Types of Credit Quiz

What is a charge account?

• C. Something of value a bank can take if a borrower does not make the required loan payments

• A. A loan repaid in regular payments over a period of time

• B. Credit provided by a store or company for customers to buy its products

• D. A credit card with an annual fee

Which type of credit card can be used to buy goods or services only at the business that issued the card?

• C. Travel and entertainment cards

• B. Multipurpose cards

• D. Standard format cards

• A. Single-purpose cards

What is collateral?

• C. Something of value a bank can take if a borrower does not make the required loan payments

• D. A credit card with an annual fee

• B. Credit provided by a store or company for customers to buy its products

• A. A loan repaid in regular payments over a period of time

Which type of credit card can be used at many different businesses?

• C. Travel and entertainment cards

• B. Multipurpose cards

• D. Standard format cards

• A. Single-purpose cards

Which source of credit only lends money to credit union members and employees?

• C. Consumer finance companies

• A. Banks and other financial institutions

• B. Credit unions

• D. Payday advance services

What is the difference between Short-term, Medium-term, and Long-term Loans in terms of duration?

• A. One year or less, One to five years, More than five years

• B. One to five years, More than five years, One year or less

• C. More than five years, One year or less, One to five years

• D. One year or less, More than five years, One to five years

Which type of loan is repaid in regular payments over a period of time?

• D. Seller-provided credit

• A. Single-payment loan

• B. Installment plan

• C. Mortgage loan

Where do banks get the money to lend out to consumers?

• From their clients' credit card accounts

• From their clients' savings accounts

• From the Federal government

• From their own money vaults

How do banks make money off of the credit they issue?

• They charge a large, one-time fee at the start of the loan

• They take out a small fee each month from your checking account

• They charge a high interest rate on the loan

• This is a trick question - they DON'T make money!

Which of the following is NOT a typical type of credit?

• Mortgage

• Overdraft

• Credit Card

• Pre-Paid Debit Card