Credit & Debt Review

Which of the following will help you build a credit history? Choose all that apply.

• Credit card

• Secured credit card

• Auto loan

• Debit card

Which of the following statements comparing credit and debit cards is TRUE?

• Businesses accept credit cards more often than debit cards.

• Credit card companies provide you with a monthly statement while debit cards do not.

• When you use a credit card, the money comes directly from your bank account.

• With debit cards, you are spending your own money, with credit cards you are promising to pay the money back.

If you do not choose a repayment plan for a Federal student loan, it will default to the Standard Plan which has a term of __________________.

• 10 years

• 5 years

• 10%

• 5%

When borrowing money, the longer your term length, the _______________ your monthly payments and the _______________ the total interest you will pay.

• lower, higher

• lower, lower

• higher, lower

• higher, higher

Which of these credit payback strategies would lead to the LOWEST interest charges?

• Paying 20% of of your credit card balance every month on time

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

• Paying off your credit card bill in full every month

• Making the minimum payment (3% of your balance) every month on time

Johnny is considering purchasing a $20,000 truck. Which of the following finance options will likely lead to the LOWEST monthly payment?

• $5000 down payment, 5% interest for 84 months

• No down payment, 5% interest for 60 months

• $5000 down payment 5% interest for 60 months

• No down payment, 0% interest for 36 months

You have been approved for a credit card and receive the following disclosure with your new card: "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." Which of the following statements is true?

• If you pay your previous balance in full after the due date, the credit card company will not charge you interest.

• If you make your credit card payment before the due date, you will be charged interest regardless of the amount of your payment.

• If you make the minimum payment on your card with the 25 day period, the credit card company will not charge you interest.

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

Cindy and Bill each buy a house in the same neighborhood for $200,000. Cindy's mortgage payment is $400 less than Bill's. What could explain the difference?

• Cindy chose a longer term for her mortgage, so her monthly payments are lower.

• Cindy made a larger down payment, so her monthly payment is also larger.

• Bill made a larger down payment, so his monthly payment is larger.

• Cindy has a lower credit score, so her interest payments are also lower.

Select the statement below that accurately describes a characteristic of a credit card.

• You must have money deposited into a checking account to use the credit card for purchases.

• Making full payments on time every month is the only way to avoid interest charges.

• You owe the same payment every month.

• They do not charge interest.

Which factors account for 65% of your credit score?

• Payment history and amounts owed

• Amounts owed and length of credit history

• Length of credit history and types of credit

• Payment history and length of credit history