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WorksheetsTypes of Credit
Total questions: 20
Worksheet time: 10mins
When can personal loans be a better option than credit cards? (hint: choose 2 correct answers)
If you want to earn rewards and enjoy travel benefits
If you want a lower interest rate
If you want purchase protection & warranties
If you increase your credit score
If the collateral for your secured loan can be taken away, why get a secured loan at all?
Because they usually have a lower interest rate
Because they are easier to obtain than unsecured loans
Because they offer more flexible repayment terms
Because they require no collateral at all
Which of the following is NOT a typical type of credit?
Mortgage
Overdraft
Credit Card
Pre-Paid Debit Card
All of the following can happen when you fail to make a mortgage payment EXCEPT:
After one missed payment, you can lose your home
You will be charged fees
Your credit score can take a hit
Foreclosure process starts after 30 days of missed payment
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
Debit cards withdraw money directly from a bank account; credit cards don't
Credit cards withdraw money directly from a bank account; debit cards don't
True or False: A cosigner's credit history can be affected by the loan they are cosigned on.
True
False
Only if the primary borrower defaults
Only for secured loans
Why does the amount of INTEREST you owe on a loan decrease over time?
Because the loan amount increases over time.
With each payment, principal decreases, so interest lowers.
Interest rates are adjusted monthly.
Payments are made less frequently.
Which of the following is typically a SECURED loan?
Auto Loan
Student loan
Credit Card Balance
Overdraft
Which of the following is most likely a fixed-rate unsecured debt?
Student loan
Credit card
Mortgage
Auto loan
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
A shorter auto loan term means ____ monthly payments & ____ total interest you'll pay.
higher, more
lower, less
higher, less
lower, more
Which is TRUE about Payday loans?
You are charged a 1-time fee for the loan
You can borrow any amount without restrictions
Payday loans have no interest rates
They are only available to people with good credit
How are credit cards and debit cards different?
A credit card can offer perks such as purchase protection.
Debit cards are always linked to a checking account.
Credit cards require a PIN for every transaction.
Debit cards can accumulate rewards points.
What is the purpose of a Schumer box when applying for a credit card?
It provides a detailed history of the applicant's credit score
It summarizes information like interest rates, fees, and grace periods
It lists the benefits of the credit card rewards program
It outlines the terms and conditions of the credit card agreement
How do banks make money off of the credit they issue?
They charge a high interest rate on the loan.
They offer free loans to attract customers.
They invest in stocks with the loaned money.
They charge a flat fee for all loans.
How do you avoid paying interest on your credit card (or any other loan for that matter)?
Always make the full payment on time
Make only the minimum payment
Pay your bill late
Use your credit card for cash advances
Which of the following is TRUE about an auto LOAN and a LEASE?
You must give the car back when a lease has expired,
Only a loan requires some kind of upfront payment,
You make monthly payments on both,
Monthly payments tend to be lower with a lease
You must give the car back when a lease has expired
Only a loan requires some kind of upfront payment
You make monthly payments on both
Monthly payments tend to be lower with a lease
Where do banks get the money to lend out to consumers?
From their clients' savings accounts
From government grants
From international investments
From selling stocks
What may NOT impact the interest rate on your loans?
Your credit score
Your level of education
The current inflation rate
The amount of your loan
Which is TRUE when you make only the minimum payment each month?
You are charged interest on the remaining balance.
You will never incur any fees.
Your credit score will improve immediately.
You will pay off your debt faster.
