Debit vs Credit
2. What is a debit card directly linked to?
a) A credit limit
b) A savings account
c) A checking account
d) A loan account
C: A checking account
A: Collapse and Condense
B: Snowball and Avalanche
C: Cow and Squirrel
D: Eliminate and Decrease
Snowball and Avalanche
What are the two most common types of debt?
Credit Card and Student Loan
What is a credit score?
A number based on your purchasing history that dictates how likely you are to pay money you borrow
Which type of card affects your credit score
Credit Card
Which option provides better security features for the consumer?
Credit
Why is it important to pay off your debt?
A) To improve your credit score and financial health
B) To increase the interest you owe over time
C) To ensure you qualify for more debt in the future
D) To avoid having to create a budget
A) To improve your credit score and financial health
What is a mortgage?
A: A mortgage is a loan for buying a car.
B: A mortgage is money given to help you go on vacation.
C: A mortgage is money you borrow to buy furniture.
D: A mortgage is a loan used to buy a home or property.
D: A mortgage is a loan used to buy a home or property.
What happens if you don't repay a loan on time?
a) Your credit score may decrease
b) The loan amount is reduced
c) The loan is canceled
d) Your credit score increases
a) Your credit score may decrease
What is the term for a person who pays off their credit card balance in full every month
Deadbeat
What are the two advantages of using a debit card over a credit card?
A. Debit cards improve your credit score faster than credit cards
B. Debit cards always come with cash-back rewards on every purchase
C. Debit cards help avoid debt and don’t charge interest or late fees
D. Debit cards let you spend more than your account balance without penalty
C. Debit cards help avoid debt and don't charge interest or late fees
Describe the snowball method
The snowball method is a strategy to repay debt in which you pay off your smallest balances first and "snowball" up to the larger balances
Which of the following describes the difference between secured and unsecured debt?
A) Secured debt requires collateral, such as a house or car, while unsecured debt does not.
B) Unsecured debt typically has lower interest rates than secured debt.
C) Secured debt includes credit cards and student loans, while unsecured debt includes mortgages.
D) Unsecured debt is always tax-deductible, while secured debt is not.
A) Secured debt requires collateral, such as a house or car, while unsecured debt does not
What is considered a good credit score range?
A. 300-579
B. 580-669
C. 670-739
D. 740-850
C. 670-739
What type of debt is typically the most costly in terms of interest rates?
A. Secured debt
B. Revolving debt
C. Installment debt
D. Student loan debt
B. Revolving debt
What is the main factor in determining a consumer's interest rate on a credit card?
Credit Score
What is one advantage and one drawback to the avalanche method
Advantage: The avalanche method allows you to pay the least interest in total saving you money.
Drawback: Due to slow initial progress, users of the method can feel demotivated and not stick with the method
Student loans are typically considered which type of debt?
A. Revolving debt
B. Secured debt
C. Installment debt
D. Unsecured debt
C. Installment Debt
How often are you entitled to a free credit report from each of the three major credit bureaus?
A. Once a month
B. Once a year
C. Every six months
D. Every two years
B. Once a year
What can happen if you only make the minimum payment on a credit card?
A. Your balance will decrease quickly
B. You will pay off your debt sooner
C. You may end up paying more in interest over time
D. Your credit score will improve automatically
C. You may end up paying more in interest over time
Jimmy is drowning with $30,000 in revolving debt and wants to cut back on his spending habits. For future purchases, do you recommend he use his debit or credit card, and why?
Jimmy should use his debit card for future purchases to avoid accumulating more debt and prevent overspending.
Timmy is struggling with $100,000 in debt across student loans, mortgages, car payments, and credit cards. He feels extremely overwhelmed by the situation. Which method do you recommend Timmy chooses to eliminate his debt, and why?
Snowball method because it will allow him to build confidence and stay consistent with his monthly debt payments, hopefully launching him out of his unfortunate situation
What is the difference between subsidized and unsubsidized student loans?
The government pays for the interest accumulated from subsidized loans while you're still a student. In unsubsidized loans, however, the student is responsible for all interest accumulated from the day they take out the loan.
Which of the following, although not directly, can affect your credit score?
A) Number of credit inquiries in the last 12 months
B) Credit utilization ratio
C) Employment Status
D) The total age of your credit accounts
C) Employment Status
Jar Carfuncle, a 30-year-old marketing professional, is looking to buy a car. He’s been saving up for a new vehicle and has a budget of $15,000. His top priority is reliability and affordability, as he wants to minimize monthly expenses and avoid taking on large debt.
He’s considering both a new car and a used car. After researching, he’s found two options:
Which option should Jar go with?
Jar should buy the used car because it allows him to avoid the steep depreciation of a new car, stay within his budget, and minimize ongoing costs like insurance. The used car offers great value, reliability, and peace of mind without sacrificing his financial goals