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WorksheetsEPF-Credit
Total questions: 96
Worksheet time: 48mins
Match the following words with the correct definition:
Transferring debt from one credit card to another
Balance transfers
Charged if the account balance goes over the credit limit
Over-the-limit fee
The maximum amount of charges allowed to an account
Credit Limit
A yearly fee that may be charged for having a credit card
Annual Fee
Charged when a cardholder does not make the minimum monthly payment by the due date
Late-payment Fee
Match the following words with the correct definition:
Transferring debt from one credit card to another
Balance transfers
Charged if the account balance goes over the credit limit
Over-the-limit fee
The maximum amount of charges allowed to an account
Credit Limit
A yearly fee that may be charged for having a credit card
Annual Fee
Charged when a cardholder does not make the minimum monthly payment by the due date
Late-payment Fee
Match the following words with the correct definition:
Annual Percentage Rate (APR)
The cost of credit expressed as a yearly interest rate
Introductory Rate
The interest rate that may be charged right after a credit card account is opened
Penalty APR
The interest rate charged on new transactions if the penalty terms in the credit card contract are triggered
Variable APR
An APR that may change depending on other factors
Match the following words with the correct definition:
Annual Percentage Rate (APR)
The cost of credit expressed as a yearly interest rate
Introductory Rate
The interest rate that may be charged right after a credit card account is opened
Penalty APR
The interest rate charged on new transactions if the penalty terms in the credit card contract are triggered
Variable-rate APR
An APR that may change depending on other factors
When may a person view their credit report for free?
Once a year, from each of the three main credit reporting agencies
At any time and an unlimited number of times
A person may not review their credit report
If a person has sufficient financial resources
When may a person view their credit report for free?
Once a year, from each of the three main credit reporting agencies
At any time and an unlimited number of times
A person may not review their credit report
If a person has sufficient financial resources
To answer the essay test question about the meaning of open-end credit, Ryan should include which statement?
Credit is extended in advance so the borrower does not have to apply for credit each time credit is desired.
A down payment must be made before receiving a loan
Individuals are allowed to borrow an unlimited amount of money as long as they pay it back
Payments are equal and required to be paid on a regular basis
To answer the essay test question about the meaning of open-end credit, Ryan should include which statement?
Credit is extended in advance so the borrower does not have to apply for credit each time credit is desired.
A down payment must be made before receiving a loan
Individuals are allowed to borrow an unlimited amount of money as long as they pay it back
Payments are equal and required to be paid on a regular basis
Which of the following statements about interest rates is true?
The interest rate depends on your credit score
All interest rates are variable
Variable interest rates are less risky than fixed interest rates
The APR of a loan includes interest rates, annual fees, and the amount of the principal payment.
Which of the following statements about interest rates is true?
The interest rate depends on your credit score
All interest rates are variable
Variable interest rates are less risky than fixed interest rates
The APR of a loan includes interest rates, annual fees, and the amount of the principal payment.
All lenders check a person's credit report and score during the loan approval process.
True
False
All lenders check a person's credit report and score during the loan approval process.
True
False
Past addresses are NOT included in an individual's credit report.
True
False
Past addresses are NOT included in an individual's credit report.
True
False
David earns $5,000 per month at his accounting job. He has a student loan payment of $120 and a car loan payment of $300. Which statement is true?
David's credit payments are within the safe range for someone with his income.
David's total credit payments are higher than the recommended amount for someone earning his income.
David's student loan payment must be subtracted from his car loan payment to determine whether his overall credit payments are within the safe range.
David's student loan payment is within the safe range but his car loan is not.
David earns $5,000 per month at his accounting job. He has a student loan payment of $120 and a car loan payment of $300. Which statement is true?
David's credit payments are within the safe range for someone with his income.
David's total credit payments are higher than the recommended amount for someone earning his income.
David's student loan payment must be subtracted from his car loan payment to determine whether his overall credit payments are within the safe range.
David's student loan payment is within the safe range but his car loan is not.
Secured loans are the only type of loan where ____________
collateral is required
there may be application fees and a credit check fee tied to APR
late payment fees are charged
the amount owed is forgiven after 5 years
Secured loans are the only type of loan where ____________
collateral is required
there may be application fees and a credit check fee tied to APR
late payment fees are charged
the amount owed is forgiven after 5 years
Paying the minimum payment on a credit card every month will
make the final amount paid substantially higher than the amount initially charged to the card
pay a large percentage of the total balance owed every month
help the cardholder create a plan for paying off a credit card in a decent amount of time
allow the cardholder to avoid paying any interest charges
Paying the minimum payment on a credit card every month will
make the final amount paid substantially higher than the amount initially charged to the card
pay a large percentage of the total balance owed every month
help the cardholder create a plan for paying off a credit card in a decent amount of time
allow the cardholder to avoid paying any interest charges
Credit cards from retailers generally have higher interest rates than credit cards from banks.
True
False
Credit cards from retailers generally have higher interest rates than credit cards from banks.
True
False
What is the primary purpose of the Schumer Box on a credit card application?
To display the terms and fees of the credit card in an easy-to-read format
To provide a detailed history of the credit card issuer
To offer promotional incentives for new cardholders
To compare different credit card companies
What is the primary purpose of the Schumer Box on a credit card application?
To display the terms and fees of the credit card in an easy-to-read format
To provide a detailed history of the credit card issuer
To offer promotional incentives for new cardholders
To compare different credit card companies
A consumer can use a credit card yet avoid paying interest on that credit card by:
Paying the full balance by the due date each month.
Paying only the minimum payment each month.
Using the card only for cash advances.
Ignoring the monthly statement.
A consumer can use a credit card yet avoid paying interest on that credit card by:
Paying the full balance by the due date each month.
Paying only the minimum payment each month.
Using the card only for cash advances.
Ignoring the monthly statement.
Sort the following statements into whether the actions will create negative effects or positive effects on your credit history.
Maintaining a reasonable amount of unused credit.
Positive
Checking credit reports annually to search for mistakes.
Positive
Routinely paying bills late.
Negative
Numerous credit applications in a short period of time.
Negative
Having many of the same types of credit accounts.
Negative
Sort the following statements into whether the actions will create negative effects or positive effects on your credit history.
Maintaining a reasonable amount of unused credit.
Positive
Checking credit reports annually to search for mistakes.
Positive
Routinely paying bills late.
Negative
Numerous credit applications in a short period of time.
Negative
Having many of the same types of credit accounts.
Negative
As compared to private student loans, federal student loans
have lower interest rates and more flexible terms
have higher interest rates and more flexible terms
have lower interest rates and more inflexible terms
have higher interest rates and more inflexible terms
As compared to private student loans, federal student loans
have lower interest rates and more flexible terms
have higher interest rates and more flexible terms
have lower interest rates and more inflexible terms
have higher interest rates and more inflexible terms
FAFSA is used by colleges and educational institutions to determine
federal aid eligibility
admittance to the educational institution
the number of years a student can attend the educational institution
whether or not to include the student on homeland security's watchlist
FAFSA is used by colleges and educational institutions to determine
federal aid eligibility
admittance to the educational institution
the number of years a student can attend the educational institution
whether or not to include the student on homeland security's watchlist
A consequence of filing bankruptcy is that it negatively impacts your credit score
True
False
A consequence of filing bankruptcy is that it negatively impacts your credit score
True
False
This type of bankruptcy allows the debtor to keep their property and pay debts over a period of 3-5 years
Chapter 13
Chapter 7
Liquidation Method
Governmental Method
This type of bankruptcy allows the debtor to keep their property and pay debts over a period of 3-5 years
Chapter 13
Chapter 7
Liquidation Method
Governmental Method
If a credit card holder finds they are unable to pay off their debt to the credit card company, which action should they take?
Call the credit card company to request an adjustment of terms
Pay a minimum of $1 to leave the account in good standing
Miss up to 4 monthly payments, penalty free
Nothing, the credit card companies expect cardholders to miss payments from time to time
If a credit card holder finds they are unable to pay off their debt to the credit card company, which action should they take?
Call the credit card company to request an adjustment of terms
Pay a minimum of $1 to leave the account in good standing
Miss up to 4 monthly payments, penalty free
Nothing, the credit card companies expect cardholders to miss payments from time to time
Cash advance fees, late payment fees, and balance transfer fees are considered ____________ fees.
transaction
annual
finance
required
________________ offer loans based on the worth of an item that is used as collateral. The item is returned when the loan is paid off.
Pawn shops
Credit unions
Payday loans
Banks
Which of the following statements about interest rates is true?
The interest rate depends on your credit score
All interest rates are variable
Variable interest rates are less risky than fixed interest rates
The APR of a loan includes interest rates, annual fees, and the amount of the principal payment
Car loans are examples of __________________.
installment closed-end credit
revolving open-end credit
non-installment credit
loan-based credit
Secured loans are the only type of loan where ________________________
collateral is required
there may be application fees and credit checks tied to APR
late payment fees are charged
the amount owed is forgiven after 5 years
Loans where borrowers sign over the title to their car as collateral are called title loans.
True
False
Unsecured loans are always more expensive than secured loans.
True
False
Credit cards from retailers generally have higher interest rates than credit cards from banks.
True
False
Which of these is not considered a risk-based (alternative) lending company?
Credit union
Pawn shop
Payday lending shop
Title loan company
Which of the following is true about credit cards?
All of these
Some come with rewards (ie free money)
They are a great way to build a credit score
Most require a credit score of 600, unless you’re a student, in which case the requirement is waived
Whether or not you actually use the credit card that has an annual fee, you will be charged that fee every year.
True
False
Credit cards are examples of installment closed-end credit.
True
False
Car loans are good examples of _________________
installment closed end credit
non-installment credit
revolving open-end credit
managerial credit
When a customer uses a _____________ to pay for purchases, the money is deducted from their bank account immediately.
debit card
credit card
money market account
certificate of deposit
Which of the following statements about cosigners and authorized users are correct?
When you’re an authorized user, you aren’t responsible for any missed payments. For a cosigned card, both you and your cosigners are responsible.
Cosigning does not allow you to build your own credit history, whereas being an authorized user does allow you to build your own credit history.
Cosigning is illegal in some states.
Authorized users must be under age 18
Going into debt to improve your education is considered good debt because
it increases your investment in human capital and potentially a higher salary
it’s better use of your money than buying your own business
it increases your chance of being unemployed
the interest rate is lower than the rate on a credit card
The _____________________, which is expressed as a percentage, is the interest rate charged for borrowing money, compounded over one year.
Annual Percentage Rate (APR)
transaction fee
finance charge
annual fee
Bank customers are charged a returned check fee by the bank when they write a check for more than they have in their checking account.
True
False
Your creditworthiness is measured by a number called a
FICO score
FICA score
ratings test
debt ratio
Which of these is NOT one of the 5 Cs of credit?
cosign
character
capacity
collateral
When may a person view his/her credit report for free?
Once a year, from each of the three main credit reporting agencies
At any time and an unlimited number of times
A person may not review his/her credit report
If a person has sufficient financial resources
This act makes it illegal for creditors to discriminate against a credit applicant on the basis of race, color, religion, national origin, sex, marital status, age, or because the applicant receives public assistance.
Equal Credit Opportunity Act
Fair Debt Collection Practices Act
Card Accountability, Responsibility, and Disclosure Act
Fair Credit Billing Act
A legal claim by a government entity to take an individual’s property or income when their taxes are not paid in full.
Tax Lien
Tax Foreclosure
Tax Repossession
Tax Exemption
FAFSA will provide students with an estimate of
family contribution to educational expenses
the number of years it will take to pay back student loans
the best career choice for the student
projected earnings of specific careers
To make an economic decision about selecting postsecondary education, the potential earnings of the career should be compared to
the cost of the training or education for the career
the potential earnings of other careers
the number of years of education needed
the cost of the training or education for other career
What portion of future jobs will require postsecondary education?
Two-thirds
One half
Three-fourths
One third
Postsecondary educational institutions include not only colleges and universities, but also junior colleges and technical schools.
True
False
Students must fill out FAFSA only at the beginning of their educational experience.
True
False
Published tuition costs are paid by all students.
True
False
FAFSA is used by colleges and educational institutions to determine
federal aid eligibility
admittance the educational institution
the number of years a student can attend the educational institution
Information can be found about the average earnings of a specific career and the average cost of training for that career from
Bureau of Labor Statistics
Congressional Budget Office
Bureau of Economic Research
Scholarships do not need to be repaid.
True
False
A grant doesn’t have to be repaid unless the obligations associated with grant are not met.
True
False
__________ student loans typically require a credit check and/or a co-signer.
Private
Federal
Direct subsidized student loans are for students with
financial need
academic merit
The Federal Work-Study Program allows students to earn money to pay for school by working
part-time
full-time
As compared to private student loans, federal student loans
have lower interest rates and more flexible terms
have higher interest rates and more flexible terms
have lower interest rates and more inflexible terms
have higher interest rates and more inflexible terms
Which of the following is a student loan repayment plan in which the monthly payment is calculated at 10% of monthly income?
Income Based Repayment Plan
Extended Repayment Plan
Graduated Repayment Plan
Extended Income Repayment Plan
If a student borrower works in the public or non-profit sector, the federal student debt is forgiven after _____ years of on-time payments
10 years
5 years
15 years
20 years
A consequence of filing bankruptcy is that it negatively impacts your credit score.
True
False
A consumer who has excessive spending habits could end up filing for bankruptcy.
True
False
One cause of bankruptcy is when someone loses his or her job and there are no savings.
True
False
A repossession occurs when ___________________________
The seller takes the goods back when the buyer fails to keep up with payments
A bank holding your mortgage takes back your house due to non-payment
You are not permitted to sell your property until the debt on your property is paid off
A landlord has renters removed from houses or apartments
Because of the ___________________, debt collectors cannot legally threaten you with physical harm while trying to collect a debt.
Fair Debt Collection Practices Act (FDCPA)
U.S. Bankruptcy Code
Better Business Bureau
Consumer Credit Counseling Services
____________ bankruptcy happens when creditors file a petition of bankruptcy against a debtor who owes them money.
Involuntary
Chapter 7
Chapter 11
Voluntary
This type of bankruptcy allows the debtor to keep his or her property and pay debts over a period of 3-5 years.
Chapter 13
Chapter 7
Liquidation method
Governmental method
Which of these is not a suggested way to get debt under control?
Pay only the minimum amount on credit cards
Make payments early
Contact credit card companies to attempt to reduce interest rates
Transfer a credit card balance to a lower interest rate card
Which of these is a step involved in the credit counseling process?
All of these
The counselor works to have fees waived on credit cards
The counselor helps set up a payment plan
The counselor communicates with creditors for the debtor
Tyler is trying to be responsible in using his new credit card and has heard there is a way to avoid paying interest on the things he charges. How can he LEGALLY avoid paying interest when using his credit card?
Tyler needs to make sure he pays the minimum balance every month before the due date on the credit card statement
Tyler needs to pay the credit card balance in full every month before the due date listed on the credit card statement
Tyler needs to limit the use of his credit cards to balance transfers only
Tyler needs to understand that the use of a credit card requires paying interest. There is not legal way for him to avoid paying interest if he uses his card during the billing cycle.
Megan’s credit card statement indicates that she is now paying a Penalty APR. Which scenario best describes what may have happened?
When Megan was participating in her college’s Study Abroad program, she left a friend in charge of sending in her January and February payments. Her friend forgot to send the payments
Megan’s credit card payment has been paid in full each of the last 6 months
Megan’s card had a lower introductory interest rate for the first year and now the interest rate has increased, as stated on her contract
The new computer Megan purchased made her account go over the credit limit for 1 week, until the credit card company processed her credit card statement
Leah is trying to explain the difference between open‐end and closed‐end credit to her roommate. Which statement should she include in her description of closed‐end credit?
It is a continuous loan the borrower must repay with a revolving balance
Equal payments are required on a regular basis until the loan is repaid.
Credit limits vary depending on the loan balance
Interest rates vary depending on the repayment history
The financial counselor that Ariel consulted about her use of credit recommended that she keep her use of credit within safe boundaries. Ariel’s financial counselor most likely told her to:
Keep the total amount of money she has borrowed, including her mortgage and her car loan, under 20% of her net income
Keep the total amount of money she has borrowed, including her mortgage and her car loan, under 40% of her net income
Keep the total amount of money she has borrowed, not including her house, under 20% of her net income.
Keep the total amount of money she has borrowed, not including her house, under 40% of her net income
Evan is writing a scholarship essay about the importance of responsible money management. He wants to explain the meaning of borrowing. Which statement below would explain the importance of understanding the process of borrowing money?
When you are borrowing, you are spending future income
Borrowing is an important part of a responsible financial plan
Borrowing strongly affects the present self but has less impact on the future self
Borrowing builds a strong credit history because it requires individuals to file a credit report
Edward wants to develop a positive credit history. How should he do this?
Maintain reasonable amounts of available credit
Have one type of credit account
Pay cash for the majority of purchases
Open credit accounts in his parents’ names
Which of the following is NOT included in an individual’s credit report?
Current and past addresses
Account balances
Bankruptcies and foreclosures
Medical information
Jake’s credit application has been declined because of his negative credit history. Which statement is most likely to be true?
Jake pays his bills consistently and on time
Jake has applied for 4 credit cards and a car loan in the past 6‐weeks
Jake has received 3 traffic tickets in the past 2 months.
Jake holds 2 store credit cards, a bank credit card, a car loan, and a mortgage
When Bryce attempted to borrow money at the bank, he learned that his credit score is low. Which statement best describes what this is likely to mean for Bryce?
The interest rates on his loan will be lower, since his credit score is low
The purchase price of the item he needs the loan for will be higher due to his low credit score
The monthly loan payments will be lower due to his lower credit score
The interest rates on his loan will be higher, since his credit score is low
Which is NOT an example of a data furnisher?
Landlord
Credit card company
Utility company
Medical provider
