Unit 3 Assessment Review

Sophia, Emma, and Luna were discussing a credit card offer they saw online that stated "0% A.P.R. for New Accounts." They were curious about what this means. What must be true?

• It's 0% APR always

• It's 0% APR if Grace has good credit

• It's 0% APR until the introductory period is over

• It's 0% APR for students like Anika and James only

Answer explanation

The credit card offer is 0% APR until the introductory period is over. This means that after a certain period, the APR will no longer be 0%.

Tags

CCSS.RL.8.1

CCSS.RI.8.1

CCSS.RI.8.8

CCSS.RL.11-12.1

CCSS.RL.9-10.1

Charlotte is looking at a credit card disclosure (aka the Schumer Box) and notices that the A.P.R. for a specific card is set at 9.99% - 23.99%. Which of the following statements is probably TRUE?

• The A.P.R. on credit cards is usually fixed so they won't be adjusted as long as you are a cardholder

• When given a range of A.P.R.s like this, you can assume most cardholders pay the lowest rate listed

• With credit card A.P.R.s, cardholders like higher A.P.R.s because they earn more

• One of the primary factors determining your card's A.P.R. is your credit score

Answer explanation

The correct statement is that one of the primary factors determining your card's A.P.R. is your credit score.

Zoe, Abigail, and Lily are discussing their credit card payback strategies. Which of these strategies would result in one of them paying the HIGHEST amount of interest?

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

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

• Paying off their credit card bill in full every month

• Making the minimum payment (3% of their credit card balance) every month on time

Answer explanation

Making the minimum payment every month with an occasional late payment would result in the highest amount of interest.

Tags

CCSS.7.RP.A.3

Hannah recently received a BestBank Visa credit card that discloses an A.P.R. of "Prime Rate + 5.74% to Prime Rate + 22.74%." If the Prime Rate increases from 3.25% to 4.25%, what impact would this have on A.P.Rs for cardholders like Hannah?

• No change since credit card A.P.Rs don't change as long as your account is open

• Increase in A.P.R. by 22.74%

• Decrease in A.P.R. by 1%

• Increase in A.P.R by 1%

Answer explanation

The increase in Prime Rate from 3.25% to 4.25% will result in a 1% increase in A.P.R. for cardholders like Hannah.

5. Arjun, Luna, and Benjamin are discussing ways to build their credit history. They mention various financial products, but one of them will NOT help them build credit history. Which one is it?

• 1. Credit card

• 1. Home mortgage

• 1. Secured credit card

• 1. Debit card

Answer explanation

A debit card does not help build credit history because it is linked to a checking account and does not involve borrowing money.

Mason is discussing the differences between credit and debit cards with Olivia and Daniel. Which of the following statements comparing credit and debit cards is TRUE?

• 1. Credit cards pull money directly from your bank account, while debit cards get their money from Visa or Mastercard

• 1. With debit cards, you're spending your own money at point of sale, while with credit cards, you're promising to pay back the money eventually

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

• 1. Far more businesses accept credit cards than debit cards

Answer explanation

Debit cards use your own money at the point of sale, while credit cards require you to pay back the money eventually.

9. Kai, Maya, and Ethan are discussing credit cards. What statement about credit cards is TRUE?

• 1. As long as you make the minimum payments it's like getting a short-term interest free loan

• 1. If you need to carry a balance, the interest rates are generally quite low (less than 5%)

• 1. They can help you establish a credit history

• 1. Since they are tied directly to your checking account, they prevent you from spending money you do not have

Answer explanation

Credit cards can help establish a credit history.

Zoe, Charlotte, and Anika are discussing credit cards for young people looking to establish their credit history. They come across a financial product that requires cardholders to make a security deposit equal to the credit limit on their account. What type of credit card are they discussing?

• Secured credit card

• Overdraft credit card

• Standard credit card

• Rewards credit card

Answer explanation

Zoe, Charlotte, and Anika are discussing a secured credit card. This type of credit card requires a security deposit equal to the credit limit on the account.

11. Evelyn recently got a credit card. Which of the following statements is TRUE regarding her credit card payments?

• 1. If Evelyn pays her balance in full after the due date, she will be charged interest.

• 1. If Evelyn pays her balance in full by the due date, she will be charged interest.

• 1. If Evelyn pays her balance in full after the due date, the credit card company will not charge her interest.

• 1. If Evelyn makes the minimum payment on her card by the due date, the credit card company will not charge her interest.

Answer explanation

If Evelyn pays her balance in full by the due date, she will be charged interest.

Tags

CCSS.7.RP.A.3

12. Evelyn sees a commercial that OrangeCo is offering a credit card with a 5% cashback program for all cardholders. She discusses it with Priya and Mia. Which question might help them evaluate how good this offer is?

• 1. Can I get a debit card along with a new credit card?

• 1. Does the cashback program apply to all purchases or only specific types of purchases like gas and groceries?

• 1. Do I still get the cash back even when I return my purchases to the store?

• 1. Who does OrangeCo use as their spokesperson in the commercial?

Answer explanation

To evaluate the offer, ask if the cashback program applies to all purchases or only specific types like gas and groceries.

Tags

CCSS.RI.1.1

CCSS.RI.2.1

CCSS.RI.3.1

CCSS.RL.2.1

CCSS.RL.3.1