Mortgages
This remains constant throughout the life of the loan
Fixed-rate mortgage
What will improve your credit score?
Paying bills on time
This changes based on market conditions, unlike fixed rates.
Variable interest rates
Why is it unrealistic to be completely debt free?
Some debt can be beneficial for large purchases like a house.
This is how creditors assess your creditworthiness.
Your credit score
This defines how long it will take to repay the entire loan
The amortization period of a mortgage
What credit card activity starts charging interest instantly?
Cash advance
What might decrease over time with variable-rate mortgages.
The interest rate
What is a major benefit of lines of credit over credit cards.
generally lower interest rates and fees
What is best advantage of excellent credit history?
more likely loaned money when needed
What is the recommended minimum down payment for most mortgages
Typically 20%
What is not important in choosing a credit card?
The color and design of the card
What is the average rate of a credit card: 5% to 10%
10% to 15%
above 15% ?
above 15% ... average now is 27%
What is the first rule of borrowing?
Try to live within your means
Why review your bank and credit card statements regularly?
To detect errors, fraud or unauthorized transactions
What increases the total interest paid over the loan term?
A longer amortization period
This will start charging interest on the outstanding balance
Only paying the minimum balance on a credit card or not paying the full amount
Which statement about lines of credit is TRUE?
They do not start accruing interest until after a 21-day grace period.
They typically have higher interest rates than credit cards.
Interest on a line of credit starts accruing immediately once funds are drawn.
Interest on a line of credit starts accruing immediately once funds are drawn.
What is used for larger purchases, often with collateral?
Long-term financing
What is the risk of using lines of credit?
Accumulating a larger balance due to lower interest rates.
Normally how much do you pay in interest over the total amortisation period?
Less than the loan amount
About the same as the loan amount
More than the loan amount
More than the value of the loan
What is a major advantage of using credit cards besides building a credit history?
Rewards and benefits
Which statement about credit cards is true?
They cannot be used for online transactions
They do not start accruing interest until after a grace period
They typically have lower rates of interest than other sources of debt
They do not start accruing interest until after a grace period
What should you consider when comparing different sources of credit?
The credit limit, ease of access, cost of borrowing, repayment terms, and any additional benefits.
Debit cards do not charge interest, but what is one disadvantage of using debit cards?
Access directly to your account. OR
Does not help build a credit history