True or False
TRUE OR FALSE:
All credit cards have an annual fee you must pay to use the card.
FALSE
The interest rate stays the same for the life of the loan.
Fixed rate
A 3 digit score between 300 and 850 that predicts how likely you are to pay back borrowed money on time
Credit Score
Interest rates on credit cards are...
A) Fixed
B) Variable
C) Super chill
D) Not real
B) Variable
They often change and are different for each person.
A loan with collateral (car, house, cash, etc)
Lower risk=lower interest rate
Secured loan
TRUE OR FALSE:
If you pay your credit card balance during the grace period, you do not have to pay interest on your principal.
TRUE
The interest rate changes based on the market rate
Variable (adjustable) rate
You can use your car, house, or other valuable assets as __________ when taking a loan.
collateral
What is the term for a person who pays off their credit card balance each month before they are charged an interest rate?
Deadbeat
No collateral
Higher risk=higher interest rate
Unsecured loan
TRUE OR FALSE:
All debt if bad debt.
FALSE
Borrow money up to a set limit, pay it back (in part or in full), and borrow it again repeatedly
Revolving Credit
The _________ is the amount of money you are borrowing.
principal
The __________ is the window of time after a billing cycle on a credit card when you can pay back your balance without being charged interest.
grace period
These types of loans have high interest rates of 300-400% which make it easy to fall into debt.
Payday loans
TRUE OR FALSE:
When you make the minimum payment on your CC balance, your payment first goes towards your principal and then your interest rate.
FALSE
You pay interest first before the principal.
Borrow a lump sum and pay back in a fixed monthly amount over time.
Installment
The _______ is the amount of time you have to pay back a loan.
term
Name 2 types of fees that can be associated with credit cards.
Annual fees
Balance transfer fees
Cash advance fees
Foreign fees
Penalty fees
Etc
Name 2 types of loans that can help you build your assets when used responsibly.
Mortgage loans (home loans)
Student loans
Auto loans
Business loans
Etc.
TRUE OR FALSE:
You can use debt to increase your overall net worth.
TRUE
Name 3 ways your can build your credit as a young adult, age 18-21.
ANSWERS MAY INCLUDE:
Get a cosigner on a loan
Chip away at student loans
Get a secured credit card
Become an authorized user on a parent's card
Pay credit card bills on time
Etc.
APR stands for _______ and is another word to describe ________.
APR stands for Annual Percentage Rate and is another word to describe Interest Rate.
Name 3 things that influence your credit score.
Payment history
Amount owed
Credit mix
Opening new accounts
Length of credit history
Etc
Name one way you can decrease your interest rate on a loan.
ANSWERS MAY INCLUDE:
Have a good credit score
Get a cosigner
Make a large down payment
Use collateral
Etc.