Types of Credit

True or False: A cosigner's credit history can be affected by the loan they are cosigned on.

• True

• False

Which of the following is most likely a fixed-rate unsecured debt?

• Student loan

• Credit card

• Mortgage

• Auto loan

Which is TRUE about Payday loans?

• You can pay them back in installments

• You are charged a 1-time fee for the loan

• Most people successfully pay these loans back

• You need a credit card account to get one

Where do banks get the money to lend out to consumers?

• From their clients' credit card accounts

• From their clients' savings accounts

• From the Federal government

• From their own money vaults

How do banks make money off of the credit they issue?

• They charge a large, one-time fee at the start of the loan

• They take out a small fee each month from your checking account

• They charge a high interest rate on the loan

• This is a trick question - they DON'T make money!

How are credit cards and debit cards different?

• They're both linked to a checking account in different ways

• Some debit cards say VISA on them; credit cards don't

• With a credit card, you are borrowing from yourself

• A credit card can offer perks such as purchase protection

What is the primary purpose of a credit limit on a credit card?

• To determine the minimum payment required

• To offer rewards and cashback

• To set the maximum amount you can borrow

• To calculate the interest rate

Why does the amount of INTEREST you owe on a loan decrease over time?

• The institution trusts you more, so they lower the interest

• With each payment, principal increases; so interest lowers

• Banks are legally required to lower interest rates over time

• With each payment, principal decreases, so interest lowers

A shorter auto loan term means ____ monthly payments & ____ total interest you'll pay.

• higher, less

• lower, more

• higher, more

• lower, less

All of the following can happen when you fail to make a mortgage payment EXCEPT:

• After one missed payment, you can lose your home

• You will be charged fees

• Your credit score can take a hit

• Foreclosure process starts after 30 days of missed payment