Ch 3 Debt

Match the definitions

• Cost of borrowing money on an annual basis

• loan term

• An interest rate charged during the early stages of a loan that often goes up after time

• annual percentage rate (APR)

• Time frame that a loan agreement is in force

• credit

• Type of card issued by a bank that allows users to finance a purchase

• introductory rate

• An amount of money placed at a person's disposal by a bank; money owed

• credit card

Reorder the debt snowball

• the smallest debt is attacked with the largest possible payments

• minimum payments are made to all debts except for the smallest

• includes a list of all debt from smallest to largest

Debt is so ingrained into our culture that most Americans can't even envision a car without a payment, a house without a mortgage, a student without a student loan, and credit without a card

• true

• false

In today's world you need debt to make it

• true

• false

Answer explanation

You'll be much better without it

​ (a)   of Americans are living paycheck to paycheck

• 70%
• 60%
• 50%
• 80%
• 90%

Debt has been ​ (a)   to us with such intensity for so long that to imagine living without it requires a complete ​ (b)   shift

• marketed
• paradigm
• taught
• a burden
• adjacent

In, ​ (a)   , the first credit card was created by Frank McNamara's company ​ (b)   and is still in business today

• 1950
• Diners Club
• 1960
• 1970
• JP Morgan
• Bank of America

Debt is not a privilege, it is a product

• true

• false

If I loan money to a friend or relative, I will be helping them

• true

• false

Answer explanation

The relationship will be strained or destroyed

By co-signing a loan, I am helping out a friend or relative

• true

• false

Answer explanation

The bank requires a cosigner because the person isn't likely to repay. Be ready to pay the loan and have your credit damaged.