Managing Credit Unit Review

When loans are amortized, monthly payments are ___________, while the interest portion of the monthly payment ___________ and the principal portion of the monthly payment _____________ over time.

• Constant, decreases, increases.

• Constant, increases, increases.

• Variable, decreases, increases.

• Variable, decreases, decreases.

Reading through a credit card disclosure (aka the Schumer Box), you see the APR for a specific card is set at 9.99%-23.99%. Which statement is true?

• Your APR will be within that range, depending on the strength of your credit history.

• Your APR will be within that range, depending on the strength of your credit history.

• With credit card APRs, cardholders like higher APRs because they earn more.

• The APR on credit cards is usually fiex so it won't be adjusted as long as you are the cardholder.

Each of the following financial products will help you build a credit history EXCEPT...

• Debit card

• Auto Loan

• Student Loan

• Credit Card

Who tracks all of your credit information?

• Companies named Equifax, Experian and TransUnion.

• Federal government.

• Consumer Financial Protection Board (CFPB).

• Lenders.

Which of these credit payback strategies would lead to the HIGHEST interest charges?

• Making the minimum payment (3% of your credit card balance) every month with an occasional late payment.

• Paying off your credit card bill in full every month.

• Paying 20% of your credit card balance every month on time.

• Making the minimum payment (3% of your credit card balance) every month on time.

What is an advantage of using a credit card?

• If you pay off your balances every month in full, it's like getting a short-term interest-free loan.

• It will not affect your credit score or credit history.

• Since it is tied directly to your checking account, it prevents you from spending money you do not have.

• If you need to carry a balance, the interest rates are generally quite law (less than 5%).

As a young adult, all of the following are good strategies for building credit, EXCEPT:

• Opening a checking account, and start using a debit card.

• Open a credit card, with you parent or guardian as a cosigner.

• Become an authorized user on a credit card used by your parent or guardian.

• Open and use a secured credit card.

All of the following would show up on a credit report EXCEPT...

• Salary of your current job.

• Payment history of your car loan.

• Credit card payment history.

• Student loan activity.

You find an error on your credit report: your credit card account indicates that you are 60 days late on your payment but you have bank records indicating that you have always made on-time payments. What should you do FIRST?

• Contact the credit card company to have them fix it.

• Contact the credit reporting agency.

• Wait a few weeks to see if it gets resolved.

• Call the police to report the possible identity theft.

Which of the following could have a NEGATIVE impact on your credit score?

• Paying your bills on-time.

• Paying down balances on your credit card accounts.

• Decreasing your utilization of credit.

• Applying for multiple credit cards in a short period of time (e.g., a week).