Understanding Credit

Which of the following is a disadvantage of using credit cards?

• Building credit history

• Potential for overspending

• Convenience in transactions

• Rewards and cashback

Which of the following is a definition of credit?

• Your history of borrowing and repaying money

• Your income level

• Your savings account balance

• Your employment history.

If you buy a pair of shoes for $200 and your lender charges you 25% interest, what will be the total cost after a year if you don't pay it off?

• $200

• $225

• $250

• $275

Good credit is characterized by:

• A) A history of responsible borrowing and repaying of debt

• B) A lack of borrowing history

• C) High levels of debt

• D) Frequent late payments.

What is one advantage of using cash?

• No monthly bills

• Build a history

• More security if lost

• Purchase something now that you would have to put off.

Fill in the blank: _______ are one of the lending agencies for installment credit.

• Consumer Finance Companies

• Supermarkets

• Gas Stations

• Restaurants

Which of the following agencies requires applications and prior approval for installment credit?

• Banks

• Gas Stations

• Movie Theaters

• Bookstores

Fill in the blank: Credit Cards are involved in providing _______ credit.

• A) Installment

• B) Revolving

• C) Open

• D) Closed

Charge cards provide more flexibility when it comes to payments then credit cards offer.

• A) True

• B) False

Which of the following is a lending agency that provides installment credit?

• Credit Unions

• Fast Food Chains

• Supermarkets

• Gas Stations