Types of Credit Review

A credit card offer comes in the mail with the bold print "0% A.P.R. for New Accounts." Which important piece of information should you find before thinking about signing up?

• Can I get two or more cards with this offer?

• Can I pay my credit card bill online?

• What is the A.P.R. after the introductory period?

• What kind of designs can I get on my card?

Which of these credit card payback strategies would result in your paying the HIGHEST amount of interest?

• Paying 20% of your credit card balance every month on time

• Paying off your credit card bill in full every month

• 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

All of the following financial products will help you build credit history EXCEPT:

• Secured credit card

• Debit card

• Home mortgage

• Credit card

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, while with credit cards, you're promising to pay back the money eventually

What statement about credit cards is TRUE?

• They can help you establish a credit history

• Since they are tied directly to your checking account, they prevent 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%)

• As long as you make the minimum payments it's like getting a short-term interest free loan

What financial product am I? I am a type of credit card that requires cardholders to make a security deposit equal to the credit limit on their account. Due to this deposit requirement, I am often a good choice for young people looking to establish their credit history.

• Standard credit card

• Secured credit card

• Overdraft credit card

• Rewards credit card

You see on a commercial that OrangeCo is offering a credit card with a 5% cashback program for all cardholders. Which question might help you evaluate how good this offer is?

• Does the cashback program apply to all purchases or only specific types of purchases like gas and groceries?

• Can I get a debit card along with a new credit card?

• Who does OrangeCo use as their spokesperson in the commercial?

• Do I still get the cash back even if I buy multiple adorable puppies?

Which of these statements best explains why it's often a good idea to pay more than the monthly amount due on an amortized loan?

• Every time you pay extra, the lender will reduce the interest rate they're charging by a small amount.

• The extra payment will be applied to the principal amount you owe, which will pay down your debt more quickly.

• The extra payment will be applied to those multiple adorable puppies that you purchased before.

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

Which statement BEST describes how student loans should be used responsibly during college?

• They can only legally cover the costs of tuition, room, and board.

• In addition to tuition, room, and board, you can use them to pay other costs of attendance such as books, fees, and transportation.

• You can use your student loans to pay for necessities OR to buy adorable puppies sold on campus, but you can't use them for off-campus purchases.

• Because student loans have such low interest rates, you can use them for large purchases including vacations and car payments while in college.

Which of the following is NOT an advantage to leasing a car?

• Monthly leases are frequently lower than a car payment would be on a loan for the same car.

• Lease payments are not reported to the credit agencies, so it's not as bad to miss a payment or two.

• Leases allow you to get a newer model car more frequently than the typical car loan would.

• Leases are typically short enough that the car stays under warranty for many repairs or service appointments.