Vocabulary
A ________ is a number between 300 and 850 generated by credit bureaus regarding your credit accounts.
Credit Score
Lauren had the following on her credit card statement:
Membership Fee: $55
Late Fee: $25
Finance Charge: $6.45
Over-the-limit fee: $12
What was the total cost of the credit card?
$98.45
Why should we avoid making the minimum payments on credit cards?
It'll take years to pay off credit card, a lot of money paid in interest, etc.
What does a finance charge tell you?
The amount of interest you owe from your credit card balance at the end of each billing cycle.
What are the 4 types of method used for computing the new balance?
Previous Balance Method
Adjusted Balance Method
Average Daily Balance Method (Including New Purchases)
Average Daily Balance Method (Excluding New Purchases)
The time for which you are not charged a finance charge on a credit card balance is called a ________.
Grace Period
Janelle has to make a minimum payment of 3% on her credit card balance. If her current balance is $125.40, how much is the minimum payment?
$3.76
What range of deb-to-income ratio would be considered a dangerous financial position?
50% or more
Given the following:
Use Previous Balance Method
Previous Balance = $175.30
New Purchases and Fees = $108.85
Payments and Credits = $125
APR = 21% with a monthly periodic rate
Find the Finance Charge (Round to the nearest cent)
$3.07
Given the following:
Use Previous Balance Method
Previous Balance = $175.30
New Purchases and Fees = $108.85
Payments and Credits = $125
Finance Charge = $3.07
APR = 21% with a monthly periodic rate
Find the New Balance (Round to the nearest cent)
$162.22
The yearly interest rate charged on a credit card is called the ____________ (Full word needed for points, not just the initials.)
Annual Percentage Rate
Daily Double
What are the 5 factors that influence your credit score? (Name at least 4)
1. Length of Credit History
2. Payment History
3. Types of Credit
4. Recent Inquiries
5. Credit Utilization
Veronica had the following
Earns $2,500 each month
Car Payment = $200 per month
Splits $800 rent each month with her roommate
What is her debt-to-income ratio? (Round to the nearest percent)
24%
Payments + Credits = $0
Given the following:
Use Previous Balance Method
Previous Balance = $308.88
New Purchases and Fees = $276.49
Payments and Credits = $400
Finance Charge = $4.69
APR = 18% with a daily periodic rate for 31 days.
Find the New Balance (Round to the nearest cent)
$190.06
The monthly or daily rate charged on a credit card balance is called the ______
Periodic Rate
Mike checked his credit card statement and had the following:
Unauthorized purchase = $26.99
He found a receipt for $35.89, but was listed as $38.59 on his statement.
If his new balance was $140.68, what is his correct new balance?
$110.99
Dianna has the following payments each month:
Rent=$350
Student Loans= $60
Monthly Income=$1,800
Find the debt-to-income ratio (round to the nearest percent)
23%
Given the following:
Use Adjusted Balance Method
Previous Balance = $166.98
New Purchases = $201.88
Payments and Credits = $75
APR = 21% with a monthly periodic rate.
Find the finance charge (round to the nearest cent)
$1.61
Given the following:
Use Adjusted Balance Method
Adjusted Balance = $91.98
New Purchases = $201.88
Payments and Credits = $75
APR = 21% with a monthly periodic rate.
Finance Charge = $1.61
Find the new balance (round to the nearest cent)
$295.47
The method that calculates the balance subject to finance charges by subtracting payments and credits from the previous balance is called the _______
Adjusted Balance Method
Identify the items that increase your credit card balance:
-New Purchases
-Fees
-Returning Item Purchased
-Finance Charges
-Payments
-Credits
New Purchases
Fees
Finance Charges
What range is considered a healthy debt-to-income ratio?
36% or less
Given the following:
Previous Balance = $239.80
New Purchases = $174. 50
Payments and Credits = $95
APR = 24% with a daily periodic rate.
Find the finance charge for 30 day billing period. (Adjusted Balance Method) (Round to the nearest cent)
$2.87
Given the following:
Adjusted Balance = $144.80
New Purchases = $174. 50
Payments and Credits = $95
APR = 24% with a daily periodic rate.
Finance Charge = $2.87
Find the new balance using the adjusted balance method (Round to the nearest cent)
$322.17