Understanding Credit and Borrowing

What is one benefit of borrowing money from a friend or family member?

• You don't have to repay them.

• They have more money than banks.

• They legally can't charge you interest.

• They will typically work with you on a repayment plan.

The longer your loan term, the _______ you pay in total. The higher your interest rate, the _________ you pay in total.

• Less; less

• Less; more

• More; more

• More; less

When applying for an auto loan, your credit score...

• decides what color car you are allowed to buy.

• affects the interest rate you will pay on the loan.

• shows how much money you have in your bank account.

• determines whether you will need car insurance.

Each of the following factors impacts your credit score EXCEPT...

• Payment history

• Bank account balance

• Mix of credit types

• Length of credit history

Which statement about credit score is TRUE?

• high credit score will make it easier to get loans with better APR

• low credit score will make it easier to get loans with better APR

• positive credit score will not require you to pay back the full amount of the loan

• a strong credit score is required to apply to college

What is the best way to avoid going into large debt on your credit card?

• Avoid paying the bill every month.

• Pay the minimum payment every month.

• Pay half your balance every month.

• Pay your full balance every month.

Which statement about credit cards is TRUE?

• Credit cards take the money straight from your checking account.

• Credit cards require you to pay taxes on your purchases.

• Credit cards will charge interest every month until the balance is paid in full.

• Credit cards will require you to make a cheaper purchase.

What is a key difference between a credit card and a debit card?

• Credit cards allow you to borrow money, debit cards come directly from your account.

• Wealthy people use credit cards, lower income people use debit cards.

• Credit cards come from credit unions, debit cards come from banks,

• You can only use credit cards over 25 and debit cards over 18

What can a person, who is under 18, do if they want a credit card?

• Wait until they turn 18.

• Be added as an authorized user on an adult's credit card.

• Apply for a loan from a bank instead.

• Open a debit card, which will help build credit.

What question is MOST useful in helping decide if someone should get a credit card or bank loan?

• Are you responsible with your money?

• Are you trying to make many small purchases or 1 large purchase?

• Are you using the money to purchase a need or a want?

• How much money do you have in your bank account?