Types of Credit

Front

Where do banks get the money to lend out to consumers? Options: From their clients' credit card accounts, From their clients' savings accounts, From the Federal government, From their own money vaults

Back

From their clients' savings accounts

Front

How do banks make money off of the credit they issue? Options: They charge a large, one-time fee at the start of the loan, They take out a small fee each month from your checking account, They charge a high interest rate on the loan, This is a trick question - they DON'T make money!

Back

They charge a high interest rate on the loan

Front

Which of the following is NOT a typical type of credit? Mortgage, Overdraft, Credit Card, Pre-Paid Debit Card

Back

Pre-Paid Debit Card

Front

Hannah, Kai, and Emma are discussing different types of loans. Can you guess which one is typically a SECURED loan? Options: Auto Loan, Student loan, Credit Card Balance, Overdraft

Back

Auto Loan

Front

If the collateral for your secured loan can be taken away, why get a secured loan at all?

Back

Because they usually have a lower interest rate.

Front

Henry and Sophia are discussing loans. What factor may NOT impact the interest rate on your loans?

Back

Your level of education

Front

True or False: Aria and Mason are discussing loans. Aria says a cosigner's credit history can be affected by the loan they are cosigned on. Is Aria correct?

Back

True

Front

Why does the amount of INTEREST you owe on a loan decrease over time?

Back

With each payment, principal decreases, so interest lowers.

Front

What is the purpose of a Schumer box when applying for a credit card?

Back

It summarizes information like interest rates, fees, and grace periods

Front

Nora and Arjun are discussing how to avoid paying interest on their credit cards. What advice should they follow?

Back

Always make the full payment on time