Quiz on Borrowing Money

What is one benefit of borrowing money from a friend or family member instead of from the bank?

• You don't have to repay your friends or family if you don't want to

• Friends and family will typically work with you to set up a repayment plan you can afford

Justin really wants to go to the dance but the ticket cost $75, and he doesn't have that much. What's a problem that could happen if he borrows money from his friend?

• As soon as she lends him the money, they won't be able to be friends any more

• It might cause problems in their friendship if Justin doesn't repay her on time or if he then asks for even more money

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What is the key difference between a credit card and a debit card?

• Credit cards allow you to borrow money to pay for things, while debit cards take money straight from your own checking account

• Credit cards come from credit unions, while debit cards come from banks

Which statement about credit card interest rates is TRUE?

• A high interest rate means you'll pay MORE money total

• A high interest rate means you'll pay LESS money total

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What is the best way to avoid going into large debt on your credit card?

• Pay the minimum monthly payment on time every month

• Pay your full balance every month

Katherine has been using her credit card very responsibly in hopes of raising her credit score. Which score would indicate that Katherine now has a good score?

• 350

• 750

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The three parts of a loan are:

• Principal, interest and term

• Debit, credit and payment

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The principal of a loan is:

• The money you borrow

• The charges for borrowing the money

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The interest on a loan is:

• The amount of money you borrow

• The money you pay for borrowing the money

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The term of a loan is:

• The interest rate you agree to pay

• The amount of time you have to pay back the loan