EPF Unit 4: Credit

Which is NOT a typical type of credit?

• Mortgage

• Credit Card

• Overdraft

• Pre-paid Debit

A secured loan means there is ____ that can be seized if you default.

If collateral can be taken away, why even get a secured loan?

• They usually have higher interest rates

• They usually have lower interest rates

• They have longer grace periods

• They typically don't charge interest for the first year

Why does the amount of INTEREST that you owe on a loan decrease over time?

• The institution trusts you more, so they lower the interest

• With each payment, principal increases, so interest lowers

• Banks are legally required to lower interest rates over time.

• With each payment, principal decreases, so interest lowers

Which of these would NOT impact the interest rate on a loan?

• A person's history with that financial institution

• A person's credit score

• The amount of principal

• The person's level of education

A _______ Box tells you what APR, fees, etc., to expect on the credit card that you're applying for.

How do you avoid paying interest on your credit card?

• Always make the minimum payment on time

• Pay the interest first, then pay what you can of the leftover balance

• Always pay the full balance on time

• Pay the principal first, then pay what you can on the interest

A shorter auto loan term means _____ monthly payments and _____ total interest you'll pay.

• higher, less

• lower, more

• higher, more

• lower, less

How are credit cards and debit cards different?

• They're both linked to your checking account, but in different ways

• Credit cards have tap to pay, while debit cards do not

• With a credit card, you are borrowing from yourself

• A credit card can offer perks such as purchase protection

Which of these does NOT impact your credit score?

• Recent inquiries

• Credit utilization

• Payment history

• Marital status