Getting Started with Credit

The cost of borrowing money is referred to as 

The maximum amount you may borrow on a credit card is known as the

Which of the following is an advantage of credit?

• Increased purchasing power

• Having to pay finance charges

• Reduction of future buying power

• Increased risk of identity theft

What is your responsibility as a borrower?

• To pay back your loans promptly
• To borrow as much as humanly possible
• Spend your loans and not pay them back
• To transfer money from your savings to checking

__ is the ability to borrow money with the agreement to pay it back at a later time.

Which of the following is typically a secured loan?

• Auto Loan

• Student loan

• Credit Card Balance

• Overdraft

If the collateral for your secured loan can be taken away, why get a secured loan at all?

• Because they usually have a higher interest rate

• Because they usually have a lower interest rate

• Banks give you an extra 90 days to make a missed payment

• Banks typically don't charge interest for the first 12 months

How do you avoid paying interest on your credit card (or any other loan for that matter)?

• Always make the minimum payment over time

• Pay interest first, then pay what you can on leftover balance

• Always make the full payment on time

• Pay the principal first, then pay what you can on interest

Which of the following is most likely a fixed-rate unsecured debt?

• Student loan

• Credit card

• Mortgage

• Auto loan

Property that can be used as security for a loan.