How do banks make money off of the credit they issue?

They charge a high interest rate on the loan

They charge a large, one-time fee at the start of the loan

They take out a small fee each month from your checking account

This is a trick question - they DON'T make money!

If the collateral for your secured loan can be taken away, why get a secured loan at all?

Because they usually have a lower interest rate

Because they usually have a higher interest rate

Banks give you an extra 90 days to make a missed payment

Banks typically don't charge interest for the first 12 months

What may NOT impact the interest rate on your loans?

Your relationship with the financial institution

How do you avoid paying interest on your credit card (or any other loan for that matter)?

Always make the full payment on time

Always make the minimum payment over time

Pay interest 1st, then pay what you can on leftover balance

Pay the principal 1st, then pay what you can on interest

Which is TRUE when you make only the minimum payment each month?

You are charged interest on the remaining balance

Your credit line is restored to its maximum amount

Credit card companies have permission to sell your information

It is the fastest way to pay off your debt

Which of the following is TRUE about a credit report?

You can get a copy of your credit report for free

It is a complete history of one type of credit you have

Credit reports are maintained by the 5 main credit bureaus

You can get a credit report only when you're 21 years old

Which of the following does NOT contribute to your credit score?

Which banks issued your credit cards

Which of the following is TRUE about finding errors on your credit report?

You may have to file a dispute with each credit bureau

You should wait until the end of the month before reporting

Finding errors is common & is not a big deal

Overlooked errors may result in you paying a fine

How are a credit score and credit report related?

A credit score is determined by the factors in your report

A credit report is determined by the factors in your score

Credit reports are less important than your credit score

All of the following may access your credit report EXCEPT...

Insurance companies Insurance companies

A benefit of comparison shopping for a credit card would be to:

Know the terms and conditions of various cards

What is a balance transfer?

The act of transferring a credit card debt from one credit account to another

The act of transferring money from one account to another to pay a credit card balance

The act of withdrawing cash from the ATM using a credit card

The act of paying a credit card balance with a check

A consumer will develop a positive credit history if they:

Maintain reasonable amounts of unused credit

Pay phone and utility bills on time

Avoid opening too many new accounts

Which of the following is a key feature of the debt snowball method of paying off debt?

Ranking your debts from smallest to largest debt so you can pay off the smallest one first.

Ranking your debts from largest to smallest debt so you can pay off the largest one first.

Making the minimum payment on all debts and then putting the rest of your money into investments.

Making the minimum payment on all debts and then distributing the remainder between the debts.

Which of the following statements is true about Debt?

Debt is the amount of money you have borrowed from a person or a business.

Debt is the amount of money you have in your checking account.

Debt is the ability to borrow money.

Debt is the amount of money you have in a savings account.

What is the debt-to-income ratio?

Total of monthly debt payments ÷ Monthly gross income = debt-to-income ratio

Income - assets = debt-to-income ratio

Assets + income = debt-to-income ratio

Monthly gross income ÷ total of monthly debt payments = debt-to-income ratio

Who is the number one target of credit card companies?

People without a high school diploma

What is the danger in co-signing a loan?

If the person doesn’t pay, you become responsible for the debt.

The bank wouldn’t give that person a loan without your help.

It automatically lowers both of your credit scores

It could cause them to have a higher interest rate.

Which is an act of identity theft?

Wrongfully acquiring and using someone’s personal identification

Receiving permission to use a parents’ credit card for school clothes

Taking the identity of another individual as inspiration for a costume

Having the same name as another person

Identity theft occurs by

Someone stealing non-shredded paperwork

Your identify was stolen! What is the first thing you should do?

file an identity theft report with the police

Debt can be avoided through which of the following?

Investing in high risk opportunities

You should treat bankruptcy as a

First option to avoid credit issues.

A smart way to avoid paying credit card bills.

What is a credit card?

A small plastic card issued by a bank and attached to a line of credit

A large plastic card designed to ruin consumer's finances

A small plastic card issued by the government attached to a line of credit

Revolving credit is...

a type of credit that can be used repeatedly up to a certain limit as long as the account is open and payments are made on time.

a type of credit that can be used only once up to a certain limit and must be closed immediately after all payments are due

a spinning door with money in it

a round device that holds credit cards and spins, making it easy to shuffle through all your credit cards quickly

Credit, Debt, and Identity Theft Review

Quiz

•

Life Skills

•

9th - 12th Grade

•

Practice Problem

•

Medium

•

CCSS

RI.11-12.5, RL.11-12.6, 7.RP.A.3

+4

Standards-aligned

Sara Simpson

Used 5+ times

FREE Resource

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Bankruptcy

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Credit, Debt, and Identity Theft Review

50 questions

Credit is the ability to _ and ____ later.

Which of the following is not a typical type of credit

People use credit cards because it is easier than___________________.

Having a credit card is good for building and establishing your ____________.

Payday lenders allow you to borrow money against your next pay check. This is a bad idea because_____________

To ________ on a loan is to fail to repay the loan.

____________ is when a bank or mortgage lender seizes a house and sells it because the homeowner cannot pay the mortgage loan.

_____________ is when a bank or other lender takes property purchased by a borrower who cannot repay his or her loan for that property.

___________ is a legal proceeding involving a person or business that is unable to repay outstanding debts.

How do banks make money off of the credit they issue?

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Credit, Debt, and Identity Theft Review

50 questions

Credit is the ability to _________ and ____________ later.

Which of the following is not a typical type of credit

People use credit cards because it is easier than___________________.

Having a credit card is good for building and establishing your ____________.

Payday lenders allow you to borrow money against your next pay check. This is a bad idea because_____________

To ________ on a loan is to fail to repay the loan.

____________ is when a bank or mortgage lender seizes a house and sells it because the homeowner cannot pay the mortgage loan.

_____________ is when a bank or other lender takes property purchased by a borrower who cannot repay his or her loan for that property.

___________ is a legal proceeding involving a person or business that is unable to repay outstanding debts.

How do banks make money off of the credit they issue?

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Credit is the ability to _ and ____ later.