Types of Credit

Front

How do banks make money off of the credit they issue?

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

Which of the following is typically a SECURED loan? 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

What may NOT impact the interest rate on your loans? Your relationship with the financial institution, Your credit score, The loan amount, Your level of education

Back

Your level of education

Front

True or False: A cosigner's credit history can be affected by the loan they are cosigned on.

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

How do you avoid paying interest on your credit card (or any other loan for that matter)?

Back

Always make the full payment on time.

Front

Which is TRUE when you make only the minimum payment each month? Options: You are charged interest on the remaining balance, Your credit line is restored to its maximum amount, Credit card companies have permission to sell your information, It is the fastest way to pay off your debt

Back

You are charged interest on the remaining balance