Friday Credit Check

Shira is trying to decide between getting a debit card, a prepaid debit card, and a credit card. Which statement is true?

• All 3 cards are completely different

• Debit cards and prepaid debit cards are the same

• Debit cards and credit cards are similar but debit cards are more safe

• All 3 cards are completely the same

The average APR for a payday loan is closest to ...

• 4%

• 14%

• 40%

• 400%

Which of the following statements comparing credit and debit cards is TRUE?

• Far more businesses accept credit cards than debit cards

• Credit cards pull money directly from your bank account, while debit cards get their money from Visa or Mastercard

• Credit card companies provide you with a monthly statement, while debit cards do not

• With debit cards, you're spending your own money at point of sale, but with credit cards, you're getting a loan that you need to pay back later

Which of the following is most likely to represent a fixed rate, secured debt?

• A student loan

• A credit card

• A prepaid debit card

• An auto loan

Which of these credit payback strategies would lead to the HIGHEST overall cost?

• 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

• Making the minimum payment (3% of your credit card balance) every month with an occasional late payment

Denise took out a payday loan for $300 in August. By February of the next year, she was able to pay back the loan, but she had spent a total of $750 doing so. What’s the most likely story of how this happened?

• The minimum monthly payment for payday loans is usually only $10 or $15, so a lot of interested accumulated

• Upfront, Denise knew there would be $450 of fees attached to the loan, but she took out the loan anyway

• Payday loans must be paid in full within two weeks, and if not, the only option is to renew the loan for a high penalty fee, which she did approximately 12 times

• Denise not only paid the $300 she owed, but she prepaid an extra $450 in case she needs another loan in upcoming months

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

• You owe the same payment every month

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

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

• They do not charge interest

Which of the following statements is CORRECT about secured loans?

• They are a good choice to use for student loans

• If the borrower does not make payments, the lender can repossess the item

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

• They usually have higher interest rates as compared with unsecured loans

An excellent credit score will help with which aspect of car financing?

• Bargaining for a great sales price

• Receiving a large down payment

• Qualifying for a low interest rate

• Having a wide selection of term lengths

Credit scores may range from _______ to _______

• 0-1000

• 250-750

• 150-800

• 300-850