Credit Card Test

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

• Debit card

• Secured credit card

• Auto loan

• Credit card

Which of the following statements below is TRUE about the credit card statement?

• If the cardholder pays $523.20 by the due date on the bill, she will pay NO interest to the credit card company.

• The cardholder is carrying a balance over from the last period.

• The cardholder was charged interest on her balances for the last period because she made her payment on time.

• If the cardholder makes her minimum payment of $35.00 by the due date, she will NOT be charged interest on her balances.

Based on her current balance, how much credit does this cardholder have available to use?

• About $1,600

• $0

• About $500

• $2,100

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

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%)

You see on a commercial that OrangeCo is offering a credit card with a 5% cashback program for all cardholders. What is ONE question you might ask to evaluate how good this offer is?

• Is there an annual fee on this credit card and how much is it?

• Can I choose the picture that is on the front of my credit card?

• Can I get a debit card along with a new credit card?

• Who does OrangeCo use as their spokesperson in the commercial?

Select the statement below that accurately describes a characteristic of a credit card.

• Making full payments on time every month is the only way to avoid interest charges.

• You owe the same payment every month

• You must have the money deposited into a checking account to use the credit card for purchases.

• They do not charge interest

Which of the following statements is CORRECT about secured loans?

• They require collateral, in the form of assets like a car or a home, to be exchanged for the loan.

• They are an example of a credit card

• In the event of default, the borrower loses nothing except for the down payment

• They usually have a higher interest rate compared with unsecured loans.

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.

• When given a range of APRs like this, you can assume most cardholders pay the lowest rate listed

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

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