credit union Flashcards
The maximum amount you are allowed to charge on your account is the
a. Quota
b. account ceiling
c. credit limit
d. maximum purchase
c. credit limit
What is credit?
a. the option to purchase things and pay for them later, usually with interest
b. the interest paid on an item bought with a credit card
c. the cost of interest and fees over the life of the loan
d. the report used to decide whether or not to extend a loan
The option to purchase things and pay for them later, usually with interest.
Which of the following do not involve interest payments on purchases?
a. personal loans
b. credit cards
c. debit cards
d. title loans
Debit cards
Which of the following has a maximum credit limit that can be used for multiple purchases and can be paid back over time?
a. title loans
b. credit cards
c. mortgage
d. paycheck loan
Credit Cards
Which of the following have the highest interest rates?
a. personal loans
b. credit cards
c. student loans
d. payday loans
Payday loans
Which of the following is not considered when determining a credit score?
a. payment history
b. previous jobs
c. types of credit
d. credit utilization
Previous jobs
What is the highest possible credit score?
a. 425
b. 675
c. 850
d. 1000
850
Which of the following is one of the Five C’s of Credit?
a. Convenience
b. Character
c. Consistency
d. Calculation
Character
The financial ability to repay a loan with present income
a. Character
b. Collateral
c. Capital
d. Capacity
Capacity
A business that accumulates, stores, and sells credit information to business subscribers
a. payday lender
b. Credit union
c. credit bureau
d. pawnbroker
Credit bureau
Which of the following is true about credit reports?
a. they list payment history and debt levels
b. they are used to determine taxes owed
c. they are prepared once every five years
d. they are only available to financial institution
They list payment history and debt levels
The frequency of payment of installment loans is usually
a. Daily
b. Weekly
c. Monthly
d. Quarterly
Monthly
Which of the following debts is not erased by bankruptcy?
a. child support
b. credit card purchases
c. medical bills
d. car loans
Child support
Which of the following is true about bankruptcy?
a. it requires a legal action to remove debt.
b. it has no effect on a person’s credit history
c. it is only available to those with a high income
d. it is considered a crime punishable by prison
It requires a legal action to level action to remove debt
A loan that is backed by something of value pledged to ensure payment is a
a. non-secured loan
b. secured loan
c. signature loan
d. none of these
secured loan
Which of the following is considered to be open-ended credit?
a. department store charge cards
b. a mortgage
c. a car loan
d. installment loans
Department store charge cards
The information that a lender must disclose to consumers applying for a cash loan is
a. the formula for compounded interest
b. the annual percentage rate (APR) and/or the finance charge
c. full dollar amount being paid back on the loan over its life
d. the tax obligations
The annual percentage rate (APR) and/or the finance charge
A person’s debt ratio shows the percentage between the debt and net worth. The lower the ratio the
a. better off financially the person is
b. worse off financially the person is
c. more liquid assets the person has
d. less liquid assets the person has
better off financially the person is
When a person brings an item to a pawnshop to obtain cash, the transaction is considered
a. a collateralized loan
b. a custodial payment
c. an unsecured loan
d. a sales agreement
A collateralized loan
When a person declares bankruptcy, that fact will appear on the person’s credit report
a. for a 3 year period
b. until the person repays all the debts owed
c. for a 10 year period
d. until the person is able to receive a new credit card
for a 10 year period
What is the best way to improve a bad credit history?
a. apply for additional credit cards
b. pay off the lowest interest rate cards first
c. use credit cards instead of paying with cash
d. pay more than the monthly minimum payment
Pay more than the monthly minimum payment
The act known for its provisions requiring full disclosure of all charges in a credit transaction is called the
a. Fair Credit Reporting Act
b. Fair Credit Billing Act
c. Truth in Lending Act
Truth in lending act
Which of the following is a benefit of credit cards?
a. The convenience of buying now and paying later
b. The ability to spend unlimited money
c. No interest fees on unpaid credit balances
d. No impact on your ability to receive loans
The convenience of buying now and paying later
The wise use of credit involves comparing the various offers of credit to determine the
a. Affiliated banks
b. Total costs
c. Yearly taxes
d. Company sponsors
Total cost
Individuals can verify the accuracy of their credit histories by reviewing a __________ that is obtained from a __________________.
a. Credit certificate; credit union
b. Bank statement; financial institution
c. Lending statement; tax agency
d. Credit report; credit bureau
Credit report; Credit bureau
Interest paid on a loan can be understood as compensation to ____________ for _________________.
a. The borrower; spending now rather than later
b. The borrower; repaying on time
c. The lender; avoiding bad investments
d. The lender; taking a risk
The lender; taking a risk
What are the two most important factors in calculating your credit score?
a. Payment history and types of accounts
b. Amounts owed and length of credit history
c. Payment history and amounts owed
Payment histor and amounts owed
All of the following would show up on a credit report EXCEPT…
a. Salary of your current job
b. Payment history of your car loan
c. Credit card payment history
d. Student loan activity
Salary of your current job
Your friend confides in you that he has a low credit score. What is the single best way for him to improve his credit score?
a. Cancel his credit cards
b. Make on-time payments
c. Get a car loan
d. Check his credit score
Make on time payments
Your friend confides in you that he has a low credit score. What is the single best way for him to improve his credit score?
a. Cancel his credit cards
b. Make on-time payments
c. Get a car loan
d. Check his credit score
Make on time payments
Melvin is 19 years old and wants to begin establishing a credit history. Which action should he take to meet that goal?
a. Always say “credit” when asked “credit or debit?” at a store
b. Ask his parents to cosign a credit card or add him as an authorized user on their credit card
c. Any time he borrows money from a friend or family member, be sure to pay it back promptly
d. Take out some private student loans, even though he doesn’t need them because he has grants and scholarships
B
Which of the following individuals or groups would be the LEAST likely to look at your credit score?
a. Employers
b. Credit card companies
c. Auto insurers
d. A bank representative who is helping you open a savings account
D
You have a credit card and want to know the best way to use it to boost your credit score. Which step will have the greatest impact?
a. Using less than 30% of the credit limit on your card and paying it off in full every month by the due date.
b. Always carry a balance from month to month.
c. Make the minimum payment required on your credit card every month by the due date.
d. Put the credit card in a drawer and don’t ever use it.
A
I forgot to pay my credit card bill one month. For how long with that payment information show up on my credit report?
a. Once I make the payment, it will disappear
b. One year
c. Seven years
d. Ten years
seven years
5 Which of the following could have a NEGATIVE impact on your credit score?
a. Paying your bills on time
b. Paying down the balances on your credit card accounts
c. Decreasing your utilization of credit
d. Applying for multiple credit cards in a short period of time (e.g., a week)
D
Which best describes the Debt Snowball method for paying off debt?
a. Only make payments on your smallest debt first, then move on to your second smallest debt, and so on…
b. Once your debt “snowballs” out of control, hire a certified credit counselor to help get your finances back on track.
c. Make the monthly minimum payments on all your debts and put any extra cash toward the debt with the highest balance.
d. Make the monthly minimum payments on all your debts and put any extra cash toward the debt with the lowest balance.
Make the monthly minimum payments on all your debts and put any extra cash toward the debt with the lowest balance.
Which of these represents a potential consequence of neglecting to pay your credit card or loan debts?
a. Wages or tax refunds can be garnished
b. Lender can file bankruptcy on your behalf
c. Collection agencies begin visiting your friends and family to collect your debt
d. You lose your job
Wages or tax refunds can be garnished
Which statement best describes why payday loans are sometimes referred to as “predatory lending?”
a. Competition to qualify for these loans is fierce, like a predator.
b. The salespeople who work at these locations are often mean and unfriendly.
c. Lenders “prey” on low-income borrowers who have little to no other options for obtaining a loan.
d. “Predatory lending” is an official category the government uses to describe these particular types of loans, based on their fine print.
Lenders “prey” on low-income borrowers who have little to no other options for obtaining a loan
Which response best completes the sentence “It’s best to begin establishing credit when you’re young because __________”?
a. Interest rates will only continue to go up as you get older.
b. You need a credit history and report to qualify for Federal student loans.
c. Credit scores are free for anyone under the age of 25.
d. You will likely need a credit history to rent your first apartment, finance your first car, or open an unsecured credit card.
You will likely need a credit history to rent your first apartment, finance your first car, or open an unsecured credit card.
According to the Equal Credit Opportunity Act, which of the following factors CAN a lender legally use to charge you a higher interest rate?
a. Your age, if you’re under 21
b. Your credit score
c. The percentage of your income that comes from Social Security payments
d. Your marital status, if you’re single
your credit score
