Understanding Credit

Which is an example of good debt?

• Financing your education

• Financing trendy clothes

• Financing a vacation

• Financing meals

Which of the following should not be considered a “surprise” when it comes to planning your budget?

• Emergency car repairs

• Gas price

• Medical bills

• Student loans

Which of these scenarios is an example of a debtor?

• • 
    a child borrowing money from her parents

• using a credit card to pay for something at the mall

• borrowing money from a friend

• all of the above

What is a disadvantage to online banking?

• It makes you use your computer

• It's convenient

• Security breaches and fraud
• It prevents you from having to go to the ATM to deposit money

Which FICO score would get you the lowest interest on a mortgage?

• 600
• 760
• 680
• 720

When using your credit card, what is the best way to keep your standard of living?

• paying the minimum due on each credit card you own

• paying off your entire credit card bill each month

• paying your credit card late

• paying only items you feel like paying for that you charged

You purchase a new TV at a local electronics store and decide to pay using your credit card. You plan to pay off this debt within a year.

What is the best credit card choice from these offers?

• 18% interest

• 27% interest

• 0% interest for 1 year and 12% interest thereafter

• 3% interest

How can revolving debt change from short term debt to long term debt?

• paying your bills in full each month

• financing college

• paying your utility bill with your checking account

• paying the minimum due on your credit card each month, carrying a large balance

What is one way to take years off of your home payment, car payment, or any other long term debt?

• Take out a second loan to cover the first loan.
• Refinance the loan to a longer term.
• Make extra payments towards the principal amount.
• Pay only the minimum monthly payment.

Which of the following ways to finance your education needs to be paid back?

• student loans
• work-study
• grants
• scholarships