WorksheetsCh 5 Test: Checking Accounts, Credit Cards, and Credit Scores
Total questions: 53
Worksheet time: 3hrs 39mins
A(n) ______ is simply your written order to your bank to pay a third party.
check
invoice
receipt
voucher
The Federal Deposit Insurance Company (FDIC) insures accounts in:
commercial banks
credit unions
brokerage companies
commercial banks and credit unions
Jorge and Alana want to keep $320,000 in cash equivalents that are federally insured. They could accomplish this by:
investing $70,000 in a money market mutual fund and $250,000 in a federally insured credit union
dividing it equally into three different joint accounts in the same federally insured bank
dividing it equally into two different joint accounts in two different federally insured savings banks
dividing it equally in two joint accounts in different branches of the same bank
How much does the Federal Deposit Insurance Corporation (FDIC) currently insure against loss per person in an individual account at any one institution?
$50,000
$100,000
$250,000
$500,000
What is the end balance for this check register?
$1,899.25
$1,201.25
$2,599.25
$2,700.25
A check drawn on a financial institution, backed by the financial institution’s finances, and made out to a specific payee is called a:
certified check
money order
cashier's check
traveler's check
What element(s) is/are required when you write a check?
The name of person or company that gets the money.
The date.
The amount to be paid.
All of the answer choices are correct.
How quickly you can access cash is referred to as:
liquidity.
insurance.
overdraft.
reconciliation.
What type of card allows you to make a payment using money that was loaded onto the card in advance?
Prepaid card.
Debit card with PIN.
Debit card with signature.
Credit card.
Macario received a $500 prepaid card for graduation. He lost the card on his way home. What is his liability with fraud protection?
$50.
$250.
$500.
$0.
Fees may be incurred on what payment methods?
Checking account.
Debit card.
Prepaid card.
All of the answer choices are correct.
Traditional methods of payment include:
cash.
coins.
checks.
All of the answer choices are correct.
Tips to minimize the possibility of someone using your cards in a fraudulent manner include:
reconciling statements monthly.
shredding copies of receipts.
sharing your account number over the phone.
both reconciling statements monthly and shredding copies of receipts.
What types of fees may be incurred for prepaid cards?
Low account balances.
Overdrafts.
Balance inquiries.
Lost card.
What types of fees may be incurred for debit cards?
Card balance inquiries.
Load and reload of funds.
Monthly maintenance.
Monthly maintenance and lost card.
Maarku lost his debit card. He reported it immediately before any unauthorized withdrawals were made. How much is Maarku responsible for?
$50.
$500.
$600.
$0.
Electronic payments include:
cash.
debit cards.
prepaid cards.
both debit cards and prepaid cards.
In what time frame are the funds transferred from your account to the merchant account when using your debit card?
The next day.
The next business day.
Immediately.
In 2 business days.
Mainstream financial service providers include:
payday lenders.
banks.
credit unions.
both banks and credit unions.
A loan consists of what elements?
Principal.
Interest.
Loan fees.
All of the answer choices are correct.
A finance charge represents that total amount of what elements?
Interest.
Fees.
Both interest and fees.
Interest, fees, and principal.
How are finance charges generally stated?
Percentage.
Dollars.
Absolute dollars.
Percentage and dollars.
Ladonna borrowed $2,000 to purchase a used car. The total amount she will need to pay includes the $2,000 she borrowed, $200 interest, and $75 loan fees. What is the finance charge on Ladonna’s loan?
$2,275.
$200.
$75.
$275.
Sachi borrowed $7,000 to purchase a used car. The total amount she will need to pay includes the $7,000 she borrowed, $2,400 interest, and $250 loan fees. What is the finance charge on Sachi’s loan?
$9,650.
$250.
$2,400.
$2,650.
________ represents something of monetary value that can be sold in the event that loan payments are not made by the borrower.
Collateral.
Credit.
Signature.
Future earnings.
All installment loan lenders disclose to credit applicants:
the interest rate expressed as an annual percentage rate (APR).
the finance charge expressed in dollars.
the interest rate (as an APR) and the finance charge (in dollars).
neither the interest rate (as an APR) nor the finance charge (in dollars).
What type of loan has an interest rate that fluctuates?
Fixed installment loan.
Variable installment loan.
Personal loan.
All loans have a fixed interest rate.
A credit report is a summarized account of your:
work history.
leasing history.
education.
credit history.
Which event can have a negative effect on your credit report?
Declared bankruptcy.
Taking out a student loan.
Lost a home to foreclosure.
Declared bankruptcy and lost a home to foreclosure.
Which event can have a positive effect on your credit report?
Declared bankruptcy.
Taking out a student loan.
Lost a home to foreclosure.
Both declared bankruptcy and lost a home to foreclosure.
Identify a national credit bureau.
Equifax.
Transunion.
Experian.
All of the answer choices are correct.
Which company maintains housing and credit files on consumers?
Credit bureau.
Bank.
Credit union.
Payday lender.
What information is included in your credit report?
Education.
Race.
Religion.
Credit history.
Your credit report may be viewed for what purposes?
Underwriting of insurance.
Employment purposes.
College admittance.
Both underwriting of insurance and employment purposes.
What information can stay in your credit report forever?
Bankruptcy.
Failure to pay a utility bill.
Failure to pay a phone bill.
Borrowing more than $150,000.
The Fair Credit Reporting Act (FCRA) requires Equifax, Experian, and Transunion to provide you with a free copy of your report once every how many months?
6.
12.
18.
24.
Who decides to grant or deny your credit application?
Lender.
Credit bureau.
Credit reporting agency.
Federal Trade Commission.
What provides a summary of a person’s credit risk?
Credit score.
Leasing history.
Credit application.
Credit history.
What is the range for FICO scores?
200–600.
250–650.
300–750.
300–850.
Having a higher credit score means you have a(n) ________ risk.
higher.
lower.
average.
increased.
The most widely used credit score is referred to as a:
FICO score.
risk score.
payment score.
borrowing score.
Your credit score is built using what input(s)?
Amount of credit
Payment history
Types of credit
Types of credit, new credit, length of credit history, amount of credit, and payment history
Types of credit represent what score input when calculating your FICO score?
35%
30%
20%
10%
What input makes up the largest portion of your FICO score?
Amount of credit
Payment history
New credit
Length of credit history
The longer you have had an account, the _______ your score.
better
worse
same
lower
How will having a credit score of 400 impact your application for new credit?
You will likely be approved for new credit.
You will likely be rejected for new credit.
It will not affect your application.
You will likely be approved but charged a higher interest rate.
How will having a credit score of 575 impact your application for new credit?
You will likely be approved for new credit.
You will likely be rejected for new credit.
It will not affect your application.
You will likely be approved but charged a higher interest rate.
How will having a credit score of 775 impact your application for new credit?
You will likely be approved for new credit.
You will likely be rejected for new credit.
It will not affect your application.
You will likely be approved and receive the best borrowing terms.
What represents the total amount of credit lines available compared to how much is used?
Credit usage ratio
Debt-to-income ratio
Debt-to-asset ratio
Liquidity ratio
A(n) _______ is a loan that can be used at the borrower's discretion and convenience and has flexible repayment options?
credit card
mortgage
auto loan
student loan
Credit cards costs can include:
annual fees
interest
transaction fees
All of the answer choices are correct.
Amar owes $2,000 on his credit card with a minimum percentage of 4%. How much is the minimum payment due?
$80
$100
$60
$120
A(n) ________ is an individual, in addition to the borrower, who will be held responsible for repayment of the debt?
originator.
lender.
co-signer.
loan officer.
consigner.
