Chapter 7 Test

Indicate whether the statement is true or false. 1. A credit card allows you to spend money loaned by a financial institution.

• True

• False

Indicate whether the statement is true or false. 2. Credit cards and debit cards are the same. (True/False)

• True

• False

Indicate whether the statement is true or false. 3. Finance charges on credit cards cannot be avoided.

• True

• False

Indicate whether the statement is true or false. 4. You must complete an application to get a credit card. (True/False)

• True

• False

Indicate whether the statement is true or false. 5. A credit report shows a summary of all the companies that have extended credit to you.

• True

• False

A finance charge is a fee associated with credit.

• True

• False

A revolving line of credit means the credit limit is constantly changing.

• True

• False

Financial institutions are legally required to use the average daily balance method when calculating credit card interest.

• True

• False

An early payment on a credit card is called a cash advance.

• True

• False

Learning to manage and reduce debt is an important financial skill.

• True

• False