Financial Literacy

If you use any kind of credit, then all you will ever have to pay back is the money that you borrowed.

• True

• False

What is a difference between revolving credit and installment credit?

• Once you repay revolving credit, then you can use it again.

• Only revolving credit charges interest.

• Installment credit can be used over and over again without getting approval from the bank.

• Banks don't give out revolving credit.

Bob uses his credit card to buy groceries and pay off bills. However, if he pays off his entire balance during the ______________________, then he won’t owe any interest.

• grace period

• term

• principal

• default

Samantha has defaulted on her loan. Oh no! Which of the following would NOT be a consequence of her failing to repay her loan?

• She might have to pay back her loan. all at once

• She might have to deal with a collection agency in court.

• She could be fired from her job.

• Her credit score could be damaged.

Ideally, how much of your credit card limit should you actually borrow?

• 20%

• 30%

• 40%

• 50%

What is a benefit of paying off a loan early?

• You won't owe as much interest.

• The bank will give you cash back.

• Your credit score will increase

• You will get a discounted interest rate on your next loan.

Why is it important to know what your priorities are before applying for a credit card?

• It is possible to find a credit card that can give you rewards that you want.

• You can only have one credit card at a time.

• Once you receive a credit card, you are stuck with it for five to ten years.

• both the second and third choices

What are two benefits of paying off your credit card on time every month?

• The credit card company will give you special rewards.

• You won't be charged interest.

• Your credit score will go up.

• The credit card company will lower your interest rates.

What happens if you get rejected by many credit card companies in a short period of time?

• You can be arrested because it is illegal.

• They will not allow you to use their reward points.

• Your credit score will actually go down.

• A letter will be sent to your employer warning them that you are a risk.

From what we discussed in class, which of the following are good ways to keep your credit card spending reasonable?

• Create a budget so you know how much you can afford to charge.

• Only use your credit card on items that you would normally pay cash for.

• Use your credit card for routine bills. You have to pay them anyway and you'll get rewards for using your credit card.

• all of the above