WorksheetsCh 5 - Using Credit Wisely
Total questions: 28
Worksheet time: 14mins
What is the definition of 'Amount Financed'?
The amount of money a borrower receives after paying pre-paid loan costs.
The total interest paid over the life of the loan.
The total amount repaid including interest and principal.
The down payment required to secure a loan.
What does 'Annual Percentage Rate (APR)' mean?
The interest rate, charges and fees charged for the use of credit for one year as expressed as a percentage.
The total amount of money borrowed from a bank.
The minimum payment required on a loan each month.
The total value of all assets owned by a person.
What is 'Available credit'?
The preset amount of credit available on a credit card or loan.
The total amount of money in your savings account.
The interest charged on overdue payments.
The minimum payment required each month.
What is a 'Credit Card'?
A card, like a Visa or MasterCard, that lets you access instant credit to make purchases or obtain cash advances.
A card used only for identification purposes.
A prepaid card that can only be used for online shopping.
A card that only allows you to withdraw money from your savings account.
What is 'Collateral'?
An asset or property used as security for a loan.
A type of insurance policy for businesses.
A government-issued bond.
A legal document for property ownership.
Who is a 'Co-signer'?
A person who shares the responsibility of the loan with the primary borrower.
A person who receives the loan amount as a gift.
A person who approves the loan application.
A person who collects loan payments from the borrower.
What is 'Credit'?
Money a creditor or lender makes available to a borrower to be paid back later. There are two basic types of credit: 1) 'closed end' credit, like an installment loan, a car loan, a mortgage, or personal loan, in which a specific amount of money is loaned; 2) 'open end' credit, like a credit card or line of credit, in which the lender establishes a credit limit and allows the borrower to use credit over and over again as amounts loaned to the borrower are repaid.
A type of insurance policy that protects against theft or loss of property.
A government-issued identification number used for tax purposes.
A savings account that earns interest over time.
What is a 'Credit Report'?
A summary of your financial history. Potential lenders will use your credit report to help them evaluate whether you are a good credit risk.
A document that lists your monthly utility bills.
A report showing your annual income tax returns.
A summary of your employment history.
What is a 'Credit Reporting Agency'?
A company that gathers information about the credit histories of consumers and provides this information to creditors. Also sometimes referred to as a 'credit bureau.'
A government agency that issues loans to individuals.
A non-profit organization that provides financial advice to consumers.
A bank that offers credit cards to customers.
What is a 'Credit Limit'?
The maximum amount that a borrower can borrow on a line of credit or credit card.
The minimum payment required on a credit card each month.
The interest rate charged on outstanding credit card balances.
The total amount of interest paid over the life of a loan.
What is a 'Credit Rating'?
A measure of a borrower's creditworthiness based on the borrower's resources and character.
A type of loan provided by banks to individuals.
A document required for opening a bank account.
A method of calculating interest on savings accounts.
What is a 'Credit Score'?
A numerical ranking of an individual's creditworthiness based on a statistical analysis of the individual's credit history.
A type of bank account used for saving money.
A government-issued identification number.
A measure of a person's annual income.
What is a 'Debit Card'?
A card from a financial institution allowing the cardholder to transfer money from his/her checking account when making a purchase. The money is deducted from the account automatically.
A card that allows you to borrow money up to a certain limit to make purchases or withdraw cash.
A card used only for withdrawing cash from ATMs and cannot be used for purchases.
A prepaid card that is not linked to any bank account and can be used until the loaded amount is exhausted.
What is 'Debt'?
The amount of money owed.
A type of investment income.
A government grant.
A form of insurance.
What is 'Debt Consolidation'?
A process of combining debts into one loan or repayment plan.
A method of increasing your total debt through new loans.
A strategy for investing in multiple stocks at once.
A way to avoid paying any debts legally.
What does 'Default' mean?
Failure to pay a loan when the payment is due.
Paying a loan before the due date.
Increasing the loan amount.
Receiving a loan without interest.
What is 'Deferred Payment Price'?
When paying for a purchase in installments, the total price of the product or service plus the finance charge.
The price paid upfront for a product or service without any additional charges.
The discounted price offered for immediate payment in cash.
The amount paid as a down payment before receiving the product or service.
What does 'Delinquent' mean?
Late payment or lack of payment on a loan, debt, or credit card account.
A person who always pays bills on time.
A type of investment account.
A reward for early payment.
What is a 'FICO Score'?
A person's credit score calculated with software from Fair Isaac Corporation (FICO). The FICO score is a number between 300 and 850, which indicates a person's capacity to repay a loan. The higher the number, the lower the risk that the borrower will default.
A government-issued identification number used for tax purposes.
A type of investment account managed by Fair Isaac Corporation.
A standardized test score used for college admissions in the United States.
What is a 'Finance Charge'?
The total cost of using credit including interest and other fees.
A type of investment account offered by banks.
A government tax on financial transactions.
A discount given for early loan repayment.
What is an 'Installment Loan'?
Loans that are repaid with a fixed number or payments of equal amount such as an auto loan.
A loan that must be paid back in one lump sum at the end of the term.
A type of credit card loan with no fixed repayment schedule.
A loan that does not require any repayment.
Fill in the blank: ________ is an agreement in which a borrower gains access to the use of someone else's money with the promise that the money will be repaid in the future with an additional fee (interest) for the privilege.
Loan
Deposit
Gift
Grant
Fill in the blank: ________ is the actual amount of money being borrowed before the interest is added to it.
Principal
Interest
Dividend
Revenue
Fill in the blank: ________ is when a creditor takes back a product you have purchased using credit because you have not paid as agreed.
Repossession
Refinancing
Amortization
Consolidation
Fill in the blank: ________ is an account where your balance and monthly payment can fluctuate such as a credit card. As you repay what you've borrowed, the amount of credit available is replenished.
Revolving Account
Fixed Account
Installment Account
Savings Account
Fill in the blank: ________ is a loan that requires the borrower to provide collateral to reduce the risk for the lender. The collateral is seized by the lender if payment is not made. The reduction in risk usually leads to a lower interest rate for the borrower. Car loan and a Mortgage are examples.
Secured Loan
Unsecured Loan
Personal Loan
Payday Loan
Fill in the blank: ________ is a federal law that requires creditors to tell borrowers the annual percentage rate, finance charge, and deferred payment price of anything they buy on credit.
Truth in Lending Act
Fair Credit Reporting Act
Equal Credit Opportunity Act
Consumer Leasing Act
Fill in the blank: ________ is a loan that is made without collateral being provided. Riskier so it results in a higher interest rate charged to the borrower. A credit card is an example.
Unsecured Loan
Secured Loan
Mortgage Loan
Auto Loan
