Financial Literacy Flashcard

Front

Shira is trying to decide between getting a debit card, a prepaid debit card, and a credit card. Which statement is true? Options: All 3 cards are completely different, Debit cards and prepaid debit cards are the same, Debit cards and credit cards are the same, All 3 cards are completely the same

Back

Debit cards and prepaid debit cards are the same

Front

Which of the following statements comparing credit and debit cards is TRUE? 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 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 a loan? Every time you pay extra, the lender will reduce the interest rate they're charging by a small amount, The extra payment will be applied to the principal amount you owe, which will pay down your debt more quickly, The extra payment will be applied to the interest you owe, which will reduce the overall cost of your loan, Amortized loans typically have much higher interest rates than credit cards, so they're the best place to put your extra cash

Back

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

Front

Taylor is about to go car shopping, and she has $5000 saved that she can use for a down payment. She expects the exact model car she’s looking for to cost $35,000. If her top priority is having the lowest monthly payments possible, which advice should she follow?

Back

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

Front

What is an advantage of using a credit card?

Back

You can make an emergency purchase that you otherwise don’t have the money to pay for right now

Front

Credit card disclosure: "Your due date is at least 25 days after the end of the billing cycle. We will not charge you interest on new purchases provided that you have paid your previous balance in full by the due date each month." Identify the true statement: 1. If you make the minimum payment on your card within the 25 day period, the credit card company will not charge you interest 2. If you pay your previous balance in full after the due date, the credit card company will not charge you interest 3. 25 days is an exceptionally long period without paying a credit card bill 4. The 25 days after the end of the billing cycle is referred to as the grace period

Back

The 25 days after the end of the billing cycle is referred to as the grace period.

Front

Which of the following statements is CORRECT about secured loans? They are a good choice to use for student loans, If the borrower does not make payments, the lender can repossess the item, In the event of default, the borrower loses nothing except for the down payment, They usually have higher interest rates as compared with unsecured loans

Back

If the borrower does not make payments, the lender can repossess the item

Front

What is a down payment?

Back

A large sum of money you pay when taking out a mortgage so that the principal of your loan is smaller.

Front

Duc has a credit card with a $1000 credit limit. His outstanding balance is currently $800. What is the maximum amount he can now spend on this credit card?

Back

$200