Module 9 (Credit) Test Review

Which is an example of a secured loan?

• Mortgage

• Credit Card

• Personal loan of $2,500

Which of the following is a characteristic of installment credit?

• Varying interest rates depending on the repayment history.

• A continuous loan the borrower has to repay with a revolving balance.

• Make equal payments on a regular basis until the loan is repaid.

Which of the following is NOT considered an advantage of using a credit card?

• Credit cards eliminate the need for savings.

• Credit cards offer protection against fraud.

• Credit cards are often required to hold hotel and car reservations

How can a credit card holder avoid paying interest on the balance owed?

• Borrow cash against your credit card, called a cash advance.

• Pay the minimum payment required every month.

• Pay the balance in full every month before the due date.

Why are payday loans often difficult for consumers to pay back?

• Consumers have to make payments in installments.

• Payday loans are usually used by people with money problems.

• Payday loans have to be repaid in cash.

You want to buy a new tablet computer from an electronic store. Which would be the least expensive way to finance this purchase?

• Loan from your bank.

• Credit card from an offer received in the mail.

• Loan from a Payday Store

How are home loans and auto loans alike?

• You risk the loss of these assets if you are unable to pay.

• They require higher interest payments than credit cards.

• The annual percentage rate is charged as compound interest on your balance.

What do you call property you own that is worth more than your debts?

• Collateral

• Capital

• Capacity

• Condition

Which of the following laws requires creditors to fully disclose all fees and finance charges associated with credit?

• Fair Credit Reporting Act

• Fair Credit Billing Act

• Consumer Credit Protection Act

What information do creditors submit to credit bureaus?

• Money owed and payment history

• Character, capacity, and capital

• Checking and savings account balances