Chapters 4-6 Flashcards
1) A credit card is a type of:
Credit Service or loan
2) An all-in-one account that provides a complete financial service program for a single fee is known as:
Asset management account
When selecting a _______, you should consider all of the following to be major factors: Convenience, Fee structure, and other charges, Personal service, Rates for savings and borrowed funds
Financial services provider
What type of financial institution offers a full range of financial services including checking, savings, lending, and other services?
Commercial bank
John needed some cash quickly, so he received a short-term loan based on the proportional value of an old ring. Where did he go?
Pawn shop
What is a drawback of a regular savings account?
Low-interest
Earning interest on previously earned interest is called:
Compounding
The Truth in Savings Act requires financial institutions to disclose the _____ on savings accounts.
APY 100= interest/principle
Lee wants his retail purchases to be deducted directly from his checking account. What should he use?
Debit card
Laura bought a used car and was told that she needed a personal check with guaranteed payment. She obtained a:
Certified check
If a check is lost or stolen, you should use a
Stop payment order
What is the APY for a savings account with a $250 balance that receives $9 interest for the year?
100=9/250
100(0.036)
3.6%
What is the APY for a one-year $4,000 certificate of deposit with $280 interest?
100=280/4000
100(0.07)
7%
APY
Annual Percentage Yield
Southern Home Lending offers home equity loans up to 80 percent of the home value for its customers. If Sue Jones has a home valued at $290,000 and a current mortgage of $87,000, how much can she borrow in a home equity loan from Acme?
290,000(80%) = 232,000 - 87,000
145,000
If Vince charged $270 on his credit card with a 21 percent APR and he paid his balance in full within the grace period, how much was he required to pay?
270 ā because he paid it off before the interest charge
APR
Annual Percentage Rate
Peter borrowed $360 to be repaid in one year. He paid 10 percent interest and a service charge of $19. What is his finance charge?
interest + service charge
36 + 19 = 55
Finance Charge
A fee for borrowing money, added to a monthly credit card bill.
Karen received a $1,060 loan from the bank for a vacation. The bank is using the simple interest formula for this one-year, 8.25 percent loan. What is her total interest?
(Total amount)(%)(rate)
(1,060)(8.25)(1)
8,745(1)
8,745
Total interest
A total fee for borrowing money
Purchasing a car so a homemaker can return to work, Borrowing for a college education, Purchasing an item that costs less now than it will later, and Paying for a medical emergency are all valid reasons for using:
Credit card
The greatest disadvantage of using credit is:
Temptation to overspend
Examples of closed-end credit
Mortgage, automobile loan, personal loan, student loan
Examples of open-end credit
Credit cards, DPT. store cards, bank credit cards, Visa, MS, Amex, Diners Club, overdraft protection
The periodic charge for the use of credit is called:
Interest payment
If you miss payments on a home equity loan, you can lose your:
Home
A credit card holder who pays off his balances in full each month is known as
Convenience user
What are the 5 Cās of credit?
Character, Capacity, Capital, Collateral, Conditions
If you think your identity has been stolen, which of the following actions does the Federal Trade Commission recommend you take immediately?
File a police report
Jack borrowed $225. He paid $20 interest and a service charge of $3.00. What is his finance charge?
$23
Chris received a $1,400 loan from the bank for a new appliance. The bank is using the simple interest formula for this two-year, 8-percent loan. What is his total interest?
$112 + $112 = 224
What is the unit price of a 22.4-ounce box of brown sugar that costs $13.44?
11.44/22.4 = .60 per ounce
Researching the brands and prices of refrigerators is called:
Comparison shopping
Impulse shopping is:
Unplanned purchasing
What is a written guarantee from the manufacturer that specifies the conditions under which the product can be returned, replaced, or repaired?
Warranty
What type of contract covers the repair costs of a product?
Service contract
What are the techniques tp get the best deal on a car purchase?
Research, negotiate, read the fine print
Where is the most expensive place to get a car repaired?
Dealership
Most customer complaints result from?
1) Defective product
2) Low quality
3) Short product lives
4) Unexpected cost
5) Deceptive pricing
6) Poor repair
If you have a problem in which the remedy will be between $1,500 and $3,000, the appropriate tool to use would be a
Small claims court lawsuit
