Week Seven Learn
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.
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. This is a one-word answer.
cash
True or false: Only about one million Americans belong to credit unions.
false
The two major categories or types of credit are _____ -end and closed-end credit.
open
Family members may only charge interest they would have earned on the money if they had deposited it in a Blank______ account.
passbook
If you are denied credit by a bank or credit union, you should question:
your ability to afford the higher rate charged by a loan company.
Which of the following statements is true?
You must qualify to be a member in order to get a loan at a credit union.
The legal process by which a person, business, or government entity unable to meet financial obligations is relieved of those debts by a court is called
bankruptcy
After Chapter 13 bankruptcy, people may find obtaining credit Blank______.
easier
Payday loans are (inexpensive or expensive) _______ although readily available via check cashers, finance companies, and other sources.
expensive
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
True or false: The reason why people choose long-term financing is because it is cheaper in the long run.
false
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
The pros and cons of T&E credit cards, such as American Express, include:
-annual fees are typically high. -full payment is due each month. -no finance charge is incurred as full payment of the balance owed is due each month.
Which of the following are signs of possible debt problems?
-borrowing money to pay old debts -using up savings -having little in savings -getting a credit card revoked
The costs to Chapter 13 bankruptcy include Blank______.
-court costs -trustees' fees and costs -attorneys' fees
Which of the following are advantages of borrowing from a credit union?
-patient with borrowers -personalized service
Credit life insurance is generally Blank______ expensive compared to equivalent term life insurance.
more
In Chapter 7 bankruptcy, a debtor is required to draw up a Blank______ listing his or her assets and liabilities.
petition
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
The costs of Chapter 13 bankruptcy include court costs, lawyer fees, and _____ fees.
trustee
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 three types of credit insurance are:
-credit accident and health. -credit property. -credit life.
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
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.
Which of the following best explains the flaw in the strategy of borrowing from a finance company?
When you are denied credit from traditional sources, you probably have less ability to afford the higher rate a finance company charges.
With the ____ -on interest method, interest is calculated on the full amount of the original principal, no matter how frequently you make payments.
add
The interest rate on cash _______ is often higher than the rate on purchases.
advances
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
Which of the following types of loans are offered by life insurance companies?
cash value of whole life
One of the intangible costs of bankruptcy is the difficulty obtaining _____ in the future.
credit
The most commonly purchased type of credit insurance is:
credit life insurance.
The Fair Debt Collection Practices Act Blank______ to creditors that collect debts themselves.
does not apply
Credit cards can be a cheaper alternative to an installment loan if the need is short term (less than a month). This is because of the _____ period that is often allowed by credit card companies.
grace
A married couple that does not talk about money could be:
having debt problems.
The interest rate on cash advances is often _____ than the rate on purchases. This is a one-word answer.
higher
Long-term financing is more costly than short-term financing because of higher _____ costs.
interest
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.
lender
The rule of 78s formula favors Blank______.
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. (Enter one word per blank.)
need
The new Credit CARD Act requires creditors to include a warning on the monthly statement about making only the minimum
payment
Annual ____ rate is the yearly interest rate quoted by a financial institution on a loan.
percentage
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
Bankruptcy is the legal process by which a person, business, or government entity unable to meet financial obligations is:
relieved of those debts by a court.
A credit counseling organization usually provides credit management classes and helps you devise a credit management _____
system
One reason some people use payday loans is that:
they are convenient.
True or false: Loans from finance companies and appliance stores tend to be the highest cost loans.
true
True or false: The Fair Debt Collection Practices Act prohibits certain practices by agencies that collect debts for creditors.
true
What would be the interest cost (simple interest) for a $2,000 loan with a 6% rate for a half of a year?
$60
True or false: The two types of credit are closed-end and free credit.
False
Which of the following statements is not true?
Finance companies offer inexpensive loans.
Which of the following loans are offered by credit unions to consumers?
-Credit card loans -Installment loans -Share draft loans
If you have funds available on your credit card, you can obtain a cash advance from Blank______.
-a bank or credit union -an ATM
If you have funds available on your credit card, you can obtain a cash advance from Blank______.
-an ATM -a bank or credit union
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.
An example of a travel and entertainment card is Blank______.
Diners Club
Identify the correct statement about a loan with add-on interest.
The interest is calculated on the full amount of the original principal, no matter how frequently the payments are made.
Simple interest (I) is calculated as follows: Principal × Rate of Interest × _____. This is a one-word answer.
time
Annual percentage rate is the _____ interest rate quoted by a financial institution on a loan.
yearly
Long-term financing is more costly than short-term financing because:
you will pay more in interest charges.
Which of the following is generally considered to be expensive sources of loans?
-finance companies -appliance companies -bank credit cards -department stores
The major provisions of the Credit Card Accountability, Responsibility, and Disclosure Act of 2009:
-set a consistent due date for each month -state that a teaser rate must be good for at least six months -limits the issuer's ability to increase the interest rate in the first year
What is the legal process by which a person, business, or government entity unable to meet financial obligations is relieved of those debts by a court?
bankruptcy
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