Interest
When taking out a loan, do you want a high or low interest rate?
Low
Why can ARM mortgages be risky?
Since the rate adjusts, you could end up with a higher interest rate and then not be able to afford your monthly payment.
What is one benefit of using a credit card?
Build Credit
Earn Rewards
Safer and easier than cash
What are the ranges for FICO Credit Scores?
300-850
What is unsecured debt?
Debt that does not have collateral.
What does APR stand for?
Annual Percentage Rate
What is the most common length of a mortgage?
30 years
What is a downside of using credit cards?
If you miss payments you will get charged interest and can easily go into debt.
What is one thing that effects your credit?
Payment History
Amount Owed
Length of Credit History
Mix of Credit
New Credit (Credit Checks)
What is an example of secured debt?
House with a mortgage
Car with an auto loan
Rate these debts from lowest interest rates to highest:
Payday loans, credit card debt, student loans.
Student loans, credit card debt, payday loans
If you wanted to get the lowest interest rate on a mortgage possible, name at least one thing you could do make it happen.
Improve your credit score, shop around for better rates between lenders, consider a shorter length mortgage.
Why isn't it a good idea to get as many credit cards as possible?
To apply for credit cards, the credit card company does a hard credit check which lowers your credit score a bit.
What has the greatest effect on your credit?
Payment History
Explain the Debt Snowball Method of paying off debt.
You pay off the smallest amount of debt first while still making your minimum payments on everything, then the next smallest once the smallest is paid off.
When you are earning interest from a savings account, is it better to have it compound more or less frequently?
More frequently
If you pay extra money every month on your mortgage, what does the money go towards paying down?
The Principal
What is the name of the box that has the details about credit card interest rates and fees?
Schumer Box
What is the credit average FICO credit score in America?
717
Why does the Debt Snowball method of paying off debt not pay it off as quickly as other methods.
It doesn't account for interest rates.
How much interest does the stock market typically return annually?
10% which is 6-7% when adjusted for inflation.
What is it called when a lender holds a portion of your monthly payment in an account to cover property taxes and homeowner's insurance?
Escrow
How much combined credit card debt is in America? (All the credit card debt added together)
1.2 trillion dollars
What are the names of the 3 main credit bureaus in the US?
Experian
Equifax
TansUnion
Why might it be a good idea to not pay off debt?
When debt has a low interest rate, and you can earn higher interest another way on the money you would be using to pay off the debt.