Unit 5 EPF Review

What are the 5 factors that affect a person’s credit score?

• Payment history, credit utilization, length of credit history, new credit, types of credit

• Income level, age, employment status, marital status, education level

• Number of bank accounts, number of loans, number of credit cards, savings, investments

• Location, family size, car ownership, home ownership, travel history

Why do banks want people to take out loans and open credit card accounts?

• To increase their customer base and earn interest

• To reduce their operational costs

• To decrease their market share

• To limit customer spending

Define APR and APY.

• Annual Percentage Rate and Annual Percentage Yield

• Annual Payment Rate and Annual Payment Yield

• Average Percentage Rate and Average Percentage Yield

• Actual Payment Rate and Actual Payment Yield

Explain how a credit score can affect your budget/ability to buy things throughout your life.

• It determines interest rates and loan eligibility

• It affects your monthly utility bills

• It influences your grocery shopping habits

• It changes your travel plans

Identify what type of person might benefit from a 0% APR credit card.

• Someone looking to make a large purchase and pay it off over time

• Someone who travels frequently

• Someone who wants to earn cash back on purchases

• Someone who needs to transfer a balance

Define the difference between secured loans vs. unsecured loans.

• Secured loans require collateral, unsecured loans do not

• Secured loans have higher interest rates, unsecured loans have lower rates

• Secured loans are short-term, unsecured loans are long-term

• Secured loans are for individuals, unsecured loans are for businesses

What is one example of a secured loan?

• Mortgage

• Credit card

• Personal loan

• Student loan

What is one example of an unsecured loan?

• Credit card

• Car loan

• Home equity loan

• Mortgage

To build wealth, you should spend money on things that _______________ in value.

• Appreciate

• Depreciate

• Disappear

• Stagnate

What are two things to spend money on that should reliably build wealth over several decades?

• Real estate and stocks

• Cars and electronics

• Clothing and vacations

• Furniture and appliances