Types of Credit

Front

Where do banks get the money to lend out to consumers?

Back

From their clients' savings accounts

Front

How does a bank make money off of the credit they issue for a car loan?

Back

They charge a high interest rate on the loan.

Front

Evelyn wants to apply for a financial product that is NOT a typical type of credit. Options: Mortgage, Overdraft, Credit Card, Pre-Paid Debit Card

Back

Pre-Paid Debit Card

Front

Maya wants to purchase a car and is considering taking a loan. Which of the following loan types is typically a SECURED loan that she can consider? Options: Auto Loan, Student loan, Credit Card Balance, Overdraft

Back

Auto Loan

Front

Why should Lily opt for a secured loan for her new car if the car can be taken away as collateral?

Back

Because they usually have a lower interest rate

Front

Which factor may NOT impact the interest rate on a loan? Options: Her relationship with the financial institution, Her credit score, The loan amount, Her level of education.

Back

Her 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 Samuel owes on the 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 new credit card?

Back

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

Front

What should Harper do to avoid paying interest on a credit card?

Back

Always make the full payment on time