Ch.4 Debt

Which of the following is not a credit myth?

• The lottery and other forms of gambling will make you rich.

• You have ʺarrivedʺ financially once you get approved for a credit card.

• Debt is a tool and should be used to create prosperity.

• Borrowing money can have serious consequences and prevent you from building wealth.

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

Which of the following is not a recommended step in the Drive Free method of purchasing a car?

• Plan your purchase in advance using the sinking fund method of saving.

• Place your savings in a mutual fund so that your money can make more money.

• Start with an inexpensive car and gradually move up in car value as your savings increases.

• Explore new car dealerships for the best interest rate.

You can and should obtain a free copy of your credit report annually in order to check for any suspicious activity.

• True

• False

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

Teens are a huge target of credit card companies today.

• True

• False

Paying off a credit card in the amount of $910 by paying the minimum payment could take as long as __________ years.

• 1

• 5

• 12

• 20

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

You must establish credit in order to buy a house.

• True

• False

If you are a victim of identity theft, you are only responsible for paying back half of the debt.

• True

• False