Higgins
How can using credit responsibly benefit an individual in an emergency?
It provides a financial safety net when immediate funds are needed
Which type of credit requires the borrower to make equal monthly payments over a specified period?
Installment credit
Which of the following is a benefit of using credit responsibly?
It allows you to make large purchases now and pay for them over time.
Which of the following is a potential risk of using a credit card?
Accumulating high-interest debt if the balance is not paid in full
What should you do if you find an error on your credit report?
Payment History
What is the potential risk of using credit cards if not managed properly?
High-interest rates can lead to accumulated debt that is difficult to repay
What does APR stand for, and what does it represent?
Annual Percentage Rate; it represents the cost of borrowing money on a credit card per year
What happens if you only pay the minimum payment on your credit card balance?
Interest will be charged on the remaining balance
Which source of credit typically targets individuals who may not qualify for traditional loans and charges high-interest rates?
Payday lenders
What is the typical term (maturity) for an auto loan
3 to 6 years
Which of the following is an example of revolving credit?
Credit Card
Which factor directly influences your ability to access credit by indicating the risk level to lenders?
Credit score
What is a secured credit card?
A credit card that requires a cash deposit as collateral
What is a late fee in terms of credit card payments?
A penalty charged for not paying at least the minimum payment by the due date
What is the most critical factor in determining your FICO credit score?
Payment History
Why is building a credit history important?
A good credit history makes it easier to obtain loans with favorable terms
What is the grace period on a credit card?
The period where you can pay your balance without incurring interest changes
What is a common feature of secured debt?
It is backed by collateral
Which type of credit is typically used for utility bills and requires payment at the end of the billing period?
Open credit
What should you do if you are a victim of identity theft?
Report the theft to the Federal Trade Commission (FTC)
What could be a consequence of missing credit card payments?
It could negatively impact your credit card score
What distinguishes a credit card from a debit card?
A credit card allows you to borrow money, while a debit card draws money directly from you
Which of the following best describes a rewards credit card?
A card that provides points, cash back, or miles for purchases
What is the primary difference between a loan and a credit card?
A loan is a lump sum of money to be repaid over time, while a credit card offers revolving credit for ongoing use.
What is collateral in the context of a mortgage loan?
The asset pledged by the borrower to secure the loan.