Credit and Debt Quiz

What is credit?

• A) A system of direct payment for goods and services

• B) The ability to borrow money from someone else with the agreement to pay it back later

• C) A form of digital currency

• D) A reward system for loyal customers

Who are considered creditors?

• A) People who borrow money

• B) People who lend money, such as lenders, persons, businesses, and service providers

• C) People who invest in stocks

• D) People who save money in a bank

What is a debtor?

• A) A person who lends money to others

• B) A person who saves money in a bank

• C) A person who borrows money from others

• D) A person who invests in real estate

What is the money borrowed called?

• A) Credit

• B) Investment

• C) Debt

• D) Loan

What may apply when using credit?

• A) Interest rates

• B) Finance charges

• C) Tax deductions

• D) Credit rewards

What must you first do to use credit according to the text?

• You must first save a certain amount of money.

• You must first qualify and ensure you can make payments.

• You must first consult a financial advisor.

• You must first purchase a credit report.

What does 'income' refer to in the context of using credit?

• Money spent on goods and services.

• Money saved from previous earnings.

• Money received, especially regularly, for work or through investments.

• Money borrowed from financial institutions.

What could happen if you are spending more than you are making?

• You could be bringing on a lot of debt.

• You could be eligible for more credit.

• You could receive a tax deduction.

• You could increase your capital wealth.

What is one of the advantages of using credit?

• It can lead to overspending

• It can cause identity theft

• It helps in financing items like cars and houses

• It comes with high fees and finance charges

What is a disadvantage of using credit?

• It helps people finance items when they can't afford them at the time

• It's ideal for the purchase of goods and services

• It can cause financial issues if used poorly by collecting debt

• It helps in emergencies when you may need money that you don't have