Chap 4 - Debt - Review 3

Which of the following things cannot be done with a debit card but can be done with a credit card?

• Go into debt

• Rent a car

• Purchase something online

• Purchase an airline ticket

When a person owes more on an item (like a car or house) than it is worth, the person is said to be ___ on the loan.

• Secured

• Upside down

Which of the following is not a good idea for getting out of debt?

• Quit borrowing money

• Get a part-time job or work overtime

• Sell something

• Borrow money from your parents to pay for the debt

A credit score is intended to measure:

• your financial success

• the risk of your not repaying debt

• your income level

• the amount of money you have in the bank

An interest rate charge to a customer during the early stages of a loan; the rate often goes up after a specified period of time.

• Introductory rate

• New customer fee

Cost of borrowing money on an annual basis; takes into account the interest rate and other related fees on a loan.

• Annual percentage rate (APR)

• Annual fee

Which of the following is not a factor in determining a FICO score?

• getting a personal loan from a bank

• using credit cards

• paying cash for all purchases

• taking out a mortgage on a house

You must establish credit in order to buy a house.

• True

• False

Which of the following is the most cost-effective option for purchasing a home?

• get a 15-year mortgage with a 5% down payment

• get a 30-year mortgage so that you can get the lowest possible payments

• The most ideal way to buy a house is with 100% down; if that is not an option you should get no more than a 15-year, fixed rate mortgage with a down payment of at least 10%.

• Get a 30-year mortgage with a 20% down payment.

Which of the following is a sign that your identity may have been stolen?

• A call from a collection agency about a debt you didn't incur

• Bank and billing statements don't arrive on time

• Your credit report shows accounts you didn't open

• All of the above