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WorksheetsCredit Unit Review
Total questions: 64
Worksheet time: 46mins
Where do banks get the money to lend out to consumers?
From their clients' credit card accounts
From their clients' savings accounts
From the Federal government
From their own money vaults
How do banks make money off of the credit they issue?
They charge a large, one-time fee at the start of the loan
They take out a small fee each month from your checking account
They charge a high interest rate on the loan
This is a trick question - they DON'T make money!
Which of the following is NOT a typical type of credit?
Mortgage
Overdraft
Credit Card
Pre-Paid Debit Card
Which of the following is typically a SECURED loan?
Auto Loan
Student loan
Credit Card Balance
Overdraft
If the collateral for your secured loan can be taken away, why get a secured loan at all?
Because they usually have a higher interest rate
Because they usually have a lower interest rate
Banks give you an extra 90 days to make a missed payment
Banks typically don't charge interest for the first 12 months
What may NOT impact the interest rate on your loans?
Your relationship with the financial institution
Your credit score
The loan amount
Your level of education
True or False: A cosigner's credit history can be affected by the loan they are cosigned on.
True
False
Why does the amount of INTEREST you owe on a loan decrease over time?
The institution trusts you more, so they lower the interest
With each payment, principal increases; so interest lowers
Banks are legally required to lower interest rates over time
With each payment, principal decreases, so interest lowers
What is the purpose of a Schumer box when applying for a credit card?
It summarizes information like interest rates, fees, and grace periods
It summarizes how much interest you have accrued in the last 90 days
It gives a detailed explanation of your credit history
It tracks your spending habits to help you find ways to budget your money
How do you avoid paying interest on your credit card (or any other loan for that matter)?
Always make the minimum payment over time
Pay interest 1st, then pay what you can on leftover balance
Always make the full payment on time
Pay the principal 1st, then pay what you can on interest
Which is TRUE when you make only the minimum payment each month?
You are charged interest on the remaining balance
Your credit line is restored to its maximum amount
Credit card companies have permission to sell your information
It is the fastest way to pay off your debt
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
Personal loans have installment payments while credit card payments are different every month.
If you increase your credit score
Which is TRUE about Payday loans?
You can pay them back in installments
You are charged a 1-time fee for the loan
Most people successfully pay these loans back
You need a credit card account to get one
A shorter auto loan term means ____ monthly payments & ____ total interest you'll pay.
higher, less
lower, more
higher, more
lower, less
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
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
How are credit cards and debit cards different?
They're both linked to a checking account in different ways
Some debit cards say VISA on them; credit cards don't
With a credit card, you are borrowing from yourself
A credit card can offer perks such as purchase protection
Which of the following is most likely a fixed-rate unsecured debt?
Student loan
Credit card
Mortgage
Auto loan
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
Credit cards withdraw money directly from a bank account; debit cards don't
Debit cards withdraw money directly from a bank account; credit cards don't
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
Filling out the FAFSA qualifies you for...(check all that apply)
federal grants
work study opportunities
merit-based scholarships
federal loans
private loans
The formula colleges use to determine your financial aid package is:
Cost of attendance minus local scholarships you get
Expected family contribution minus local scholarships you get
Expected family contribution plus your personal contribution
Cost of attendance minus expected family contribution
Loans are...
Free Money
Borrowed Money
Earned Money
Not given through FAFSA
How much money you get from FAFSA is determined by your...
Work Study
Loans
Grants
EFC, Estimated Family Contribution
What does the term "grant" imply in the context of student financial aid?
Money that must be repaid with interest
Money that does not need to be repaid
A loan with a low interest rate
A scholarship based on academic merit
What is the primary purpose of the FAFSA?
To apply for college admission
To apply for federal student aid
To apply for scholarships
To apply for student housing
If your parents live together, you...
Include them both on FAFSA
Include them both on FAFSA only if they are living together AND married
Include only the parent who makes more money
Include only the parent who you prefer
If your parents are divorced and do not live together...
You must report the information for them both in every circumstance
You must only report the information for the parent who either financially supports you the most or who you live with the most
You cannot apply for FAFSA
You do not have to report any parent information
If the parent you live with has remarried, and this person lives in your home...
You include the stepparent's tax information on your FAFSA
You do not include the stepparent's tax information on your FAFSA
You only include the stepparent on your FAFSA if your parent does not have a social security number
You lie and say your parent has not remarried to get an EFC closer to 0
FAFSA Checklist- What documents do you need to gather to apply for FAFSA? Check all that apply.
Most recent tax forms (IRS 1040, 1040A, 1040EZ)
W2
Records of untaxed income
Information on cash- checking and savings account balances
