Financial Literacy Test Review

Front

The purpose of the Truth in Lending Act is to guarantee that consumers are provided with information on what the total cost of their loan will be before signing a loan agreement.

Back

consumers are provided with information on what the total cost of their loan will be before signing a loan agreement.

Front

By law, promotional credit card interest rates

Back

must last for at least 6 months.

Front

Which is a true statement about credit? Options: The higher the rate of interest charged on a loan, the lower the number of years to repay the loan. It costs more to buy an item on a credit card that is paid for over six months than to buy the same item with cash. A person's credit history does not influence whether the person gets a loan. The higher the interest rate on a credit card, the lower the cost of the item purchased.

Back

It costs more to buy an item on a credit card that is paid for over six months than to buy the same item with cash.

Front

How can the services provided by Consumer Credit Counseling help Susan who is behind on her debt payments?

Back

They can work with those who loaned Susan money to get an affordable repayment schedule.

Front

Tax refund loans are known for being

Back

extremely expensive

Front

The Consumer Protection Act of 1968 is also known as the Truth in Lending Act. It requires that a credit card application or solicitation to apply for credit reveal the

Back

Annual Percentage Rate (APR) for use of credit.

Front

Which of the following lenders typically charge the highest interest rate? Banks, Credit Unions, Pawn shops, Investment firms.

Back

Pawn shops.

Front

A person contacted a mortgage company about refinancing her mortgage. The mortgage company gave her a home loan with unusually high costs and without regard to her ability to repay. This practice is called

Back

predatory lending.

Front

How can a person improve his credit score? Options: Applying for new credit cards. Making monthly payments below the minimum payment. Paying 15 days after the due date. Paying the amount owed on his credit bills in full each month.

Back

Paying the amount owed on his credit bills in full each month.

Front

A true statement about interest rates and fees under the CARD Act of 2009 is that

Back

interest rates on credit cards are not limited.

Answer explanation

there are no restrictions on the amount an interest rate can be increased or decreased by a credit card company.