WorksheetsPF - Unit 2 Test
Total questions: 17
Worksheet time: 9mins
Good debt is...
Any debt that helps you increase your current or future wealth.
Any debt that you can immediately pay off.
Any debt that someone else owes you.
Any debt that charges you interest.
Which is not an example of good debt?
Mortgage
Credit Card
Student Loan
Small Business Loan
(Choose 2) What is important to know about introductory (or promotional) rates when choosing a credit card?
How long the introductory rate lasts
What the APR is after the introductory rate expires
How the introductory rate will affect your credit score
What specific purchases the introductory rate applies to
It is easy to get a credit card, even if you don't currently have a credit score.
True
False
Which of these is not an effective way to establish a credit score?
Pay bills on time
Get a secured card
Use a co-signer to get a loan or a credit card
Become an authorized user on someone else's credit card
Apply for as many credit cards as possible.
Why is an adjustable-rate mortage (ARM) riskier than a fixed-rate mortgage?
ARM rates may increase over time
ARMs are more expensive to originate than fixed-rate
ARMs have higher fees than fixed-rate
A Mortgage is...
A home loan
A car loan
A school loan
The name of one of the new muppets on Sesame Street
One difference between a debit card and credit card is...
Credit cards build your credit score; debit cards do not
Credit cards draw directly from your checking account; debit cards act as short-term loans
Debit cards have high interest rates; credit card rates are generally lower
Debit cards do not have fees; credit cards do
(Select all that apply)
If you miss a credit card payment...
You will have to pay a Penalty APR, higher than your normal APR
You will be charged interest on the unpaid balance
Your credit score will drop
You will be charged a late payment fee
Increasing your credit score may...
qualify you for a lower APR
qualify to you pay a smaller minimum balance
qualify you to pay a lower monthly tax rate
Assume that Louis carried an average balance of $100 from credit card purchases over the past year. The APR on his credit card for the past year was 19.99%.
Approximately how much interest would Louis have paid over the course of the year?
$2
$20
$200
$2000
Tamara had a $0 balance on a credit card.
She goes on a week-long trip and speds $200.
When she returns, she opens her credit card statement.
What will be the balance in her account assuming no other purchases?
$0
$200
$206
One challenge of paying off credit card debt is that the interest you owe compounds.
True
False
If you can't pay the full balance on a credit card, you should at least make the minimum payment. Making the minimum payment is better than skipping the payment altogether.
True
False
Debt, loans, and credit should be avoided at all costs.
True
False
The Rule of 72 estimates how long it will take your money, or your debt, to double.
The formula is...
Years * Interest = 72
Months * Interest = 72
Years * Principal = 72
Principal * Interest = 72
Amortization is...
the process of gradually paying off a loan over time
a measure of the interest and fees applied to a loan
the amount an asset loses value over time
the amount an asset gains value over time
