Examination Final Banking A

Each purchase is a loan that is repaid later.

• Debit Card

• Credit Card

• Both

How do banks make money off of the credit they issue?

• They charge a large, one-time fee at the start of the loan

• They take out a small fee each month from your checking account

• They charge a high interest rate on the loan

• This is a trick question - they DON'T make money!

How can you develop a positive credit history?

• Use only one type of credit account

• Pay cash for almost everything

• Open credit cards in your parents names

• Maintain a resonable amount of available credit

Can you legally avoid paying interest on your charge cards?

• Yes if you can pay back all of you charges before the end of the grace period.

• No it is illegal to avoid interest

• Only if he uses his credit cards for balance transfers only.

• Yes, if he makes only the minimum payment.

This is judged upon your character, capacity, and capital.

• Your first loan

• Credit worthiness

• Character

• Capacity

To build a good credit history, you should

• open as much credit as possible quickly
• use the maximum credit allowed on all your credit cards
• pay on time and as much of your balance as possible
• all of these

Credit is merely a tool to buy something now and pay for it later.

• True
• False

What is the relationship between a credit score and a credit report?

• There is no relationship

• The information in your credit report is used to calculate your credit report.

• Credit scores are less important than your credit report

According to the Equal credit Opportunity Act, which of the following factors CAN a lender legally use to charge you a higher interest rate.

• The percent of your income that comes from Social Security payments.

• Your age, if you are 21

• Your credit score

A lender checking Jake's credit score for an auto loan would likely notice that...

• His savings account has more than $4,000 in it

• He has paid off a car loan after making every payment for 5 years

• The credit scores of his his family including his wife.