Introduction to Credit

When using credit, the purchase amount becomes what once the payment agreement is made?

• Loan

• Debt

• Mortgage

• IOU

Credit allows for purchases without cash.

• True

• False

Credit agreements are not legally binding.

• True

• False

Credit is free.

• True

• False

Lenders do not check a person’s likelihood to repay before accepting a credit agreement.

• True

• False

Which of the following is NOT a type of credit?

• Loans

• Debit cards

• Revolving credit accounts

• Credit cards

Which of the following is often used for operating expenses?

• Lump loans

• Short-term loans

• Intermediate-term loans

• Large loans

Which of the following is an example of an intermediate-term loan?

• Automobiles

• Houses

• Credit Cards

• IOUs

A grace period is a free period which allows you to avoid finance charges by paying your balance in full before the due date.

• True

• False

An annual fee is an amount paid to you by the credit card company for using their service each year.

• True

• False