Credit Card Review

Question 1

Balance transfers

Answer 1

Transferring debt from one credit card to another

Question 2

Over-The-Limit Fee

Answer 2

Charged if the account balance goes over the set credit limit

Question 3

Credit limit

Answer 3

The maximum amount of charge allowed to an account

Question 4

Annual percentage rate (APR)

Answer 4

The cost of credit expressed as a yearly interest rate

Question 5

Introductory rate

Answer 5

The interest rate that may be charged right after a credit card account is opened

Question 6

Variable-Rate APR

Answer 6

An interest rate that may change depending on other factors, such as the prime rate

Question 7

Annual fee

Answer 7

A yearly fee that may be charged for having a credit card

Question 8

Late-Payment Fee

Answer 8

Charges when a cardholder dies not make the minimum monthly payment by the due date

Question 9

Penalty APR

Answer 9

When you fail to pay a bill on time, and they increase the APR

Question 10

Is a 13% or an 18% APR for a credit card better?

Answer 10

13%

Question 11

What are three safety tips when using a credit card?

Answer 11

Don’t overspend
Use a protected website
Don’t let people see you imputing #’s

Question 12

Advantages to having a credit card

Answer 12

Easy money
Convenient
Large purchases can be made
Don’t need to carry large amounts of cash

Question 13

Disadvantages to having credit cards

Answer 13

Debt
Impulse spending
Identity theft

Question 14

Closed end credit vs Open ended credit

Answer 14

Closed: there is a set time the loan exists (examples-car loan, mortgage)
Open: can keep using, don’t have to repay

Question 15

Debit card vs Credit card

Answer 15

Debit-immediate (takes money directly out of account)

Credit-money is owed

Question 16

What may happen if a cardholder makes a late credit card payment?

Answer 16

• Penalty APR
• Hurt credit score
• Late fee

Question 17

What can happen if you have no credit history?

Answer 17

You may be denied credit

Question 18

People under 21 can never receive a credit card

true/false?

Answer 18

False

Question 19

The Truth in Lending Act limits an individuals liability for unauthorized (blank)

Answer 19

Limits unauthorized credit charges in case a credit card is lost/stolen

Question 20

What are two ways to determine if a website is secure when purchasing items online?

Answer 20

https at the begging of URL

Lock icon on the browser

Question 21

Credit

Answer 21

A customers ability to obtain goods or services before payment based on trust

Question 22

What are the three C’s of Credit

Answer 22

Character
Capital
Capacity

Question 23

Character

Answer 23

Lenders checks to see if you’re a responsible person

Question 24

Capital

Answer 24

Lender makes sure you have assets they can take if credit debt can’t be payed

Question 25

Capacity

Answer 25

The individuals ability to pay them back

Question 26

What's the Truth-In-Lending act?

Answer 26

A law made to promote the informed use of consumer credit by disclosures about its terms and costs

Question 27

Line of credit

Answer 27

Amount of credit extended to a borrower

Question 28

Which loans are down payments required?

Answer 28

Auto and Mortgage

Question 29

Installment credit

Answer 29

A type of credit that has a fixed # of payments

Question 30

Revolving credit

Answer 30

Credit that is automatically renewed as debts are payed off

Question 31

Credit score

Answer 31

given to a person that indicates to lenders their capacity to pay a loan

Question 32

Credit rating

Answer 32

Estimate of how well a person will pay a loan based on past dealings

Question 33

What are advantages to having a good interest rate?

Answer 33

- more likely to get a loan - better (lower) interest rate - have credit cards with lower interest rate (more benefits)

Question 34

What are the thee major credit reporting agencies?

Answer 34

Equifax Experian TransUnion, LLC

Question 35

Consigner

Answer 35

An individual with good credit who signs a loan with an applicant. They have to pay it if the signer can't

Question 36

Bankruptcy

Answer 36

The legal process of relieving someone of their outstanding debt (will hurt credit score for 7-10 years)

Question 37

Collateral

Answer 37

Something that can be pledged as security for a loan in the even that the loan in not repaid (car payment for a car loan)

Question 38

Credit limit specifies what?

Answer 38

The maximum amount charged to a credit card

Question 39

General purpose credit cards

Answer 39

Visa MasterCard Discover

Question 40

Fair Credit Reporting Act

Answer 40

Promotes fairness, accuracy, and privacy of a consumer

Question 41

Interest

Answer 41

The charge for borrowing money