How do credit card companies make money?

By charging late fees and interest to their customers.

By making you pay an extra dollar on every purchase.

By charging late fees and interest to stores and other businesses.

By earning interest on the money they have saved up.

All of the following are dangers of credit, EXCEPT:

Can increase your financial options

Can be dangerous in tough economic times

Which of the following is NOT a factor to consider when taking out a loan?

How much time it takes to receive the loan

Impact of the monthly payment on your budget

The amount owed for borrowing money

A charge for lending money to a bank

the amount added into your savings when opening a bank account

a charge for the convenience of accessing money stored in your bank account

How can a cardholder avoid paying interest on a credit card?

Pay the balance in full every month

Pay the minimum payment after its due date

Pay the minimum balance every month

When taking out a loan, the longer the length of the loan is...

the lower your monthly payment will be, but the interest paid will be higher

the higher your monthly payment will be, but the interest paid will be lower

the higher the monthly payment will be AND the higher the interest paid will be

the monthly payment and the interest paid will be the same

What happens if you pay more than your minimum each month?

You will repay the principal quicker.

You will pay more interest over time.

You won’t have to repay the principal.

Your lender will forgive the loan.

What is the principal of the loan?

the period of time you take out the loan for

a manager in charge of the loan

What would happen to a monthly payment if the interest rate increased?

The payment would remain the same.

What is the primary difference between "credit" and "debt"?

Credit is the ability to borrow money, while debt is the amount of money borrowed.

Credit is the amount of money borrowed, while debt is the ability to borrow money.

Credit and debt are the same, used interchangeably.

Debt is the interest charged on borrowed money, while credit is the loan itself.

What is a potential risk of using credit cards if not managed properly?

High-interest rates can lead to accumulated debt that is difficult to repay.

You can increase your purchasing power without consequences.

Credit cards offer rewards that outweigh the risks of buying on credit and paying interest.

Carrying a credit card balance helps to build credit history quickly.

Which of the following is a benefit of using credit responsibly?

It allows you to make large purchases now and pay for them over time.

It ensures that you will never face financial difficulties.

It eliminates the need for an emergency fund as you can always borrow money in a pinch.

It encourages overspending and living beyond your means.

Why is building a credit history important?

A good credit history makes it easier to obtain loans with favorable terms.

It allows you to avoid paying taxes on income.

It ensures you will never have to pay interest on loans.

Credit history has no impact on renting an apartment or getting a job.

What is a significant drawback of accumulating too much debt?

It can lead to financial stress and mental health issues.

It guarantees lower interest rates on future loans.

It helps you establish a strong credit score.

It makes saving for the future easier.

What is one risk associated with using credit cards for everyday purchases?

It can lead to high-interest charges if the balance is not paid in full each month.

Credit cards charge no interest if payments are late.

Using credit cards always improves your credit score.

Credit cards are a form of free money that doesn’t need to be repaid until a month after the grace period

Loans and Credit Review

Quiz

•

Business

•

9th - 12th Grade

•

Practice Problem

•

Medium

Logan Kats

Used 4+ times

FREE Resource

Bankruptcy

Thin File

7.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is one advantage of having a credit card?

It prevents you from spending more than you earn.

It allows you to make purchases without carrying lots of cash.

It encourages you to budget your money wisely.

It helps you pay off debts that you may have.

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A legal process that relieves debtors of the responsibility of paying their debts or protects them while they try to repay

The interest rate a credit card user will be charged on the unpaid portion of their balance

An agreement in which a borrower receives something of value now and agrees to repay the lender in the future, generally with interest

A three-digit number (ranging from 300-850) based on an individual's credit history detailed in a credit report

A method of debt repayment whereby the borrower prioritizes paying down debts with the smallest balances first

A term used to describe someone with little to no credit history

What is one advantage of having a credit card?

How do credit card companies make money?

The more credit cards you have, the better.

All of the following are dangers of credit, EXCEPT:

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