Final exam

A credit card offer comes in the mail with the bold print “ 0% A.P.R. For New Accounts.” Which important piece of information should you find before thinking about signing up?

• Can I get two or more cards with this offer?

• Can I pay my credit card bill online?

• What is the A.P.R after the introductory period?

• What kind of designs can I get on my card?

Reading through a credit card disclosure (aka the Schumer box), you see the A.P.R. For a specific card is set at 9.99%. Which of the following statements is probably True?

• When given a range of A.P.R.s like this, you can assume most cardholders pay the lowest rate listed

• One of the primary factors determining your card’s A.P.R is your credit score

• With credit card A.P.R.s cardholders like higher A.P.R.s because they earn more

• The A.P.R on credit cards is usually fixed so they won’t be adjusted as long as you are a cardholder

Which of these credit card payback strategies would result in your paying the highest amount of interest?

• Paying 20% of your credit card balance every month on time

• Paying off your credit card bill in full every month on time

• Making the minimum payment (3% of your credit card balance) every month on time

• Making the minimum payment (3% of your credit card balance) every month with an occasional late payment

Based on the card statement above, which of the following statements is true?

• The cardholder is carrying a balance over from the last period

• The cardholder was charged interest on her balance for the last period because she made her payment on time

• If the cardholder makes her minimum payment of 35.00 by due date she will not be charged interest on her balances

• If the cardholder pays 523.20 by due date on bill she will pay no interest to the credit card company

Based on the card statement above how much credit does this cardholder have available to use?

• 0

• About 500

• About 1600

• 2100

Which of the following statements comparing credit and debit cards are true?

• Far more businesses accept credit cards than debit cards

• Credit cards pull money directly from your bank account while debit cards get their money from visa or MasterCard

• Credit card companies provide you with a monthly statement while debit cards do not

• With debit cards you’re spending your own money at point of sale while with credit cards you’re promising to pay back the money eventually

What statement about credit cards is true ?

• They can help you establish a credit history

• Since they are tied directly to your checking account they prevent you from spending money you do not have

• If you need to carry a balance, the interest rates are generally quite low( less then 5%)

• As long as you make the minimum payments it’s like getting a short term interest free loan

Which of the following statements is true?

• If you make the minimum payment on your card by due date, the credit card company will not charge you interest

• If you pay your balance in full after due date, the credit card company will not charge you interest

• If you pay your balance in full after due date, you be charged interest

• If you pay your balance in full by due date, you will be charged interest

Amy and chuck each buy a house in the same neighborhood for $250,000. Amy’s monthly mortgage payment is $400 more per month than Chuck’s. Which of the following statements would explain the difference?

• Amy chose a shorter term for her mortgage so her monthly payment are higher

• Chuck has a lower credit score so his interest payments are also lower

• Amy made a larger down payment so her monthly payments are also larger

• Chuck’s interest rate is higher so his monthly payments due is also lower

Ashton needs to get his car fixed in order to get to work and he doesn’t have an emergency fund or enough cash in his account to pay for the repair which cost $975. Which option below is likely the Worst financial decision to solve his problem?

• Take out a home equity loan

• Obtain a loan through a peer to peer lending website

• Put the repair on his credit card

• Take out a payday loan