardless of the borrower's credit history.
easy access
Which of the following is most likely to incur a fee from a credit lender?
exceeding a credit limit
Combination of an individual's attitudes about money and spending patterns.
financial personality
Forced sale of property.
foreclosure
Perhaps the most serious type of repossession is _________________________.
foreclosure
Legal procedure requiring a portion of the debtor's pay to be set aside by the person's employer to pay creditors.
garnishment
Time between the billing date and the start of interest charges.
grace period
What does it mean to be creditworthy?
having the assets, income, and willingness to repay debt
A secure website is denoted by _________________________ in the URL.
https
A(n) ______________________________ is a loan for a specific amount of money that is repaid with interest in regular payments.
installemtn laon
In _________________________, the lender sells the property under court supervision.
judicial foreclosure
Legal claim on a borrower's property by a creditor who is owed money.
lien
A preapproved maximum amount that an individual can borrow is called a(n) ______________________________.
line of credit
Most likely to pay debts.
low-risk borrower
Which of the following solutions to credit problems should be done first?
notify creditors
Which of the following is not a negative aspect of using credit?
opportunity to buy expensive items
An example of open-end credit is _____.
overdraft protection on checking accounts
Businesses that give customers high-interest loans with personal property held as collateral.
pawnshop
Short-term, high-interest loan.
payday loan
The ______________________________ of a loan is the amount of money borrowed.
principal
Under the Fair Credit Reporting Act, a consumer has the right to _____.
receive the name and address of the reporting agency that sent the report
A(n) ______________________________ agreement is an arrangement in which a consumer pays rent for the use of a product and eventually owns it.
rent-to-own
Which of the following always results in lost ownership of property?
repossession
Taking of collateral when a borrower fails to repay a loan.
repposeion
Type of open-end credit agreement that offers a choice of paying in full each month or spreading payments over a period of time.
revolving credit account
Loans that require collateral are known as ______________________________ credit.
secured
Which of the following is most similar to unsecured credit?
signature loan
______________________________ credit cards are cards offered to people who have a poor credit history.
subprime
A(n) ______________________________ is a secured, short-term loan made using a borrower's vehicle as collateral.
title loan
_____ is credit granted based on a signed credit agreement.
unsecured credit
Which is the best example of closed-end credit?
vehicle loan
Of the following, which is not a result of a credit problem?
zero balance
