Credit and Debt

The cost of credit on a yearly basis as a percentage rate is called the APR.

• True

• False

The credit limit on a credit card restricts the total cumulative amount of charges that can be made by the borrower over the borrower's lifetime.

• True

• False

All types of open-end credit accounts allow multiple uses without reapplication, but some require that the entire balance be repaid each month.

• True

• False

The amount owed on a debt is the principal.

• True

• False

The outstanding balance owed on a debt is the

• principal

• finance charge

Revenues for depository institutions that issue bank credit cards are generated from

• finance charges.

• fees paid by participating merchants.

• All of these.

A borrower who has failed to make a payment of principal or interest when due or meet any other requirement of a credit agreement is said to be in

• foreclosure

• default

Credit interest rates that go up and down according to interest rates in the economy as a whole are referred to as

• variable rates.

• fixed rates

Credit interest rates that remain the same over the life of the loan are referred to as

• variable rates.

• fixed rates

The contract supporting a credit card account is called a(n)

• promissory note.

• credit card agreement.