Credit & Debt Quiz

Which of the following statements comparing credit and debit cards is TRUE?

• Far more businesses accept credit cards than debit cards

• Credit cards pull money directly from your bank account, while debit cards get their money from Visa or Mastercard

• Credit card companies provide you with a monthly statement, while debit cards do not

• With debit cards, you're spending your own money at point of sale, but with credit cards, you're getting a loan that you need to pay back later

Which of the following is most likely to represent a fixed rate, secured debt?

• A student loan

• A credit card

• A prepaid debit card

• An auto loan

If you are having trouble making auto loan payments and are really following a tight budget, which recommendation below represents the WORST advice?

• Find an extra source of income by taking a second job, working longer hours, or borrowing from family if they can afford to help

• Stop making payments on some of your debts so you can focus on getting the most expensive or largest debts under control

• Continue making all payments and call your lenders and see if you can negotiate lower monthly payments, lower interest rates, or longer terms

• Explore whether a free or non-profit credit counseling service could help

Which of the following is true about fixed and adjustable-rate mortgages?

• Fixed-rate mortgages have a constant payment every month, but an interest rate that increases throughout the term of the loan

• Fixed-rate mortgages have a fixed interest rate for a few years, after which time the interest rate fluctuates according to general market conditions

• Adjustable-rate mortgages have a fixed interest rate for a few years, after which time the interest rate fluctuates according to general market conditions

• The two mortgages work the same way but are called different names depending if they come from a bank or a credit union

Which of these credit payback strategies would lead to the HIGHEST overall cost?

• Paying off your credit card bill in full every month

• Paying 20% of your credit card balance every month on time

• Making the minimum payment (3% of your credit card balance) every month on time

• Making the minimum payment (3% of your credit card balance) every month with an occasional late payment

What is an advantage of using a credit card?

• It will not affect your credit score or credit history

• Since it ties directly to your checking account, it prevents you from spending money you do not have

• If you need to carry a balance, the interest rates are generally quite low (less than 5%)

• You can make an emergency purchase that you otherwise don’t have the money to pay for right now

A loan with a shorter term length will have __________ monthly payments, and you will pay __________ in total interest.

• higher, less

• higher, more

• lower, less

• lower, more

Select the statement below that accurately describes a characteristic of a credit card.

• You owe the same payment every month

• You must have money deposited into a checking account to use the credit card for purchases

• Making full payments on-time every month is the only way to avoid interest charges

• They do not charge interest

Which of the following statements is CORRECT about secured loans?

• They are a good choice to use for student loans

• If the borrower does not make payments, the lender can repossess the item

• In the event of default, the borrower loses nothing except for the down payment

• They usually have higher interest rates as compared with unsecured loans

An excellent credit score will help with which aspect of car financing?

• Bargaining for a great sales price

• Receiving a large down payment

• Qualifying for a low interest rate

• Having a wide selection of term lengths