FM Semester Exam Review

Shira is trying to decide between getting a debit card, a prepaid debit card, and a credit card. Which statement is true?

• All 3 cards are completely different

• Debit cards and prepaid debit cards are the same

• Debit cards and credit cards are the same

• All 3 cards are completely the same

The average APR for a payday loan is closest to … 

• 4%

• 14%

• 40%

• 400%

Which of the following is most likely to represent a fixed rate, secured debt?

• A student loan

• A credit card

• A prepaid debit card

• An auto loan

If you are having trouble making auto loan payments and are really following a tight budget, which recommendation below represents the WORST advice?

• Find an extra source of income by taking a second job, working longer hours, or borrowing from family if they can afford to help

• Stop making payments on some of your debts so you can focus on getting the most expensive or largest debts under control

• Continue making all payments and call your lenders and see if you can negotiate lower monthly payments, lower interest rates, or longer terms

• Explore whether a free or non-profit credit counseling service could help

When loans are amortized, monthly payments are _______ , while the amount of your monthly payment applied to interest ________  and the amount of your monthly payment applied to the principal _______  over time.

• Constant, Increases, Increases

• Constant, Decreases, Increases

• Variable, Decreases, Increases

• Variable, Decreases, Decreases

What are the two most important factors in calculating your credit score?

• Payment history and types of accounts

• Amounts owed and length of credit history

• Payment history and total debt

• Length of credit history and new credit inquiries

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

Your friend confides in you that he has a low credit score. What is the single best way for him to improve his score?

• Cancel his credit cards

• Make on-time payments

• Get a car loan

• Check his credit score

Melvin is 19 years old and wants to begin establishing a credit history. Which action should he take to meet that goal?

• Always say "credit" when asked "credit or debit?" at a store

• Ask his parents to cosign a credit card or add him as an authorized user on their credit card

• Any time he borrows money from a friend or family member, be sure to pay it back promptly

• Take out some private student loans, even though he doesn't need them because he has grants and scholarships

Who tracks all of your credit information?

• Credit reporting agencies (Equifax, Experian and TransUnion)

• Federal government

• Consumer Financial Protection Board (CFPB)

• Lenders