Spring 2024 Credit Types Flashcardziz

Front

Which word represents the total cost of the item you’re purchasing on credit minus any down payment you make upfront?

Back

Principal

Front

Each of the following represents an installment loan EXCEPT…
Home mortgage, Auto loan, Student loan, Credit Card

Back

Credit Card

Front

Which of these actions would most likely decrease a person’s net worth for at least the next 6 months?
Options:
Use a loan to buy a brand new car,
Work 10 hours of overtime each week and put all extra earnings into a savings account,
Work 10 hours of overtime each week and use all extra earnings to pay down student loan debt,
Open 3 new credit cards but don’t spend any money on them

Back

Use a loan to buy a brand new car

Front

Felix opens a credit card with no annual fee, so he assumes that using the credit card regularly will be absolutely free for the next two years while he finishes grad school. Why is his assumption incorrect?

Back

Unless he pays the whole bill every month, he will pay interest according to his APR

Front

Which statement best describes a Schumer box? Options: The final calculation of how much you owe on your credit card bill each month, A standardized way of presenting the key terms of your credit card agreement, A legal document stating that you’re behind on your credit card payments, The outstanding balance on your credit card once you’ve made your recent payment

Back

A standardized way of presenting the key terms of your credit card agreement

Front

Which statement is true of both debit AND credit cards? Options: 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

Back

Both allow you to make purchases in a store or online

Front

If your credit card limit is $800 and your outstanding balance is $725, what is the largest amount you can charge on that card in the upcoming month?

Back

$75

Front

As you move through your payment schedule on an amortized loan, what will happen to the interest portion of each month’s payment?

Back

The interest portion will shrink

Front

How much should Roxanne expect to owe next month for her student loans? Options: Substantially less than $396, Slightly less than $396, Exactly $396, Slightly more than $396

Back

Exactly $396

Front

Antonio has saved up $4,000 for a down payment and is looking to buy a car that costs $29,000. What do you think the amount of his loan will be?

Back

$25,000