Category 1:Credit Cards
To avoid paying any interest on your credit card, you must do this every month.
Answer: What is pay the full balance?
This type of mortgage has an interest rate that stays the same for a few years then fluctuates with market conditions.
What is an Adjustable-Rate Mortgage (ARM)?
The average APR for a payday loan is closest to this staggering percentage.
What is 400%?
If your credit limit is $1,000 and your balance is $800, this is the maximum you can still spend.
What is $200?
This type of debt is often considered "good" because it is an investment that can provide a future return.
What is a mortgage (or a home loan)?
This type of card is tied directly to your checking account, whereas a credit card is a loan you pay back later.
What is a debit card?
A loan where the monthly payments are constant, but the portion going to principal increases over time.
What is an amortized loan?
Instead of a credit check, payday lenders usually only require proof of this.
What is employment (or regular income)?
This is the "worst" advice for someone struggling to make auto loan payments on a tight budget.
What is stop making payments on some debts to focus on others?
This term describes an interest rate that does not change over the life of the loan.
What is a fixed rate?
This is the name of the standardized table found in credit card agreements that lists APRs and fees.
What is a Schumer Box?
This type of loan is backed by collateral (like a car or house) that can be repossessed if you don't pay.
What is a secured loan?
This is the most likely reason a $300 payday loan could end up costing a borrower $750.
What is renewing/rolling over the loan multiple times (due to high penalty fees)?
An excellent credit score is most helpful for this specific aspect of car financing.
What is qualifying for a low interest rate?
Being added as one of these on a parent's account is a common way for students to build credit.
What is an authorized user?
Credit card companies prefer you only pay this amount each month because it allows them to make more money from interest.
What is the minimum payment?
Compared to a 30-year mortgage, a 15-year mortgage will have these two characteristics.
What are higher monthly payments and lower total interest?
As a young adult, this is the one strategy you should EXCEPT or avoid when trying to build credit.
What is taking out a payday loan?
This is one reason why two people with the exact same debt amount (e.g., $40,000) might have different stress levels.
What is differences in income, outlook, or financial obligations?
This refers the interest rate plus any additional fees or costs associated with the loan, expressed as a yearly percentage.
What is APR (Annual Percentage Rate)?
If a Schumer Box lists an APR range of 9.99%–23.99%, your specific rate will be determined by this.
What is your credit history (or creditworthiness)?
This is the term for a large sum of money paid upfront when taking out a mortgage to reduce the principal.
What is a down payment?
This modern service allows you to split expensive purchases into smaller payments, but may result in late fees or debt collection if missed.
What is Buy Now, Pay Later (BNPL)?
Applying an extra payment to this part of your loan will help you pay off debt the fastest.
What is the principal?
A 28.99% "Penalty APR" is usually triggered by this action.
What is a late payment?
This specific status on a parents' credit card can help a college graduate secure a better interest rate on their first car loan.
What is an authorized user?
What is repossession? (Or: The car is taken back).
This is the legal process by which a lender takes back a home after a borrower falls behind on payments.
What is foreclosure?
While a shorter loan term (e.g., 15 years vs. 30 years) makes the total loan cheaper, it has this specific drawback for the monthly budget.
What is a larger monthly payment?
The original amount of money borrowed, excluding interest.
What is the principal?
Identify two reasons why it is beneficial for a young adult to establish credit.
Bart graduated college with $40,000 in student loan and credit card debt and is extremely worried about how he’ll pay it back. His best friend Miguel has the same exact debt and isn’t worried at all. What could explain why these two people have different levels of concern about the same situation?
Personal feelings about debt can vary according to many factors:
Jojo is offered an installment loan at a fixed rate for a secured debt. Explain what each aspect of that offer means:
a. Installment –
b. Fixed rate –
c. Secured –
a. Installment – Payment due will be the same amount from month to month; loan is amortized
b. Fixed rate – Interest rate will stay the same for the entire length of the loan
c. Secured – The loan is for a specific item that can be repossessed for non-payment
What is one piece of advice you would offer to a friend if they told you they plan to use a Buy Now, Pay Later service to make an expensive purchase? Explain the consequences they might face if they don't take your advice.
You should make sure you make your payments on time. If you don’t make payments on time, you might receive a late fee. In addition, depending on how long it takes you to make your payment, your account might be sent to a collection agency.
Your brother and sister-in-law want to buy their first house. Write two sentences of mortgage advice you want them to know.