Credit Cards 1
What are the main differences between a debit card, a prepaid debit card, and a credit card.
Debit Card - Your money in your checking account.
Prepaid Debit Card - No link to your bank, can be used by anyone.
Credit Card - Borrowing the bank's money.
With _______ cards, you're spending your own money at point of sale, but with _______ cards, you're getting a loan that you need to pay back later
With DEBIT cards, you're spending your own money at point of sale, but with CREDIT cards, you're getting a loan that you need to pay back later
True or False:
If you are having trouble making auto loan payments and are really following a tight budget, "Stop making payments on some of your debts so you can focus on getting the most expensive or largest debts under control" would generally be considered as GOOD advice.
FALSE
Good advice: Continue making all payments and call your lenders and see if you can negotiate lower monthly payments, lower interest rates, or longer terms, Find an extra source of income by taking a second job, working longer hours, or borrowing from family if they can afford to help, Explore whether a free or non-profit credit counseling service could help
True or False:
The average APR for a payday loan is 40%
False
400%
What is a potential consequence for a borrower when taking out a secured loan?
If the borrower does not make payments, the lender can repossess the item
Which of these credit payback strategies would lead to the HIGHEST overall cost?
4. Making the minimum payment (3% of your credit card balance) every month with an occasional late payment
Reading through a credit card’s Schumer Box, you see the APR for a specific card is set at 9.99% - 23.99%.Typically, what will determine what APR the actually offer you?
The strength of your credit history.
True or False:
Credit cards are tied directly to your checking account, which prevents you from spending money you do not have.
FALSE
Wendy is about to go car shopping, and she has $2500 saved that she can use for a down payment while still having extra cash in her emergency fund. She expects the exact model car she’s looking for to cost $17,500. If her top priority is having the lowest monthly payments possible, which advice should she follow?
Put in $2500 for your down payment, and choose a loan with a long term length.
Any extra or additional payments on an amortized loan will be applied to the _________, which will pay down your debt more quickly.
PRINCIPAL
Adjustable-rate mortgages have a _____ interest rate for a few years, after which time the interest rate __________ according to general market conditions
Adjustable-rate mortgages have a FIXED interest rate for a few years, after which time the interest rate FLUCTUATES according to general market conditions
True or False:
As a young adult, taking out a payday loan is generally deemed to be a good strategy for building credit.
FALSE
Credit card disclosure: "Your due date is at least 25 days after the end of the billing cycle. We will not charge you interest on new purchases provided that you have paid your previous balance in full by the due date each month." This is an example of a _____ period.
Grace Period
Making ____ payments __-____ every month is the only way to avoid ________ charges
Making FULL payments ON-TIME every month is the only way to avoid INTEREST charges
An excellent credit score will help with which aspect of car financing?
Qualifying for a low interest rate
When loans are amortized, monthly payments are _______ , while the amount of your monthly payment applied to interest ________ and the amount of your monthly payment applied to the principal _______ over time.
When loans are amortized, monthly payments are CONSTANT, while the amount of your monthly payment applied to interest DECREASES and the amount of your monthly payment applied to the principal INCREASES over time.
Alex took out a payday loan for $300 in August. By February of the next year, he was able to pay back the loan, but he had spent a total of $750 doing so. What’s the most likely story of how this happened?
Payday loans must be paid in full within two weeks, and if not, the only option is to renew the loan for a high penalty fee, which he did approximately 12 times
Ulises and Brandon each buy a house in the same neighborhood for $250,000. Ulises' monthly mortgage payment is $400 more per month than Brandon's.
What could explain the difference in their monthly payments?
Ulises chose a shorter term for his mortgage, so his monthly payments are higher.
Keyder has a credit card with a $2000 credit limit. His outstanding balance is currently $1200. What is the maximum amount he can now spend on this credit card?
$800
Why would credit card companies prefer that their cardholders make the minimum monthly payment every month rather than paying their total balance in full?
This enables the credit card company to make more money.
True or False:
An auto loan is likely to have an adjustable interest rate, and is an unsecured debt?
FALSE
An auto loan typically has a fixed rate and is a secured debt
A loan with a shorter term length will have __________ monthly payments, and you will pay __________ in total interest.
A loan with a shorter term length will have HIGHER monthly payments, and you will pay LESS in total interest.
Why are payday loans so much easier to qualify for than traditional bank loans?
Payday loans require proof of employment or other regular income but not a credit check
When buying a house, what is a down payment?
A large sum of money you pay when taking out a mortgage so that the principal of your loan is smaller
In the equation y = 3x + 9, what is the y-intercept?
9
What is half of half of half of 8?
1
How many sides does a dodecagon have?
12
True or False:
7 is a prime number
True
In geometry, the tool we use to measure angles is called a __________.
Protractor
I am a number with a couple of friends, quarter a dozen and you’ll find me again. What am I?
3