Credit & Loans
What is the difference between a secured and unsecured loan?
Secured loans require collateral; unsecured loans do not.
What does “pay yourself first” mean?
Saving money before spending on other expenses.
What two taxes are considered payroll taxes?
Medicare and Social Security.
What is the difference between a need and a want?
Needs are necessary for survival; wants are things desired but not necessary.
What is loss aversion?
Feeling losses more strongly than comparable gains.
What happens if you only pay the minimum payment on a credit card?
Debt lasts longer and costs more due to interest.
What is an emergency fund used for?
Unexpected expenses or emergencies.
What is gross income?
Income before taxes and deductions.
Why is comparison shopping important?
It helps consumers find the best value and price.
What is herd mentality?
Following what others are doing.
What is collateral?
Something valuable pledged to secure a loan.
True or False: Investing always guarantees profit.
False.
What is net income?
Income after taxes and deductions.
What is a sales tax?
A tax added to the purchase price of goods and services.
Why do cognitive biases occur?
The brain uses shortcuts to make decisions quickly.
What credit score range is considered excellent?
800-850
What is diversification?
Spreading investments across different assets to reduce risk.
Who said, “Nothing is certain except death and taxes”?
Benjamin Franklin
What is impulse buying?
Purchasing something without planning.
What is confirmation bias?
Looking for information that supports existing beliefs.
Which is usually lower: credit card interest rates or mortgage interest rates?
Mortgage interest rates.
Which compounding frequency earns the most interest?
Daily compounding.
Which tax system takes a higher percentage from high earners?
Progressive income tax.
What is opportunity cost when making purchases?
What you give up when choosing one option over another.
Behavioral economics says people often make decisions that are:
Irrational or emotional.