Unit - Consumer Credit
A credit report is: Your monthly credit card statement A loan and bill payment history Your credit line with your financial institution
A loan and bill payment history
An advantage of using credit is: Less impulse buying Ability to obtain needed items now Lower chance of overspending
Ability to obtain needed items now
Which of these credit limits is reasonable for a college student? $100 $1,000 $10,000
$1,000
You obtained an installment loan of $1,400 with an annual percentage rate of 12 percent. You must repay the loan in 12 months. What is your monthly payment? http://www.franklinsavings.com/Calculator_Installment.html $124.38 $130. 67 $137.19 $146.22
$130. 67 WRONG
Using the 20-10 rule, a person earning $1,500 net income a month should not have monthly credit payments that exceed $20 $15 $150
$150
Bought a new delivery truck for $18,000 with a down payment of $4,000; paid $270 monthly for 60 months. The total finance charge is $2,000 $2,020 $2,200 $4,000
$2,200
You bought a new car for $20,000. You put down $6,000 and paid $280 for 60 months. The total finance charge is $2,800 $2,850 $3,250 $3,250
$2,800
You bought a new boat for $16,000 and put a $3,000 down payment on it. The bank's loan was for 60 months. Finance charges totaled $4,800. Your monthly payment is $269.67 $296.67 $346.67 $364.76
$296.67
What is the maturity value on a single-payment loan of $3,000 for 60 days at 11 % ordinary interest? $3,055 $3,330 $3,550 $3,660
$3,055
Calculate the average daily balance on a credit card account for the month of May. Previous balance was $600. On May 4 a payment of $200 was made. On May 8 charged$55 for gas. On May 15 returned an item for $95. On May 20 purchased groceries for $110. $452.42 $470 $600 $1,425
$470 WRONG
Your bank granted you a single-payment loan of $2,500 for 90 days at 10 percent ordinary interest. What is the interest on the loan? $33.50 $62.50 $64.75 $72.33
$62.50
Which of these APRs offers the best long-term deal? 2% introductory APR, which goes up to 23% after 6 months 10% APR, which goes up 1% every month for 10 months 15% fixed APR
15% fixed APR
Credit scores range from: zero to 100 300 to 850 100 to 1,000
300 to 850
Under the Credit Card Act, how much advance notice must be given to consumers when there are significant changes in credit card terms? 15 days 30 days 45 days 60 days
45 days
What right or responsibility is included in the Truth in Lending Act? You can get a free copy of your credit report every year from the three major reporting agencies. A creditor must give you written notice of the cost of credit and the terms of repayment before you get a loan or credit card.
A creditor must give you written notice of the cost of credit and the terms of repayment before you get a loan or credit card.
Your application for a credit card is denied. You can obtain information on your credit history under the Credit Card Act Equal Credit Opportunity Act Fair Credit Reporting Act Fair Debt Collection Practices Act
Fair Credit Reporting Act
The credit department of E-Electronic Stores often calls you at work about your overdue bill. This is a violation of the Credit Card Act Fair Credit Reporting Act Fair Debt Collection Practices Act Truth-in-Lending Act
Fair Debt Collection Practices Act
A credit card deducts money from your checking account. True False
False
All credit card companies charge an annual fee and offer rewards. True False
False
All credit cards charge the same annual fees and interest rates. True False
False
All credit cards have the same grace period. True False
False
All loans are long term. True False
False
Credit is about earning money. True False
False
Credit is free. True False
False
Credit reporting bureaus decide whether or not I can get credit. True False
False
For credit card users who do not pay the balance in full every month, the interest rate matters less than the annual fee and the rebates they earn. True False
False
If I find incorrect information on my credit report, I must hire an attorney to fix it. True False
False
Paying only the minimum down on a credit card will save you the most money. True False
False
Revolving charge accounts must be completely paid off by end of the month. True False
False
The fine print on a credit card agreement, which outlines interest rates, late payment fees, and annual fees, can be changed at any time by the credit card company. True False
False
The fee charged for the use of the credit card if not paid off in full each month? Annual Fee Interest Fee Finance Charge
Finance Charge
The finance charge is equal to the total of all monthly payments: Plus amount financed Less amount financed Divided by amount financed Multiplied by amount financed
Less amount financed
With an installment loan, the amount of money borrowed is known as the
Principle
MasterCard and Visa used on vacation Single payment credit Installment credit Revolving credit
Revolving credit
If you lose your credit card or fear it has been stolen, the first call you should make is to: The credit card issuer The Attorney General s Office The Better Business Bureau Your insurance company
The credit card issuer
Lenders consider employment record and length of time at each position. Capital Capacity Character
Character
What is the fee charged by the card issuer for being a card holder? Annual Fee Finance Charge Late Payment Fee
Annual Fee
In terms of credit, what does APR stand for? Annual Percentage Rate Annual Payment Rate Annual Payoff Rate
Annual Percentage Rate
Selling your assets to pay creditors occurs under which of the following bankruptcy filings? Chapter 7 Chapter 11 Chapter 13 Chapter 15
Chapter 7
A bank that is looking at your past payment records on your loans by examining your credit report is most likely examining which aspect of the 5 C's of lending? Character Capacity Capital Capital
Character
Most companies calculate the finance charge on credit card accounts as a percentage of the: Daily balance Weekly balance Average daily balance Average weekly balance
Average daily balance
The act of moving whole or a partial balance of a card to another credit card is called Balance Transfer Cash Advance Finance Charge
Balance Transfer
The days between the last statement and the current statement cycles is called Billing Cycle Grace Period Balance Transfer Period
Billing Cycle
Lenders consider debt-to-income ratio. Capital Capacity Character
Capacity
Asking if you have a savings account is an example of: Character Capital Collateral Capacity
Capital
Lenders consider your net worth. Capital Capacity Collateral
Capital
Refers to a person's assets Refers to a person's assets Capacity Capital
Capital
Allowing the courts to arrange a repayment schedule to pay creditors occurs under which of the following filings? Chapter 7 Chapter 11 Chapter 13 Chapter 15
Chapter 13
Lenders consider what is pledged for repayment of loan. Capital Capacity Collateral
Collateral
The Fair Debt Collection Practices Act applies to which of the following: Banks Collection agencies Credit unions Finance companies
Collection agencies
Lenders consider what's happening in the local economy. Capital Capacity Conditions
Conditions
When you receive goods and services now, and pay for them later, you're using: A lease Opportunity costs Credit
Credit
Which is not one of the Five Cs of credit? Capacity Credit rating Conditions
Credit rating
A low interest rate that is offered for a limited time as an incentive is a(n) Low ball rate Introductory rate Minimum balance rate
Introductory rate
What right or responsibility is included in the Fair Debt Collection Practices Act? Debt collectors cannot use unfair or deceiving practices to collect overdue money on a loan that a creditor has forwarded to them. You cannot be denied credit based on your race, sex, marital status, religion, national origin, age, or because you are on public assistance.
Debt collectors cannot use unfair or deceiving practices to collect overdue money on a loan that a creditor has forwarded to them.
The average daily balance is equal to the sum of daily balances: Plus number of days in billing cycle Less number of days in billing cycle Divided by number of days in billing cycle Multiplied by number of days in billing cycle
Divided by number of days in billing cycle
Which act prohibits discrimination? Equal Credit Opportunity Act Fair Credit Billing Act Fair Credit Reporting Act Fair Discrimination Policy Act
Equal Credit Opportunity Act
How do lenders find your credit history? From bank records From employer records From credit bureaus
From credit bureaus
Time allowed to pay your balance without being charged a finance charge is the Billing Cycle Grace Period Finance charge calculation period
Grace Period
College loan Single payment credit Installment credit Revolving credit
Installment credit
The smallest amount of the balance a cardholder is required to pay is called the Balance Grace Period Minimum Payment
Minimum Payment
Monthly telephone bill Single payment credit Installment credit Revolving credit
Single payment credit
What is the most commonly used credit score? The FICO score Acme credit score Vantage Score
The FICO score
Which of these is in a credit report? Your educational history The amount of tax withheld from your paycheck The names of everyone who has requested your credit history in the past six months
The names of everyone who has requested your credit history in the past six months
To protect yourself from falling into debt, you should save enough money to last you through Two weeks One month Three to six months One to two years
Three to six months
The three national credit bureaus (credit-reporting agencies) are: TransUnion, Enterprise and Capital One TransUnion, Equifax and Experian TransUnion, Moody's and Experian
TransUnion, Equifax and Experian
A car loan is an example of a secured loan. True False
True
A disadvantage of using credit is impulse buying. True False
True
APR measures the interest rate charged by a credit card True False
True
Amortization is a payment process, True False
True
Credit is granted to those who have demonstrated their ability to manage their money over time. True False
True
Credit used for an investment, such as a house, is good credit. True False
True
Finance charges are levied on consumers who carry balances from month to month. True False
True
I need to check my credit report at least once a year. True False
True
I need to pay my bills on time to maintain a good credit history. True False
True
In determining character, the lender may ask how long you have lived at your present address. True False
True
It is my responsibility to make sure that my credit report is correct and up to date. True False
True
Most credit cards have a credit limit. True False
True
The daily balance is the previous balance plus cash advances plus purchases less any payments. True False
True
The interest rate, or fee for paying off credit card debt in monthly installments, can be as high as 30 percent. True False
True
The monthly payment is calculated by totaling the finance charge and amount financed divided by the number of payments of the loan. True False
True
Unpaid tax liens remain on your credit report for 15 years. True False
True
Using the 20-10 rule, a person earning $40,000 net income a year (excluding mortgage or rent) should have no more than $8,000 in outstanding debt. True False
True
Your credit report indicates if any accounts are in collection status. True False
True
You borrow $20,000 from First State Bank to buy a car. This transaction is subject to the Credit Card Act Fair Credit Reporting Act Car Equity Act Truth-in-Lending Act
Truth-in-Lending Act
Are missed payments a factor used to calculate a credit score? Yes No
Yes
Is carrying a high balance on a credit card a factor used to calculate a credit score? Yes No
Yes
Is personal bankruptcy a factor used to calculate a credit score? Yes No
Yes
What is your liability if you have lost your credit card? You must pay for all charges until you find the credit card. You are liable for the first $50 of charges if your card is used. You are liable for all charges until you report the card lost.
You are liable for the first $50 of charges if your card is used.
What right or responsibility is included in the Equal Credit Opportunity Act? You cannot be denied credit based on your race, sex, marital status, religion, national origin, age, or because you are on public assistance. A creditor must give you written notice of the cost of credit and terms of repayment before you get a loan or credit card.
You cannot be denied credit based on your race, sex, marital status, religion, national origin, age, or because you are on public assistance.
What right or responsibility is included in the Fair Credit Reporting Act? Debt collectors cannot use unfair or deceiving practices to collect overdue money on a loan that a creditor has forwarded to them. You have the right to find out information on your credit report.
You have the right to find out information on your credit report.
Which of the following is NOT considered when calculating your credit score? Your payment history The types of credit you are using Your income
Your income
A credit score is: a three-digit number summarizing the state of your credit an alphabetical score grading your creditworthiness a numerical score reporting how much money you owe
a three-digit number summarizing the state of your credit
The category that considers your current income level and current borrowing level is capital capacity character
capacity
The Fair Debt Collection Practices Act makes it illegal for banks and businesses to discriminate against potential creditors debt collectors to impersonate government officials you to seek the services of a credit repair organization you to be denied credit
debt collectors to impersonate government officials
Inquiries from lenders to the credit bureau will: raise your score lower your score not affect your score
lower your score
Collateral is used to "secure" a loan something of value you can deduct from your taxes not part of the "Five Cs" used to determine creditworthiness
used to "secure" a loan
The biggest factor in your credit score is: whether you pay your bills on time how much debt you have how long you've had credit
whether you pay your bills on time
A credit score helps a lender determine: how much money you owe how much money you make whether you're a good financial risk
whether you're a good financial risk