Unit 4/5 Review

What is the difference between a credit, debit, and prepaid card?

• All 3 cards are pretty much the same

• Debit cards and prepaid debit cards are the same

• Debit cards use pay later with, credit cards pay now, and prepaid cards are the same as debit

• Debit cards are a buy now/pay now card, credit cards are buy now/pay later, prepaid cards are like a gift card

My auto loan is a fixed rate, secured payment...what does that mean?

• It means that the interest rate changes each month

• It means that the interest rate stays the same and the car would be used as collateral

• The interest rate stays the same but the payment would change each month

• There is no secure payment around auto loans

If I am paying more than my monthly payment towards my loan, what does that mean?

• It means nothing

• The extra amount of money will go towards the principal and will help pay off the loan quicker and decrease interest

• The extra amount goes toward interest but doesn't really affect the loan

• Amortized loans typically have much higher interest rates than credit cards, so they're the best place to put your extra cash

I'm struggling to make all of my payments...what should I do?

• Stop paying some of them and focus on paying one debt off at a time

• There is nothing you can do, so you just have to keep paying them

• Continue making all payments and call your lenders and see if you can negotiate lower monthly payments, lower interest rates, or longer terms

• Stop making payments and call the bank to see what you can do

When loans are amortized, what does that mean?

• Your payment is consistent and constant and goes towards the principle and interest each month

• Your payment fluctuates each month

• Your payment goes directly toward the principal and then the interest

• Your payment goes toward the interest first and then the principal

What are fixed and adjustable rate mortgages?

• Fixed-rate mortgages have a constant payment every month, but an interest rate that increases throughout the term of the loan

• Fixed-rate mortgages have a fixed interest rate for a few years, but then it changes

• Adjustable-rate mortgages have a fixed interest rate for a few years, and then the rate fluctuates

• The two mortgages work the same way but are called different names depending on if they come from a bank or a credit union

If I want to have the lowest possible monthly payment on my loan, what should I do?

• Put in $0 for your down payment, and choose a loan with a short term length

• Put in small amount for your down payment, and choose a loan with a short term length

• Don't put any money down and choose a loan with a long term length

• Put in a good amount for your down payment, and choose a loan with a long term length

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 than 5%)

• You can make an emergency purchase that you otherwise don't have the money to pay for right now

A loan with a longer term length will have ______ monthly payments, and you will pay ______ in total interest.

• higher, less

• higher, more

• lower, less

• lower, more

Which of these below describes 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