Chapter 4 Credit

Zoe received a credit card offer in the mail with the bold print "0% A.P.R. for New Accounts." Which important piece of information should she 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?

Aiden is considering taking out a payday loan. The average APR for a payday loan is closest to ...

• 0%

• 5%

• 25%

• 400%

Anika has a credit card and is considering different payback strategies. Which of these strategies would result in her paying the HIGHEST total amount?

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

• Paying off her credit card bill in full every month

• Making the minimum payment (3% of her credit card balance) every month on time

• Making the minimum payment (3% of her credit card balance) every month with an occasional late payment

Daniel noticed that his credit card company prefers that he makes the minimum monthly payment every month rather than paying his total balance in full. Why would the credit card company prefer this?

• This is required by federal law for tax purposes

• This allows the card holder to pay their bill quickly and close the card when they're ready

• This enables the credit card company to make more money on interest

• This helps cardholders develop financial independence

Based on William's Card Statement above, which of the following statements is TRUE?

• The cardholder is carrying a balance over from the last period.

• The cardholder was charged interest on her balances for the last period because she made her payment on time.

• If the cardholder makes her minimum payment of $35.00 by the due date, she will NOT be charged interest on her balances.

• If the cardholder pays $523.20 by the due date on the bill, she will pay NO interest to the credit card company.

Scarlett received her credit card statement. Based on the statement, how much credit does she have available to use?

• $1686.15

• $523.20

• $1576.80

• $2100

Sophia is trying to understand the difference between credit and debit cards. 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

When Ava's home loan is amortized, monthly payments are _______ , while the amount of her monthly payment applied to interest _______ and the amount of her monthly payment applied to the principal _______ over time.

• Constant, Increases, Increases

• Constant, Decreases, Increases

• Variable, Decreases, Increases

• Variable, Decreases, Decreases

Charlotte received her credit card statement: "Your due date is at least 25 days after the end of the billing cycle. We will not charge you interest on new purchases provided that you have paid your previous balance in full by the due date each month." Identify the true statement.

• If you make the minimum payment on your card within the 25 day period, the credit card company will not charge you interest

• If you pay your previous balance in full after the due date, the credit card company will not charge you interest

• 25 days is an exceptionally long period without paying a credit card bill

• The 25 days after the end of the billing cycle is referred to as the grace period

Aria is considering two loan options. A loan with a shorter term length will have __________ monthly payments, and she will pay __________ in total interest.

• higher, less

• higher, more

• lower, less

• lower, more