PF - Unit 2 Test

Good debt is...

• Any debt that helps you increase your current or future wealth.

• Any debt that you can immediately pay off.

• Any debt that someone else owes you.

• Any debt that charges you interest.

Which is not an example of good debt?

• Mortgage

• Credit Card

• Student Loan

• Small Business Loan

(Choose 2) What is important to know about introductory (or promotional) rates when choosing a credit card?

• How long the introductory rate lasts

• What the APR is after the introductory rate expires

• How the introductory rate will affect your credit score

• What specific purchases the introductory rate applies to

It is easy to get a credit card, even if you don't currently have a credit score.

• True

• False

Which of these is not an effective way to establish a credit score?

• Pay bills on time

• Get a secured card

• Use a co-signer to get a loan or a credit card

• Become an authorized user on someone else's credit card

• Apply for as many credit cards as possible.

Why is an adjustable-rate mortage (ARM) riskier than a fixed-rate mortgage?

• ARM rates may increase over time

• ARMs are more expensive to originate than fixed-rate

• ARMs have higher fees than fixed-rate

A Mortgage is...

• A home loan

• A car loan

• A school loan

• The name of one of the new muppets on Sesame Street

One difference between a debit card and credit card is...

• Credit cards build your credit score; debit cards do not

• Credit cards draw directly from your checking account; debit cards act as short-term loans

• Debit cards have high interest rates; credit card rates are generally lower

• Debit cards do not have fees; credit cards do

(Select all that apply)

If you miss a credit card payment...

• You will have to pay a Penalty APR, higher than your normal APR

• You will be charged interest on the unpaid balance

• Your credit score will drop

• You will be charged a late payment fee

Increasing your credit score may...

• qualify you for a lower APR

• qualify to you pay a smaller minimum balance

• qualify you to pay a lower monthly tax rate