The definition of credit is:

Using someone else’s money, promising to repay in the future for a fee

Using your money to finance a purchase

Your creditor determines your creditworthiness based on:

Character, collateral, and capacity

Which of the following is a true statement about a credit card?

It allows a person to make purchases wherever the card is accepted

It must be accepted at any place of business that accepts cash

It most often is used to make large purchases such as a car

It cannot be used to make purchases under $10

The greatest advantage to using a credit card is that it provides what?

An easy way to establish a personal credit history

An easy way to avoid going into debt

A less expensive way to pay for college

Which of the following is NOT an advantage to having and using a credit card?

No interest is charged if a minimum payment is made on the account each month

Credit card statements help a person keep track of spending

A person who is making most purchases with credit cards can see if he is living within his budget

A cardholder does not have to carry a lot of cash when traveling

If a person has mounting credit card debt and cannot pay it down, the first thing they should do is what?

Contact each credit card company with which she has an account and try to negotiate new terms such as a lower interest rate

Pay one of the credit card bills each month

Declare personal bankruptcy and start over with a clean slate

Open a new credit card account, make all purchases using that account, and pay the minimum on the old accounts

Ellen, Barbara, and Paul all charged $1,000 on their credit cards last year. Who paid the most in finance charges?

Paul, who only pays the minimum amount each month

Ellen, who generally pays off her credit card in full but occasionally will pay the minimum when she is short of cash

Barbara, who always pays off her credit card bill in full after she receives it

They all paid about the same since the method of payment per month does not influence the finance charge

When you mail your credit card payment on the due date, your payment will be considered:

Late, and the company will assess you a late fee

On time as long as the postmark is on or before the due date

On time, because you paid it within the five-day grace period

Late, but the company will not assess a late fee

Even though a person has overdraft protection on her credit card, she should avoid using this feature, why?

The overdraft charge can be as high as $30 per transaction

Each time a person uses overdraft protection, her credit score will drop by 50 points

Using overdraft protection will cause the interest a person earns on other accounts to drop

Using overdraft protection will cause the person’s credit limit to be increased

When a person declares bankruptcy that fact will appear on the person’s credit report for how long?

Until the person repays all debts owed

Until the person is able to receive a new credit card

Matt’s wallet, with all his credit cards, was stolen. What does he need to do?

Notify each credit card company immediately

Notify the credit card companies after he gets his next account statement to get the 800 telephone numbers to report the card stolen

Check the next account statements for unauthorized charges and, if so, file a complaint with the credit card company

Nothing because retailers will not accept charges by someone who does not own the card

How can you avoid being a victim of identity theft?

Avoid giving your Social Security number on a phone call you did not initiate

Leave your wallet containing personal information where it can be stolen

Avoid using your credit card to charge purchases on the phone

Predatory lending practices generally include what?

Very high interest rates and fees

An interest rate based on the borrower’s credit history

Repayment terms that the consumer can afford

To improve an UNFAVORABLE credit rating, a person should do what?

Increase the number of payroll deductions

The Truth in Lending Act of 1968 requires creditors to do what?

State the monthly finance charge and the Annual Percentage Rate on the monthly statement

Adhere to federal fixed interest rates and state the monthly finance charge

Have a clean record of services to credit card holders

Limit the amount of money charged for credit

One advantage of declaring bankruptcy is what?

Most debts to creditors are eliminated

It appears on your credit report for seven years

Some of your possessions can be repossessed

It makes it difficult to get credit or get a mortgage

You used your CREDIT CARD to buy flowers at the florist. The dollar amount of the purchase was:

Added to your credit card bill and you pay for it at a later date

Deducted immediately from your checking account

Added to your credit card account as a late fee

Put on your credit card bill as a cash advance

A person buys a homeowner’s insurance policy with a $250 deductible, which means the person will:

Have to pay the first $250 which will be deducted from the claim settlement paid by the insurance company

Have to pay a quarterly premium of $250

Only receive payment from the insurance company of $250 for any single article damaged

Not be responsible for the first $250 of the claimed damages

Lucy has no insurance. The situation(s) she should consider insuring against first are what?

Losses resulting from an illness, accident, or disability

Death so her financial obligations are paid

Property losses and auto accidents

Generally, the higher the deductible on an insurance policy, the...

More frequently the premium has to be paid

Less frequently the premium has to be paid

Richard’s auto insurance policy expired on 5/15/2022. Richard was upset with his insurance agent and decided to change insurance companies. At 10:00 a.m. on 5/16/2022, as he drove to a different agent to buy a new policy, he had an accident. Who is liable for the damage to his car and his personal injuries?

The old agent is liable for damage to your car and the new agent for personal injuries

Ben’s truck is crashed by a hit-and-run driver. Scott is hit by an uninsured driver. How will they receive payments?

Uninsured or underinsured coverage

As an investment, a person decides to buy a small house that has three rental apartments. The profits from this investment may be lower than expected if:

One of the apartments is not rented

Tenant in the apartment decides to paint the hallways

Mortgage on the house is paid off

What is the main reason corporations issue stock?

To raise money for the corporation

To give consumers ownership of their company

Personal Finance Units 3-6 Review

Authored by Brianna Lemmons

Life Skills

9th - 12th Grade

Used 3+ times

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50 questions

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MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The major purpose of the Equal Credit Opportunity Act is to:

Make it easier for individuals to file for personal bankruptcy when they get into credit card debt

Prohibit creditors from using age, religion, or race to deny credit to a person

Make sure people are billed at least once a month for any outstanding debt

Provide a way for people to correct mistakes that they believe have been made on their credit reports

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The information collected by credit bureaus such as Experian is accessible to:

Only the person whose information has been collected

Anyone who puts in a written request to the credit bureau

Only banks and other financial institutions considering making a loan to the person

The person’s potential employers, landlords, and lenders

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Why might a person decide to take advantage of a non-installment credit offer?

Interest on this type of loan is much lower than interest on other types of loan

The loan can be paid back without interest charges any time within one year

The loan offered by Company A can be used to purchase items at Company B

There is no interest charged on the loan if it is paid back within a very short time

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

If a person has a credit card with a limit of $2,000 it means that:

He will not be charged interest on purchases until he uses the credit card to make purchases over the $2000 limit

He must pay the full credit card balance each month even if it is under $200

The credit card company is loaning him up to $2000 to make purchases. He can pay the entire card balance each month or pay part of the bill and pay interest on the rest.

He earns interest at the bank that issued the credit card on purchases made up to the $2000 limit. That interest is subtracted from the balance owed each month.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

When a person brings an item to a pawnshop to obtain cash, the transaction is considered:

A collateralized loan

A custodial payment

An unsecured loan

A sales agreement

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following is considered to be open-ended credit?

A mortgage loan

A car loan

A department store credit card

An installment loan

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is meant by an uncollateralized loan?

A loan not backed by a co-signer who agrees to cover the amount of the loan

A personal loan without assets to cover the loan amount

A home equity loan

A loan taken on a life insurance policy

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Personal Finance Units 3-6 Review

The major purpose of the Equal Credit Opportunity Act is to:

The information collected by credit bureaus such as Experian is accessible to:

Why might a person decide to take advantage of a non-installment credit offer?

If a person has a credit card with a limit of $2,000 it means that:

When a person brings an item to a pawnshop to obtain cash, the transaction is considered:

Which of the following is considered to be open-ended credit?

What is meant by an uncollateralized loan?

Which of the following lenders charge the highest interest rate?

The definition of credit is:

Your creditor determines your creditworthiness based on:

Access all questions and much more by creating a free account

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