Credit 1 - What is Credit?

What is credit?

• Free money
• Borrowed money
• Standard of living
• A term that causes tears

Revolving credit is...

• a type of credit that can be used repeatedly up to a certain limit as long as the account is open and payments are made on time.

• a type of credit that can be used only once up to a certain limit and must be closed immediately after all payments are due

• a spinning door with money in it

• a round device that holds credit cards and spins, making it easy to shuffle through all your credit cards quickly

Which of the following could be a SECURED loan? (hint: choose 2 correct answers)

• Auto loan

• Student loan

• Mortgage

• Overdraft

If the collateral for your secured loan can be taken away, why get a secured loan at all?

• Because they usually have a higher interest rate

• Because they usually have a lower interest rate

• Banks give you an extra 90 days to make a missed payment

• Banks typically don't charge interest for the first 12 months

A loan which the borrower must repay the amount in a specified number of equal payments.

• Title loan

• Payday loan

• Closed‐end credit

• Refund anticipation loan

A line of credit established in advance so the borrower does not have to apply for credit each time new credit is desired.

• Rent‐to‐own loan

• Pawn loan

• Open‐end credit

• Refund anticipation loan

An example of closed‐end credit is a secure credit card.

• True

• False

Examples of when credit, if used responsibly, can be a positive. (Check All that Apply)

• Credit can provide long‐term benefits such as the opportunity to earn a higher income by attending college

• Credit may allow individuals to make large purchases, such as an automobile, that allows them to get to and from work.

• Having a credit card will allow an individual to make online purchases more securely and provide a source of open‐end credit in case of emergency.

• Credit will not allow individuals to make large purchases, such as an automobile, that allows them to get to and from work.

An unsecured loan is backed by collateral.

• True
• False

What must you have in order to get a home equity loan?

• Car
• House
• College Education
• A dog