New PF (3)

Choose the option that best completes this sentence: When using a credit card…

• you will pay interest whether or not you pay your bill every month.

• you are transferring money from your savings account directly to another party.

• you are getting a short-term loan to allow you to purchase an item now which you can pay for later.

• you always have the option to wait to make a payment because late payments don’t affect your credit.

Which statement best describes the basic relationship between savers and borrowers at a traditional bank?

• The bank pays interest to the savers and gives loans at the SAME interest rates to the borrowers, so it all balances out.

• The bank pays interest to the savers and gives loans at a HIGHER interest rate, so that the bank makes money

• The bank pays interest to the savers and gives loans at a LOWER interest rate, so the bank makes money

• The bank makes no money from savers or borrowers

Which of the following is an example of credit?

• Getting a certificate of deposit (CD) from the bank

• Paying for college with money your parents helped save

• Splitting the cost of a meal with a friend

• Taking out a mortgage to buy a home

Which of the following is usually a secured debt?

• Student loan

• Auto loan

• Credit card

• Payday Loan

Which of the following statements is TRUE?

• You can typically reduce your loan costs by finding the highest interest rate

• You can typically reduce your loan costs by finding the longest term

• You can typically reduce your loan costs by making a large down payment

• You can typically reduce your loan costs by making a small down payment

Which of the following statements is TRUE?

• To avoid appearing biased, a bank or other lender must offer the same interest rate to all of its borrowers.

• To avoid appearing biased, a bank or other lender must offer the same loans to any borrower.

• Banks can pick both the interest rate and the borrowers they lend money to.

• Banks can pick the borrowers they lend money to, but must set the same interest rate for everyone.

Pretend you take out a 30-year fixed rate mortgage for $250,000. Which of the following statements would be true?

• The payment amount you owe every month will be the same

• The amount of interest you pay every month will be the same

• The amount of principal you pay every month will be the same

• You will not be allowed to pay more than the amount due every month

Mustapha needs a $3000 loan to buy a used car so he can take a job not accessible by public transportation. Which loan structure would result in the HIGHEST TOTAL COST?

• Make a $500 down payment, then pay $500 per month from his paychecks until the debt is paid off.

• Make a $1500 down payment, then pay $500 per month from his paychecks until the debt is paid off.

• Make a $500 down payment, then pay the $150 minimum monthly payments required until the debt is paid off.

• Don't make a down payment, but pay the $150 minimum monthly payments required until the debt is paid off.

Which row in the following table describes the most desirable interest rates for consumers?

• A

• B

• C

• D

Which statement has the underlined words in the correct place?

• A debit card pulls money from your checking account. A credit card has a minimum monthly payment. A prepaid card is loaded with a set amount of money.

• A debit card pulls money from your checking account. A prepaid card has a minimum monthly payment. A credit card is loaded with a set amount of money.

• A credit card pulls money from your checking account. A prepaid card has a minimum monthly payment. A debit card is loaded with a set amount of money.

• A credit card pulls money from your checking account. A debit card has a minimum monthly payment. A prepaid card is loaded with a set amount of money.