Unit 8 Study Guide

What is one disadvantage of using credit?

• It can be tempting to overspend.

• It is not convenient.

• It never offers special advantages.

• It is extremely difficult to find places that use credit.

Kristina is tempted to get a credit card now that she is in college. What is one fiscally responsible reason for Kristina to get a credit card?

• She will be able to buy whatever she wants.

• She won’t have to carry cash everywhere.

• Price will no longer need to be considered when she makes purchases.

• She will receive a free tee-shirt when she opens the account.

Nineteen-year-old Devon plans to get a credit card, but his parents say it is not a good idea. What fiscally responsible argument can Devon make to get his parents to explain why he should, in fact, get the credit card?

• He needs to be able to buy whatever he wants, whenever he wants it.

• He will get a card that charges no interest for the first six months so there is no risk.

• He needs a credit card if he wants to make any online purchases.

• He will only get a card that has a strong rewards program.

Harriet bought a lot of new clothes and paid for them with a credit card. She doesn’t have the money to pay off the card yet, but she will after she receives her next paycheck in five days. Luckily, she has about 20-25 days between her purchase and the time her credit card payment is due. What is the name of this period of time?

• a floating period

• a credit period

• a settling period

• a grace period

Tejas used his credit card to buy a jacket that cost $100. At the end of the month, he still didn’t have the $100 to pay for the jacket, so he paid nothing. What is MOST likely to happen in this scenario?

• A percentage of interest will be added to his $100.

• He will still owe exactly $100 on the next month’s bill.

• His $100 owed will become $200 owed on the next bill.

• His credit score will be unaffected.

What is a typical grace period for a credit card?

• 2 to 5 days

• 10 to 14 days

• 20 to 25 days

• 35 to 40 days

 

Trevor is trying to apply for consumer credit. What purchase is he MOST likely planning to make?

• a home

• a car

• stocks and bonds

• investment properties

What is the term for an arrangement between you and another party where you receive goods or services now and arrange to pay later?

• debit

• the rate of return

• investment

• credit

Dante is making his first purchase using a credit. He asks his friend Tay to educate him about using credit. What is the BEST advice Tay can give him?

• Be prepared to pay back the original amount and additional interest.

• Make all of your purchases using credit once you have it.

• You have as much time as you need to pay back your debts.

• Credit purchases always cost less than paying with cash.

 

Eduardo obtained credit to buy a car. He has failed to make any payments over the past few months. What is MOST likely to happen?

• He will make one giant payment to cover the past months without penalty.

• The lender will take possession of his car.

• The amount of debt owed will decrease the longer he waits to make a payment.

• Nothing—people are allowed to miss several payments without consequences.