Unit 3 Review (Managing Credit)

Which type of debt typically represents the largest balance owed for most American households?

• Student loans
• Credit cards
• Mortgage
• Auto loan

Which of the following is a key feature of the debt snowball method?

• Ranking your debts from largest to smallest debt so you can pay off the largest one first.
• Ranking your debts from smallest to largest debt so you can pay off the smallest one first.
• Making the minimum payment on all debts and then putting the rest of your money into investments.
• Making the minimum payment on all debts and then distributing the remainder between the debts.

Which statement describes the High Rate method for paying off debt?

• Paying off the biggest debt at as high a rate as possible
• Paying of the smallest debt at as high a rate as possible
• Paying off your highest interest debts first so you will pay a lower interest rate overall
• Paying off your lowest interest debts first so you will pay a higher interest rate overall

John has $7,500 in credit card debt. John was recentely laid off and unfortunately will not make a payment for the next 4 months. His APR is 22% compounded daily. How much will John's credit card balance be in 4 months.

• 7,555.20
• $7,588.00
• $8007.49
• $8,070.49

Carl has two credit cards: On card A, he owes $5,000.00 On card B, he owes $8,000.00 He decides to put all of his effort into paying off Card B with the higher balance for 8 months. He does not make any payments on Card A during that time. The annual interest rate on Card A is 19% compounded daily. How much is Carl's balance on Card A after 8 months?

• $5,675.00
• $4,509.43
• $5,000.00
• $5,509.43
• $5,950.00

Paying more than the minimum payment (or paying your balance in full) is beneficial because…

• It lowers your interest rate
• The lender can’t penalize you for future late payments
• You get a discount on future purchases made with credit
• You pay less interest overall

Why do lenders look at credit reports?

• To edit your credit score
• To decide whether you are a qualified or risky candidate for credit
• To provide them with details about your savings account
• To determine the size of your household

What is the name given to the numerical rating that you receive based on your credit habits?

• Credit report
• Credit score
• Credit history
• Credit card

Each of the following is a credit reporting bureau in the United States EXCEPT?

• Transunion
• FDIC
• Equifax
• Experian

Review this partial credit report, and then choose the response below that accurately depicts the information on the report.

• The borrower paid a $30 fee in February 2015
• This borrower was never late with any of their credit payments
• This borrower's most recent payment was $30
• This borrower was 30 days late on their May 2015 payment