Types of Credit Unit Review

Identify the true statement if "Your due date is at least 25 days after the end of the billing cycle. You will not pay interest on new purchases provided you have paid your previous balance in full by due date

• If you make the minimum payment on your card within the 25 day period, the credit card company will not charge you interest

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

• 25 days is an exceptionally long period without paying a credit card bill

• The 25 days after the end of the billing cycle is referred to as the grace period

A loan with a shorter term length will have _____ monthly payments, and you will pay _____in total interest. The shorter your term length, the ____ your monthly payments, and the _____ total interest you will pay.

• higher, less

• higher, more

• lower, less

• lower, more

Taylor is about to go car shopping, and has $5000 saved for a down payment & extra cash in her emergency fund. The model car she’s looking for to cost $35,000. Advice for the lowest monthly payment possible?

• Put in $0 for your down payment, and choose a loan with a short term length

• Put in $2500 for your down payment, and choose a loan with a short term length

• Put in $3500 for your down payment, and choose a loan with a long term length

• Put in $5000 for your down payment, and choose a loan with a long term length

Which of the following is a TRUE statement about credit and debit cards?

• A debit card requires an activation fee

• A debit card allows you to buy now and pay later

• A credit card charges interest, has a credit limit, and may have annual fees

• A credit card has no credit limit because money comes from your account

Which of the following is a TRUE statement?

• A credit report is the amount owed each month to keep your credit in good standing

• A credit card is a detailed list of your credit history

• Money is withdrawn from your account when you use a debit card, and a credit card is money loaned to you for a period of time

• Interest rate is a three-digit number that determines how financially responsible you are

The cost of borrowing money (dollar amount)

• interest

• balance

• interest rate

• credit limit

A three-digit number that determines how financially responsible you are

• Credit report

• Credit limit

• Credit score

• credit card

Why would credit card companies prefer that their cardholders make the minimum monthly payment every month rather than paying their total balance in full?

• This is required by federal law for tax purposes

• This allows the card holder to pay their bill quickly and close the card when they’re ready

• This enables the credit card company to make more money

• This helps cardholders develop financial independence

Which of the following statements is true about this Schumer Box (credit card statement)?

• Depending on your creditworthiness, the APR for a borrower will always either be 8.99%, 10.99% or 12.99%

• There is an introductory APR that is valid only for 1 year, but then the permanent APR is lower than that at 8.99%.

• You will never be charged an APR higher than 14.99%

• A 28.99% APR may be applied to your account for late payment

Duc has a credit card with a $1000 credit limit. His outstanding balance is currently $800. What is the maximum amount he can now spend on this credit card (excluding any interest charge)?

• $200

• $800

• $1000

• $1800