Using Credit Quiz

_________can be used repeatedly for purchases that will be paid back monthly.

• Open-End Credit

• Closed-End Credit

• Cash Advance

• Personal Loan

Interest is not charged by the credit card company if you pay your balance in full by the grace period.

• True

• False

The interest rate you pay on financed purchases on your credit card is known as the?

• Variable Rate Period (VPR)

• Annual Percentage Rate (APR)

• Annual Membership Fee (AMF)

• Variable Percentage Rate (VPR)

Which of the following is an advantage of using a credit card?

• Using it will always negatively affect your credit score.

• 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 low (less than 7%)

• If you pay off your balance every month in full, it is similar to a short-term interest-free loan.

Which of the following is TRUE about credit cards?

• You should never use them

• You have to pay interest on ALL purchases.

• All credit cards have an annual fee.

• Interest rates on credit cards are determined by your credit score.

What is true about a variable interest rate loan?

• The interest rate can vary during the length of the loan.

• There is no risk involved

• The interest rate never changes

• It is usually the best option for borrowing

It is recommended that your monthly loan payments (INCLUDING your home mortgage) should not be over what percentage of your gross monthly income?

• 10%

• 16%

• 20%

• 36%

It is recommended that your monthly loan payments (not including your home mortgage) should not be over what percentage of your net monthly income?

• 10%

• 16%

• 20%

• 36%

Secured loans typically have a higher interest rate than unsecured loans.

• True

• False

Which of the following is an example of an unsecured loan?

• Mortgage loan on a house

• Auto loan on a car.

• Student loan for college tuition.

• None of these are unsecured loans