Credit 101
What are the three main components of a line of credit?
What is Principal, Interest Rate, and Term
What is the smallest amount you can pay on a credit card bill to remain in good standing?
What is minimum payment?
What term describes loans paid off in equal monthly payments?
What is Installment Loans (Amortized Loans)
What is a down payment?
What is an upfront payment that reduces the loan amount.
What is the typical APR for a payday loan?
What is 400%
What does “net worth” represent and how is it calculated?
What is Net worth = Total assets – Total liabilities
What period allows you to pay your balance without interest charges?
What is Grace Period
What type of loan uses an asset, such as a car or home, as collateral?
What is Secured Loan
What factor most strongly affects your interest rate when financing a car?
What is a credit score?
Why are payday loans easier to get than traditional bank loans?
What is required proof of income but not a credit check.
What type of credit allows borrowing up to a limit repeatedly, like a credit card?
What is Revolving Credit
What information is summarized in a credit card’s Schumer Box?
What is APR, fees, and key credit card terms
Why is it a good idea to pay more than the minimum on an amortized loan?
What is Extra payments reduce the principal faster, lowering total interest costs
What is the difference between a fixed-rate mortgage and an adjustable-rate mortgage (ARM)?
What is Fixed rates remain stable; ARMs change over time.
How can payday loans trap borrowers in a cycle of debt?
What is High fees and rollovers make it difficult to repay the full amount.
What is the key difference between secured and unsecured debt?
What is secured debt is backed by collateral; unsecured debt is not.
Why is paying only the minimum balance each month a poor strategy?
What is accruing interest and staying in debt longer.
A longer loan term generally means __________ monthly payments and __________ total interest.
What is Lower;more
What are two strategies for reducing the total cost of a mortgage?
What is making a larger down payment and securing a lower APR?
Name one safer alternative to payday loans.
What is Credit union “PAL” loans, small bank loans, or nonprofit credit counseling.
Why is establishing credit early in life beneficial for young adults?
What is builds credit history, increases access to loans, and can lead to lower interest rates.
Name three ways individuals under 21 can begin building credit responsibly
What is a cosigner, authorized user, or using secured credit card
What is the key difference between a fixed-rate and variable-rate loan?
What is Fixed rates stay constant; variable rates fluctuate with the market.
How does amortization apply to home loans?
What is each monthly payment covers interest first, then gradually more of the principal.
What are some hidden fees that can make payday or title loans even more expensive?
What is Processing fees, rollover fees, documentation fees, or add-on costs like roadside insurance.