WorksheetsPF Ch. 4 Quiz
Total questions: 29
Worksheet time: 15mins
Something that credit card commercials don’t show you is . . .
People making payments for months or years on those credit card purchases
How much your credit score will grow right away
How happy your parents will be that they don’t have to lend you cash anymore
How great your life will be with payments
Banks and lenders use credit scores to determine ________
The likelihood that someone is able to repay debt
A person’s financial responsibility
How much collateral someone has available to put up for a loan
How successful someone is
Making purchases with a credit card means that you’re borrowing money with interest, and ________ pay much higher interest rates.
Rich people
Old people
College graduates
When you finance a new car, you will end up paying more than the sticker price.
True
False
While it may not always appear so, the majority of Americans live paycheck to paycheck.
True
False
Your greatest tool to building wealth is ______________.
Single stocks
Your income
Your credit score
_____________ require the borrower to put up collateral for the loan.
Unsecured loans
Interest rates
Revolving credit
Which of the following is part of the formula that determines a person's FICO score?
Their income level during a one year period
The percent of income that they invest into mutual funds
The dollar amount in their savings funds
Their history of payments made to lenders
There are certain things, like renting a car or booking a hotel room, that you cannot do without having a credit card.
True
False
Credit card companies make the most profit from ____________.
Incentive programs with banks
Partnering with companies to offer rewards to customers
Government tax breaks
Charging interest to customers who only pay part of their debt monthly
Which is an example of an appreciating asset?
A computer used for business purposes
A new car purchased within the past 6 months
A piece of farming equipment
A home
Credit cards that offer flashy rewards like airline miles often . . .
Charge a high annual fee
Don't include protection against fraud
Can't be used for personal expenses
Have no interest fees
The debt snowball method involves . . .
Waiting until the winter months to begin paying off debt
Paying off debts from largest to smallest
Pooling together money from other people to pay off your debt
Paying off debts from smallest to largest
Loans that directly help you advance in life, such as student loans, are acceptable debts.
True
False
Predatory lenders get their negative reputation from . . .
Limiting the amount of time a borrower has to use a loan
Taking advantage of people during the Great Depression
Charging high fees for loans and targeting desperate people
Discreetly selling personal bank information
A credit score is an indicator of how well someone pays off their debt, not how well they handle money.
True
False
When you buy with credit, you typically spend more than you would with cash or a debit card.
True
False
The smartest way to buy a car is to __________.
Finance it but pay the debt as quickly as you can
Take out a personal loan for it
Pay for it in cash
What is the best way to avoid falling into debt?
Use credit to pay for large expenses now so that you have plenty of time to pay it off.
Only buy things that you can purchase with cash.
Use airline miles earned through a credit card to help pay for a vacation.
Take out a small loan for any purchases over $1,000.
Credit isn't a wealth-building tool, it's a business that makes money for . . .
Individuals who use credit cards
Stock market investors, tax agencies, and financial advisors
Local businesses and homebuilders
Credit card companies, banks, and lenders
A car is a depreciating asset.
True
False
Credit card companies charge stores a 2–3% fee for every purchase made with credit cards. This is called a(n) ________
Merchant fee
Cash advance fee
Annual fee
Over-the-limit fee
The ____________ is the total amount of the car loan, plus taxes and fees.
Value
Interest
Term
Debt and credit can be a bad idea because they can negatively affect your life by:
Leading to financial stress and difficulty managing money.
Helping you save more money over time.
Guaranteeing you will always have extra cash.
Ensuring you never have to pay interest.
The importance of a good credit score is a myth because:
It is not always necessary for financial success.
It guarantees wealth and prosperity.
It is the only factor lenders consider.
It prevents all financial problems.
Which of the following are ways the credit card industry makes money off of customers?
Interest charges, annual fees, and late payment fees
Cashback rewards, free credit reports, and zero interest rates
Government subsidies, tax refunds, and grants
Charity donations, customer gifts, and free services
An appreciating asset increases in value over time, while a depreciating asset loses value. Which of the following pairs correctly identifies an appreciating asset and a depreciating asset?
Real estate (appreciating), car (depreciating)
Car (appreciating), real estate (depreciating)
Furniture (appreciating), stocks (depreciating)
Electronics (appreciating), gold (depreciating)
Marketing tactics that the credit industry uses to trick people into getting into debt include:
Offering low introductory interest rates that increase later
Providing free financial education to consumers
Encouraging people to pay off their balances every month
Promoting savings accounts with high interest rates
The Debt Snowball Method is a strategy for getting out of debt. How does it help you?
By paying off the smallest debts first to build momentum
By consolidating all debts into one payment
By negotiating lower interest rates on all debts
By only paying the minimum amount due on each debt
