Credit Types + Credit Management 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?

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?

Back

Both allow you to make purchases in a store or online.

Front

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

Back

Pay $250 per month until it’s paid off

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

Each of the following people has $5000 in debt. Which debt is most worthwhile? Phil, who spent mostly on GoFundMe campaigns for people he saw on social media, Tyree, who took out a loan for an old used car so he can drive to and from campus, JJ, who used a credit card to pay his daily expenses while he was out of a job, It’s impossible to tell, because we don’t know how much they each valued the spending, how much it impacted their lives, or how easily they can repay the debt.

Back

It’s impossible to tell, because we don’t know how much they each valued the spending, how much it impacted their lives, or how easily they can repay the debt.

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