Credit 2024

1. Which word represents the total cost of the item you are purchasing on credit minus any down payment you make upfront?

• Principal
• Term
• Interest rate
• APR

2. Which statement is true of both debit AND credit cards?

• Both can trap you in an endless cycle of debt if you’re not careful
• Both allow you to make purchases in a store or online
• Both typically have interest rates between 10-30%
• Both require you to pay a minimum monthly payment when your bill arrives

3. If you buy a $1000 bicycle, which credit card payoff strategy will result in your paying the LEAST total amount?

• Pay the minimum monthly payment
• Pay $100 per month for 10 months
• Pay $250 per month until it’s paid off
• Don’t make any payments until you have the full $1000 saved, regardless of how long that takes

4.Paying more than the minimum payment (or paying your balance in full) is beneficial because…

• It lowers your interest rate
• The lender can’t penalize you for future late payments
• You get a discount on future purchases made with credit
• You pay less interest overall

5.All of the following appear on your credit report EXCEPT…

• Your checking account balance
• Student loan payment history
• Balance owed on a car loan
• Number of active credit accounts

6.Which of the following categories make up most of your credit score?

• Number of recent hard inquiries
• Average length of your credit history
• Number of active credit accounts
• Payment history and credit utilization

7. All of the following purchases can be impacted by your credit report EXCEPT…

• Getting your own cell phone plan
• Leasing an apartment
• Applying for a mortgage to buy a house
• Buying a TV with cash

8. Which of the following is most likely to represent a fixed rate, secured debt?

• A student loan
• A credit card
• A prepaid debit card
• An auto loan

9. Heather realized she has taken out too much debt and it has started to negatively impact her ability to budget. She has decided to pay off this debt in full as soon as possible. All of the following would be beneficial strategies EXCEPT…

• Reducing spending by canceling some of her streaming subscriptions
• Taking extra shifts at work to increase her income
• Making more than the minimum required payment on her debt
• Applying for another credit card to use in case she runs out of cash paying off her debt

10. What is the general timeline to establish your first credit score?

• As soon as you apply for a credit card or loan
• Six months after you first actively use your credit
• Once you pay all of your credit balances in full
• Once you turn 18