QUIZ: Ch. 3.5 - 3.7 (Math for Finance)

Match the following

• Revolving Charge Account

• The average amount of money owed on a credit card account over a certain period of time.

• Credit Card

• A card that allows the customer to borrow money repeatedly up to a certain limit.

• Debit Card

• A card that entitles its holder to make purchases and pay for them later.

• Charge Card

• A card that deducts money directly from a checking account.

• Average Daily Balance

• A card that requires the balance to be paid in full each month.

Match the following

• Fair Credit Billing Act

• Displays key information about credit card fees, so consumers can easily read it and compare credit cards.

• Electronic Funds Transfer Act

• A law that offers protection if a credit card is lost or stolen.

• Schumer Box

• A law that protects debit card users from unauthorized debit card transactions, if it's determined to be lost or stolen.

• Fair Debt Collection Practice Act

• A law that protects you if there's any errors in your monthly billing statement.

• Truth-In-Lending Act

• A law that protects consumers from unfair and abusive means to collect the money owed.

According to the law, what is the maximum liability you have to pay on your credit card if someone steals it and makes, say, $400 worth of purchases?

Match the following

• Billing Date

• When the credit card statement was written by.

• Billing Cycle

• An accounting of the credits and debits in the form of a monthly report that's sent to the credit card user.

• Credit Line

• When the monthly payment must be received by for the credit card company.

• Credit Card Statement

• The max. amount that a person can owe (or spend) on a credit card at one time.

• Payment Due Date

• A predetermined set of time set up by the credit card company that is used for calculating a credit card bill.

Match the following

• Account Number

• A payment made to reduce your debt AND can count as a refund if you return the item you purchased.

• Debits

• A unique number that identifies a credit card holder.

• Available Credit

• The difference between the max. amount you're allowed to charge to your credit card and the actual amount owed on the card.

• Credits

• An amount charged to a credit card account.

Match the following

• Late Charge

• A penalty charged for making a payment after the due date.

• New Balance

• Any money owed prior to the current billing period.

• Finance Charge

• A fee charged on a credit card for the convenience of extra payment time.

• Previous Balance

• Smallest amount that must be paid to keep the account in good standing.

• Minimum Payment

• Total amount due for the current billing period.

For Nick's 18th birthday, his parents gave him permission to open up a credit card account to help build his credit score. As soon as Nick received his credit card in the mail, a random person snatched it out of his wallet and immediately went to Staples to purchase $125 worth of "That Was Easy" buttons.

Unfortunately, Nick wasn't able to cancel the credit card before the thief used it. But at least the thief was caught and imprisoned by law enforcement... So out of the $125 that was charged to the credit card, how much is Nick responsible for paying back to the credit card company, at least until the criminal is prosecuted in court?

• $25

• $50

• $100

• $125

• $0

Joe: Good credit score - 12% APR

Hunter: Poor credit score - 18% APR

If each of them carry an average daily balance of $1,100 for a specific month, and they both had to pay a finance charge, how much more would Hunter have to pay on his finance charge than Joe? (**Don't forget to use the MONTHLY APR when doing your calculations**)

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You swipe your credit card a handful of times and decide not to make any payments for the entire month. Why? Because you bet your brother your ENTIRE Savings Account that the Jags would win a football game against Kansas City and, welp, they didn't. Just look at all that money flowing into your brother's Venmo account. Look how happy he is! (*See picture on left).

Using the numbers below, let's calculate his average daily balance from his credit card balance over the the past month. Each dollar amount represents how much he owed the credit card company and for how many days out of the month: (*for example, for 6 days out of the month, your brother owed the credit card company $250. Then he went out and spent another $140, which resulted him owing the credit card company a total of $390 for the next 9 days. And so on...)

6 days @ $250

9 days @ $390

12 days @ $465

4 days @ $515

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Alyssa's average daily balance for last month was $875. The finance charge she received for not paying off her credit card was $17.06. What is her monthly percentage rate? Be sure to round correctly. (*Do you remember the formula to calculate Finance Charge...)

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