WorksheetsUnit 4 Review
Total questions: 18
Worksheet time: 9mins
Emily is evaluating her options between a debit card, a prepaid debit card, and a credit card. Which of the following is accurate?
All three cards function differently
Debit cards are identical to prepaid debit cards
Debit cards and credit cards serve the same purpose
There is no difference
Which represents the interest rate on a payday loan?
They are typically low
They are typically average
They are traditionally similar to a bank loan
They are extremely high
What is a key difference between how credit cards and debit cards operate?
Credit cards are linked directly to your bank account, while debit cards are not
Debit cards offer rewards programs similar to credit cards
Credit cards allow you to borrow money up to a certain limit, while debit cards use funds directly from your account
Debit cards require a monthly payment, while credit cards do not
Which of the following is most likely to be a type of secured loan with a fixed interest rate?
A personal loan
A mortgage
A payday loan
A credit card
If I pay more than my monthly payment on my amortized loan, what happens?
Larger payments will lead to a reduction in the interest rate charged by the lender
Extra payments are applied to the principal, reducing the total debt faster
Additional payments are used to cover interest, lowering the loan's total cost
Amortized loans have higher interest rates than other loans, making them a priority for extra payments
When a loan is amortized, does the amount of money that goes towards principal increase, stay the same, or decrease over time?
Constant, Increases, Decreases
Increase
Variable, Increases, Decreases
Variable, Decreases, Increases
What is a key difference between fixed-rate and adjustable-rate mortgages?
Fixed-rate mortgages have a constant interest rate and monthly payment throughout the loan term, while adjustable-rate mortgages may have changing interest rates and payments.
Fixed-rate mortgages have an interest rate that changes annually, while adjustable-rate mortgages have a constant interest rate.
Adjustable-rate mortgages have a fixed interest rate for the entire loan term, while fixed-rate mortgages have a variable interest rate.
Both fixed-rate and adjustable-rate mortgages have interest rates that change based on market conditions.
Sheri borrowed $500 from a payday lender in June. By December, she had repaid a total of $1,250. What happened?
Denise was charged a flat fee of $750 when she took out the loan, which she agreed to pay
The interest rate on payday loans is very high, causing the amount owed to increase rapidly
Denise made a mistake and accidentally paid back more than she owed
She didn't pay it back quickly, which resulted in costly renewals and penalties
Jack is about to go car shopping and has a set amount of money put aside for a down payment. He wants the lowest possible monthly payment...what should he do?
Put all of the money down for the down payment and choose a loan with a long term length
A loan with a long term length will have __________ monthly payments, and you will pay __________ in total interest.
Which of the following is a true statement about credit card usage?
You are required to pay the full balance every month
You can only use a credit card if you have a savings account
Paying at least the minimum payment or paying your balance in full on-time every month helps maintain a good credit score
Credit cards do not have any fees
Which of the following is TRUE regarding secured loans?
They are ideal for financing education expenses
The lender has the right to take possession of the collateral if payments are missed
Defaulting on the loan only affects the borrower's credit score
Secured loans typically come with higher interest rates than unsecured loans
What is a great way to obtain a low interest rate on a loan?
Have a low credit score
Have a high credit score and good credit history
Which of the following is NOT a recommended way for a young adult to establish a good credit history?
Apply for a credit card with a parent or guardian as a cosigner
Utilize a payday loan service
Be added as an authorized user on a parent's credit card
Use a secured credit card responsibly
What makes a traditional bank loan different from a payday loan?
Payday loans are designed for wealthy individuals, ensuring they have the funds to repay
Bank loans require a credit history and a full credit check while payday loans may only require proof of employment or income
Bank loans do not require any credit history
Payday loans involve such minimal amounts that repayment is often overlooked
What is a down payment?
A sum of money you pay when taking out a loan so that the principal of your loan is smaller
Ray has a credit card with a $1500 credit limit. His outstanding balance is currently $1200. What is the maximum amount he can now spend on this credit card?
$300
$1200
$1500
$2700
My friend and I both bought a house for the same price with the same down payment and interest rate. His payment is larger than my monthly mortgage. How does this happen?
He chose a shorter term, so the payments will change
He chose a longer term for his mortgage, so his monthly payments are higher
He chose a shorter term for his mortgage, so his monthly payments are higher
That is not possible
