types of credit

Shira is trying to decide between getting a debit card, a prepaid debit card, and a credit card. Which statement is true?

• All 3 cards are completely different
• The 25 days after the end of the billing cycle is referred to as the grace period
• Stop making payments on some of your debts so you can focus on getting the most expensive or largest debts under control
• Making full payments on-time every month is the only way to avoid interest charges

The average APR for a payday loan is closest to ...

• A large sum of money you pay when taking out a mortgage so that the principal of your loan is smaller
• 400%
• Take out a payday loan
• Your APR will be within that range, depending on the strength of your credit history

Which of the following statements comparing credit and debit cards is TRUE?

• Take out a payday loan
• With debit cards, you're spending your own money at point of sale, but with credit cards, you're getting a loan that you need to pay back later
• Qualifying for a low interest rate
• Making full payments on-time every month is the only way to avoid interest charges

Which of the following is most likely to represent a fixed rate, secured debt?

• Put in $5000 for your down payment, and choose a loan with a long term length
• All 3 cards are completely different
• An auto loan
• Making full payments on-time every month is the only way to avoid interest charges

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?

• Stop making payments on some of your debts so you can focus on getting the most expensive or largest debts under control
• This enables the credit card company to make more money
• The 25 days after the end of the billing cycle is referred to as the grace period
• The extra payment will be applied to the principal amount you owe, which will pay down your debt more quickly

If you are having trouble making auto loan payments and are really following a tight budget, which recommendation below represents the WORST advice?

• Making full payments on-time every month is the only way to avoid interest charges
• Adjustable-rate mortgages have a fixed interest rate for a few years, after which time the interest rate fluctuates according to general market conditions
• A large sum of money you pay when taking out a mortgage so that the principal of your loan is smaller
• Stop making payments on some of your debts so you can focus on getting the most expensive or largest debts under control

When loans are amortized, monthly payments are _______ , while the amount of your monthly payment applied to interest ________ and the amount of your monthly payment applied to the principal _______ over time.

• Payday loans must be paid in full within two weeks, and if not, the only option is to renew the loan for a high penalty fee, which she did approximately 12 times
• Constant, Decreases, Increases
• Making the minimum payment (3% of your credit card balance) every month with an occasional late payment
• The extra payment will be applied to the principal amount you owe, which will pay down your debt more quickly

Which of the following is true about fixed and adjustable-rate mortgages?

• 400%
• Qualifying for a low interest rate
• A 28.99% APR may be applied to your account for late payment
• Adjustable-rate mortgages have a fixed interest rate for a few years, after which time the interest rate fluctuates according to general market conditions

Which of these credit payback strategies would lead to the HIGHEST overall cost?

• Making the minimum payment (3% of your credit card balance) every month with an occasional late payment
• A large sum of money you pay when taking out a mortgage so that the principal of your loan is smaller
• With debit cards, you're spending your own money at point of sale, but with credit cards, you're getting a loan that you need to pay back later
• This enables the credit card company to make more money

Denise took out a payday loan for $300 in August. By February of the next year, she was able to pay back the loan, but she had spent a total of $750 doing so. What's the most likely story of how this happened?

• Payday loans must be paid in full within two weeks, and if not, the only option is to renew the loan for a high penalty fee, which she did approximately 12 times
• Your APR will be within that range, depending on the strength of your credit history
• You can make an emergency purchase that you otherwise don't have the money to pay for right now
• All 3 cards are completely different