Which of the following statements is FALSE?

If you pay the MINIMUM PAYMENT of $53.00, you will not have to pay interest for the balance you still owe.

If you pay only the minimum payment AND DO NOT make any additional charges on your card it will take you 10 years to pay off your card.

If you pay $9.00 more than your minimum payment of $53.00 (or $62.00), you will reduce the time to pay off your credit card debt to three years.

If you want to pay off your credit card debt faster you should pay more than the minimum payment every month.

Shira is trying to decide between getting a debit card, a prepaid debit card, and a credit card. Which statement is true?

All 3 cards are completely different

Debit cards and prepaid debit cards are the same

Debit cards and credit cards are the same

All 3 cards are completely the same

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

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

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

Which of these statements best explains why it's often a good idea to pay more than the monthly amount due on an amortized loan?

The extra payment will be applied to the principal amount you owe, which will pay down your debt more quickly

Every time you pay extra, the lender will reduce the interest rate they're charging by a small amount

The extra payment will be applied to the interest you owe, which will reduce the overall cost of your loan

Amortized loans typically have much higher interest rates than credit cards, so they're the best place to put your extra cash

What is an advantage of using a credit card?

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

It will not affect your credit score or credit history

Since it is tied 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%)

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

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

You owe the same payment every month

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

Which of the following statements is CORRECT about secured loans?

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

They are a good choice to use for student loans

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?

Qualifying for a low interest rate

Bargaining for a great sales price

Having a wide selection of term lengths

As a young adult, all of the following are good strategies for building credit, EXCEPT:

Open a credit card, with your parent or guardian as a cosigner

Become an authorized user on a credit card used by your parent or guardian

Open and use a secured credit card

Amy and Chuck each buy a house in the same neighborhood for $250,000. Amy's monthly mortgage payment is $400 more per month than Chuck's. Which one of the following statements could explain this difference?

Amy chose a shorter term for her mortgage, so her monthly payments are higher

Amy made a larger down payment, so her monthly payments are also larger

Chuck chose a shorter term for his mortgage, so his monthly payments are also lower

Chuck has a lower credit score, so his interest payments are also lower

Why would credit card companies prefer that their cardholders make the minimum monthly payment every month rather than paying their total balance in full?

This enables the credit card company to make more money

This is required by federal law for tax purposes

This allows the card holder to pay their bill quickly and close the card when they’re ready

This helps cardholders develop financial independence

Credit Cards and Loans Test review

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24 questions

A credit card does not have to be paid back.

A loan does not have to be paid back.

A debit card does not have to be paid back.

Paying the minimum on a loan is the best way to pay off the loan quickly.

Using a credit card to complete all of your purchases is a smart financial plan.

Your debit card is money that is given to you in a loan.

Your checking account and debit card take money out of the same account.

A credit card is money that you have earned and is deposited from your place of employment.

Your credit history does not affect your ability to get a loan in the future.

Having a good credit history will help to lower your interest rates for future loans.

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