Types of Credit Quiz

Trudy tells her mom that she wants to buy a house within two years of graduating from college. Her mom says Trudy will need a down payment first. What is a down payment?

• A large sum of money you pay when taking out a mortgage so that the principal of your loan is smaller

• A specific type of tax advantaged bank account used for saving money to buy ahouse

• The first year’s worth of property taxes, held in reserve

• A prepayment to a real estate agent so that they will start helping you house hunt

Duc has a credit card with a $1000 credit limit. His outstanding balance is currently $800.What is the maximum amount he can now

spend

on this credit card?

• $200

• $800

• $1000

• $1800

Why would credit card companies prefer that their cardholders make the minimum monthly payment every month rather than paying their total balance in full?

• This is required by federal law for tax purposes

• This allows the card holder to pay their bill quickly and close the card when they’re ready

• This enables the credit card company to make more money

• This helps cardholders develop financial independence

What is an advantage of using a credit card?

• 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 low (less than5%)

• You can make an emergency purchase that you otherwise don’thave the money to pay for right now

Credit card disclosure: "Your due date is at least 25 days after the end of the billing cycle. We will not charge you interest on new purchases provided that you have paid your previous balance in full by the due date each month." Identify the true statement.

• If you make the minimum payment on your card within the 25 day period, the credit card company will not charge you interest

• If you pay your previous balance in full after the due date, the credit card company will not charge you interest

• 25 days is an exceptionally long period without paying a credit card bill

• The 25 days after the end of the billing cycle is referred to as thegrace period

A loan with a shorter term length will have __________ monthly payments, and you will pay__________ in total interest.

• higher, less

• higher, more

• lower, less

• lower, more

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 forpurchases

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

• They do not charge interest

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 the same

• 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 payback later