Unit 4 Credit: Review

When discussing a loan, such as a college loan or auto loan, what does the word "principal" mean?

• The total amount you borrowed

• The total amount of money you owe

• The amount of interest you pay over the whole length of the loan

• The total number of months you will have to repay the loan

Maria's parents keep telling her she should worry about her credit score. She says, "Why bother?" Why should Maria care?

• If her credit score is positive, lenders will allow her to pay back only a portion of her loan instead of the whole balance

• A low credit score will make it easier for her to get loans or credit cards with better interest rates

• Maria will not be able to apply for colleges if she doesn't have a strong credit score

• A high credit score will make it easier for her to get loans or credit cards with better interest rates

Katherine has been using her credit card very responsibly in hopes of raising her credit score. Which score would indicate that Katherine now has a prime score?

• 350

• 550

• 750

• 950

Each of the following factors impacts your credit score EXCEPT...

• Bank account balance

• Mix of credit types

• Length of credit history

• Payment history

Which age group tends to have the most credit card debt?

• Senior Citizens

• Young Adults

• Middle Aged People

• All ages groups have about the same amount of credit card debit.

What is the best way to avoid going into large debt on your credit card?

• Pay your full balance every month

• Pay half your balance every month

• Pay the minimum monthly payment on time every month

• Avoid paying the bill every month so your bank account stays high

Which statement about credit card interest rates is TRUE?

• Most credit cards do not charge any interest rate

• A high interest rate means you'll pay LESS money total

• The more money you spend on purchases, the higher your interest rate will be

• A high interest rate means you'll pay MORE money total

Kervin really wants to buy a new bike because his old one is too small now. He's trying to decide if he should use his debit card or credit card. What's one reason he should be careful about using credit?

• Credit will charge him interest every month until he repays his full balance

• Credit will force him to buy a cheaper bike than he could with debit

• Credit will force him to pay taxes on his bike purchase

• Credit will take the money straight from his checking account, lowering his bank balance

Craig isn't sure if he should open up a credit card account or get a bank loan. What question is MOST useful in helping him decide which financial product he should get?

• Are you responsible with your money?

• Are you using the money to purchase an item that is a need or a want?

• Are you trying to make a bunch of small purchases over time or one large purchase?

• How much money do you have in your bank account?

What is the key difference between a credit card and a debit card?

• You can only use credit cards if you are over 25, but you can use debit cards as long as you are over 18

• Credit cards allow you to borrow money to pay for things, while debit cards take money straight from your own checking account

• Credit cards come from credit unions, while debit cards come from banks

• Wealthy people use credit cards, while people with lower incomes use debit cards