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WorksheetsOptimizing Credit Cards Assessment - Accounting and Finance
Total questions: 40
Worksheet time: 22mins
Name the three main national credit reporting agencies. (Choose 3)
Experian
TransUnion
Equifax
Equicredit
TranshirschCredit
True or False: If you pay your credit bill in full, on time, it is like having a free short-term loan.
True
False
Credit cards, managed properly can give you up to thousands of dollars worth of perks. Most offer free ____________ and free ______________. (Choose the two best answers)
warranty extensions
airline seat upgrades
rental car insurance
medical Insurance
What does APR stand for?
Annual Payment Rate
Acceptable Percentage Rate
Annual Percentage Rate
Accrued Percentage Rate
True or False: Using credit cards will always lower your overall credit score.
True
False
For someone with established credit and a FICO score of 750 what is the current average APR on credit cards in the (choose the closest answer)
16.7%
21.98%
33.48%
18.6%
The two main components of your credit history are your...
Transaction History and your APR
Credit Report and your Credit Score (FICO Score)
Payment History and the size of your bank
APR and your Income
What is another name for your Credit Score?
Your FICA Score
Your APR
Your FICO Score
Your CSCR
One of the 6 Commandments of Credit Scores is to Pay off your credit card regularly. This commandment states that the single most important thing you can do to improve your credit score is to ___________________ and that your debt payment history represents __________ of your credit score, which is the largest part. Choose the answer that best fills in the two blanks
pay your credit card bills on time ; 35%
Pay your credit card bills on time ; 50%
Pay the minimum amount required on your credit card bill ; 35%
Pay the minimum amount required on your credit card bill ; 50%
The consequences of missing a single payment on a credit card could include... (Choose the three best answers)
Jail time
your credit score dropping more than 100 points
being charged a late fee
your APR going up over 40%
rate increases on your other credit cards, even if you have never been late on them
Many credit card companies will negotiate with you on all of the following except? (Choose the one that is not true)
the rate your credit card company charges you annually (APR)
Annual Credit card fees
Your credit limit
Payment due date periods
Late charges
True or False: One way to increase your credit score is to ask your credit card companies to increase your available amount of credit. This strategy, best applied when your overall debt is zero or low, will improves your credit utilization rate/ratio by lowering its percentage and this accounts for 30% of your overall credit score.
True
False
When a credit card holder has no credit card debt and _____________is the best time to tray and have their available credit amount increased because their FICO score may actually lower otherwise.
pays their credit card bill off, in full, each month
have multiple credit cards
pay the minimum fee per month
a credit score above 850
Besides the more well-known perks credit cards provide, the following are lessor known perks that many credit card users are not aware of.
Automatic Warranty Doubling
Trip-Cancellation Insurance
Concierge Services
Your card tracks your spending making it easier to categorize your expenses
All given answers are true
Cash back cards ....
give you 50 cents back on every dollar you spend.
give you a percentage of your purchases back, usually between 1 and 3 percent
give you a percentage of your purchase back, usually between 5 and 10 percent
give you 25 cents back on every dollar you spend.
Cash Back Cards ....
usually earn cash back on all purchases
earn points that can be used to pay for airline tickets
can only be used for travel
are the credit cards you are allowed to use on airlines, trains, buses and helicopters
Many credit cards have variable monthly minimum payments. This means?
the minimum amount owed each month changes based on the federal economy
the minimum amount owed decreases as your credit card balance goes down
the minimum monthly payment fluctuates base on which state the credit card user lives in
None of these
"Dumb Dan" has a 5000 dollar credit card debt with a 14% APR and he chooses to pay the minimum monthly payment, which is a variable amount that starts at $100 per month. Approximately how long will it take Dan to pay off the debt?
less than 5 years
Just under 10 years
12-15 years
25+ years
"Dumb Dan" has a 5000 dollar credit card debt with a 14% APR and he chooses to pay the minimum monthly payment, which is a variable amount that starts at $100 per month. Approximately how much interest will he end up paying?
$6,322
$480
$4,733
$1,897
Paying more on your credit card with the lowest balance, while paying the minimums for all other cards until the lowest balance card is paid off, and then repeating this process with the next-lowest balance is called?
The Standard Method
The Fireball Method
The Snowball Method
The Triangle Method
Paying the minimum on all cards, but paying more on the card with the highest interest rate and once you pay off the first card you repeat the process and pay of the next-highest-APR card is called?
The Standard Method
The Fireball Method
The Snowball Method
The Triangle Method
The author lists Five Steps to Getting Rid of Credit Card Debt. Often people neglect this first step so is often never completed. What is this first step?
Deciding what to pay off first
Figuring out how much Debt you have
Negotiating down your APR
Deciding where the money, used to pay down the debt, will come from
Credit cards, when managed properly, will have a strong positive financial affects. Choose the positive affect that a credit card can have. (Choose ALL that apply)
You can earn cash back or points for airline tickets
Credit cards automatically track your spending making it easy to categorize and manage your expenses
Keeping your credit card accounts in good standing will increase your chances of getting more credit when the need arrises
You can take advantage of automatic warranty doubling, included car rental, trip cancellation Insurance that will all save you money
Establishing Credit on a few Credit cards and paying your bills regularly and on time is the quickest and most significant way to increase your credit score
Why is a high credit score so valuable? (Choose the 2 best answers)
The best credit scores get the lowest APRs on loans and other forms of credit which could potentially save hundreds of thousands of dollars
You will be invited to more parties
the highest scores get automatic upgrades when renting vacation homes
The better your credit score is, the more negotiating power you will have when trying to add credit, reduce APRs, asking for yearly fees and service fees to be waived or reduced,
The author advises that you not do what within six months of filing for any major loan application for a car, home or education?
Do not pay of your credit card debt
Do not close a credit card account because it will lower your overall credit score for a period of time
Do not check your credit score because it will permanently reduce your credit score
Do not pay more than the minimum monthly requirement
A person that buys goods or services using credit is called a...
Creditor
Cosigner
Debtor
Bad Motherfunction
The ability to earn money now and in the future is called ....
Installments
Asset Allocation
Forcasting
Earning Power
True or False: A person with a FICO score between 600 and 670 is viewed as having excellent credit.
True
False
The Maximum FICO score one can have is?
675
750
850
1000
Lisa purchases two pro football tickets on her credit card that cost $1000 for both, including all fees and taxes. If Lisa only pays the minimum required payments, which are set at 3% of the debt and start at $30 dollars per month, which of the following is the best estimate of how long it will take for Lisa to pay off the debt, AND approximately how much interest she will pay in the determined time frame? Let's assume her credit card has an APR of 18%.
3 years (36 months);
approximately $284 in interest
5 years (60 months); approximately $430 in interest
2 years (24 months); approximately $198 interest
7 years (approx. 93 months); approximately $698 in interest
Michelle purchases two pro football tickets on her credit card that cost $1000 for both, including all fees and taxes. Instead of paying the minimum required payment (set a 3% and starts at $30), Lisa decides to pay for the purchase paying a fixed amount of $50 per month. Which of the following is the best estimate of how long it will take for Lisa to pay off the debt AND how much interest she will pay in the determined time frame? Let's assume her credit card has an APR of 18%.
10 years (120 months); approximately $799 in interest
2 years (24 months); approximately $198 interest
5 years (60 months); approximately $430 in interest
3 years (36 months);
approximately $284 in interest
The Fair Debt Collection Practices Act ....
prohibits the creditor from harassing you or using unfair means to collect the amount owed.
protects you if your card is lost or stolen.
protects you if there are any errors in your monthly statement.
protects you, the debit card user, from unauthorized use of your cards.
The Truth-in-Lending Act ....
protects you if your card is hacked.
prohibits the creditor from harassing you or using unfair means to collect the amount owed.
protects you if your card is lost or stolen as well as ensures creditors clearly disclose to consumers all costs of using the credit card.
protects you, the debit card user, from unauthorized use of your cards that totals over $2850 dollars.
Choose the best description for a Revolving Charge Card.
The Full Amount must be paid by the due date
Is basically an electronic check
The entire bill does NOT need to be paid by the due date. There is usually a minimum payment that is usually between 1 and 3% of the purchase.
You must pay the balance down to zero every 6 months.
Choose the best description for a Charge Card.
The Full Amount must be paid by the due date
Is basically an electronic check
The entire bill does NOT need to be paid by the due date. Instead there is usually a minimum payment.
You must pay the balance down to zero every 6 months.
Choose the best description for a Debit Card.
The Full Amount must be paid by the due date
Is basically an electronic check
The entire bill does NOT need to be paid by the due date. Instead there is usually a minimum payment.
You must pay the balance down to zero every 6 months.
The finance charge on your monthly credit card statement is the ....
penalty for late payments from the previous month
average amount owed per day during the billing cycle.
cost of using the credit card for the current billing period.
period.
amount your currently owe.
In 2023 the average household credit card debt was closest to ....
$16,540
$21,000
$8,267
$57,628
Which of the following accounts for approximately 35% of a person's FICO Score?
Paying bills on time and/or early.
Number of social media memberships
Income
Charitable and or political donations
If Caylee forgets to pay her American Express credit card bill on time what could the consequences include? (Choose all that apply)
Her credit score will likely lower
Her other credit cards may raise her rates.
Her Amex account may be cancelled.
Her FICO score may go up.
She will be fired from her job.
