Credit Exam: Test Review

Front

What is the difference between secured and unsecured credit?

Back

Secured credit is backed by collateral.

Front

What is an overdraft?

Back

An extension of credit when there's not enough money in an account.

Front

What is the main difference between a loan and a credit card?

Back

Loans provide a lump sum of money while credit cards allow for ongoing borrowing.

Front

What is interest?

Back

The cost of borrowing money

Front

What does "revolving credit" mean?

Back

You can continue to add purchases to an outstanding balance.

Front

What is an installment credit?

Back

A loan where you pay a fixed amount each month

Front

Why is it important to understand interest rates?

Back

It can save you money over the life of a loan

Front

What should you consider before taking out a loan?

Back

The interest rate, the repayment terms, and whether you can afford the monthly payments.

Front

What is a co-signer on a loan?

Back

Someone who shares responsibility for repaying the loan.

Front

What is the best definition of credit?

Back

An arrangement to get goods and services now and pay for them later