WorksheetsTypes of Credit
Total questions: 20
Worksheet time: 10mins
With an amortized loan, you will...
Have a higher monthly payment that decreases over time
Have a lower monthly payment that increases over time
Have a steady monthly payment
Have a monthly payment that changes each month
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!
Which of the following is NOT a typical type of credit?
Mortgage
Overdraft
Credit Card
Pre-Paid Debit Card
Which of the following is typically a SECURED loan?
Auto Loan
Student loan
Credit Card Balance
Overdraft
If the collateral for your secured loan can be taken away, why get a secured loan at all?
Because they usually have a higher interest rate
Because they usually have a lower interest rate
Banks give you an extra 90 days to make a missed payment
Banks typically don't charge interest for the first 12 months
What may NOT impact the interest rate on your loans?
Your relationship with the financial institution
Your credit score
The loan amount
Your level of education
True or False: A larger down payment will save you more money on the total cost of your loan.
True
False
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
What is the purpose of a Schumer box when applying for a credit card?
It summarizes information like interest rates, fees, and grace periods
It summarizes how much interest you have accrued in the last 90 days
It gives a detailed explanation of your credit history
It tracks your spending habits to help you find ways to budget your money
How do you avoid paying interest on your credit card (or any other loan for that matter)?
Always make the minimum payment over time
Pay interest 1st, then pay what you can on leftover balance
Always make the full payment on time
Pay the principal 1st, then pay what you can on interest
Which is TRUE when you make only the minimum payment each month?
You ar charged interest on the remaining balance
Your credit line is restored to its maximum amount
Credit card companies have permission to sell your information
It is the fastest way to pay off your debt
What is net worth?
All of your assets
Assets - Liabilities
All of your liabilities
Liabilities - Assets
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
A shorter auto loan term means ____ monthly payments & ____ total interest you'll pay.
higher, less
lower, more
higher, more
lower, less
Which of the following is TRUE about an auto LOAN and a LEASE?
You must give the car back at the end of an auto loan
With a loan, you have to make 6 payments before you can drive the car
You make monthly payments on both
Monthly payments tend to be lower with a loan
An adjustable-rate mortgage might be riskier than a fixed-rate mortgage, because...
Your monthly payment can change
You may be charged extra fees
It impacts your credit score more than a fixed-rate mortgage
Your principal balance may increase
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 rewards programs and perks
Which of the following is most likely a fixed-rate unsecured debt?
Student loan
Credit card
Mortgage
Auto loan
Which statement is true about debit and credit cards?
More businesses accept credit cards than debit cards
You get a monthly statement for a credit card, but not for a debit card
Credit cards withdraw money directly from a bank account; debit cards don't
Debit cards withdraw money directly from a bank account; credit cards don't
Which of the following factors will most likely INCREASE the overall cost of your loan?
A lower interest rate
A longer loan term
Offering collateral to secure the loan
Paying a higher down payment
