Types of Credit - Lessons 1-3

Why are "Pay Day" loans often considered the worst type of loan?

• High fees and high interest

• High fees but low interest rates

• Low fees and low interest rates

• Low fees and high interest rates

The amount borrowed is known as the __.

The amount of time you have to pay back a loan is known as the __.

What the bank charges for the money borrowed is called __.

Something pledged as security for repayment of a loan, to be forfeited in the event of a default.

• Credit

• Agreement

• Collateral

• Foreclosure

Which of the following statements about unsecured loans is not true?

• There is no collateral involved

• Interest rates are lower

• They are more risky to the lender

• They can be obtained at a bank

Higher credit scores may qualify one for higher interest rates on loans.

• True

• False

Person that may sign a loan agreement along with you and takes responsibility for the loan if you are unable to fulfill its terms.

What is the advantage of paying your credit card balance in full each month?

• You will incur only a small "paid in full" fee on your next credit card statement.

• You avoid paying any interest and fees.

• You pay only a small amount of interest.

• You have less of your credit limit available, therefore, less temptation to spend.

The amount you still owe after you have made your most recent payment is called an