Debt and Bankruptcy Quiz

When you borrow money in the form of a loan or a credit card, you can end up paying more than the loan amount because you will pay ___ in addition to the loan amount.

• rate

• interest

• principal

• balance

Tags

CCSS.7.RP.A.3

What is the first step in the debt snowball method?

• Pay off the debt with the highest interest rate first

• List debts from smallest to largest by dollar amount

• List debts from highest to lowest interest rate

• Make minimum payments on all debts

What is the main psychological benefit of the debt snowball method?

• It saves more money in the long run

• It focuses on high interest rates first

• It is easier to manage

• It provides small psychological wins

What is the primary difference between the debt snowball and debt avalanche methods?

• The interest rates of the debts

• The total amount of debt to be paid off

• The minimum payments on the debts

• The order in which debts are paid off

According to the debt avalanche method, how should debts be prioritized?

• Randomly

• From highest to lowest interest rate

• From smallest to largest by dollar amount

• From largest to smallest by dollar amount

Tags

CCSS.7.RP.A.3

What is the purpose of maintaining minimum payments on other debts while focusing on one?

• To accumulate more debt

• To avoid late fees

• To increase credit score

• To reduce the principal amount

What does the debt snowball and avalanche methods aim to achieve?

• Buying more assets

• Being debt-free

• Financial independence

• Increase in debt

Tags

CCSS.7.RP.A.3

What is advised if you can't afford minimum payments?

• Ignoring the payments

• Using savings to pay off debt

• Negotiating with your creditors

• Taking out a payday loan

What is considered 'Good Debt'?

• Debt from luxury items

• Debt from credit card purchases of non-essentials

• Debt from student loans or mortgages

• Debt from payday loans

What is bankruptcy?

• Bankruptcy is a legal process where an individual or business declares that they are unable to pay their debts and seeks relief from their creditors.

• Bankruptcy is a process where an individual or business is punished for not paying their debts.

• Bankruptcy is a process where an individual or business is exempted from paying their debts.

• Bankruptcy is a process where an individual or business is rewarded for paying off their debts.