Types of Credit Review - Unit 4

Front

Mr. Foltz is trying to decide between getting a debit card, a prepaid debit card, and a credit card. Which statement is true?

Back

All 3 cards are completely different

Front

The average APR for a payday loan is closest to …

Back

400%

Front

Which of the following statements comparing credit and debit cards is TRUE?
Options: Far more businesses accept credit cards than debit cards, Credit cards pull money directly from your bank account, while debit cards get their money from Visa or Mastercard, Credit card companies provide you with a monthly statement, while debit cards do not, With debit cards, you're spending your own money at point of sale, but with credit cards, you're getting a loan that you need to pay back later

Back

With debit cards, you're spending your own money at point of sale, but with credit cards, you're getting a loan that you need to pay back later

Front

Which of the following is most likely to represent a fixed rate, secured debt? A student loan, A credit card, A prepaid debit card, An auto loan

Back

An auto loan

Front

Which of these statements best explains why it's often a good idea to pay more than the monthly amount due on an amortized loan?

Back

The extra payment will be applied to the principal amount you owe, which will pay down your debt more quickly.

Front

If you are having trouble making auto loan payments and are really following a tight budget, which recommendation below represents the WORST advice? Options: Find an extra source of income by taking a second job, working longer hours, or borrowing from family if they can afford to help, Stop making payments on some of your debts so you can focus on getting the most expensive or largest debts under control, Continue making all payments and call your lenders and see if you can negotiate lower monthly payments, lower interest rates, or longer terms, Explore whether a free or non-profit credit counseling service could help

Back

Stop making payments on some of your debts so you can focus on getting the most expensive or largest debts under control

Front

When loans are amortized, monthly payments are _______ , while the amount of your monthly payment applied to interest ________ and the amount of your monthly payment applied to the principal _______ over time.

Back

Constant, Decreases, Increases

Front

Which of these credit payback strategies would lead to the HIGHEST overall cost? Options: Paying off your credit card bill in full every month, Paying 20% of your credit card balance every month on time, Making the minimum payment (3% of your credit card balance) every month on time, Making the minimum payment (3% of your credit card balance) every month with an occasional late payment

Back

Making the minimum payment (3% of your credit card balance) every month with an occasional late payment

Front

What’s the most likely story of how Gina spent a total of $750 to pay back her $300 payday loan? Options: The minimum monthly payment for payday loans is usually only $10 or $15, so a lot of interest accumulated, Upfront, Gina knew there would be $450 of fees attached to the loan, but she took out the loan anyway, Payday loans must be paid in full within two weeks, and if not, the only option is to renew the loan for a high penalty fee, which she did approximately 12 times, Gina not only paid the $300 she owed, but she prepaid an extra $450 in case she needs another loan in upcoming months.

Back

Payday loans must be paid in full within two weeks, and if not, the only option is to renew the loan for a high penalty fee, which she did approximately 12 times.

Front

If Alexus wants the lowest monthly payments possible for a car costing $35,000 with a $5000 down payment, what advice should she follow?

Back

Put in $5000 for your down payment, and choose a loan with a long term length.