Test 2

Question 1

List 4 Credit Card Advantages

Answer 1

• Convenience
• Fraud Protection
• Bill Consolidation
• Benefits/Rewards

Question 2

List 4 Credit Card Disadvantages

Answer 2

• Fraud
• Going Over Budget
• High Interest Rates
• Increased Debt

Question 3

List 3 Debit Card Advantages

Answer 3

• Easy to Obtain
• Convenient
• Widely Accepted

Question 4

List 3 Debit Card Disadvantages

Answer 4

• Less Protection
• No Grace Period
• Check Book Balancing Required

Question 5

Debit Card vs Credit Card

Answer 5

Debit Cards - allow bank customers to spend money directly from their bank accounts

Credit Cards - allow consumers to borrow money from an issuer and pay it back

Question 6

What are the 3 C’s?

Answer 6

1) Character
2) Capital
3) Capacity

Question 7

Character

Answer 7

Common Questions Asked:

1) Have you used credit before?
2) Are your bills paid on time?
3) How long have you lived at your present address?
4) How long have you had a credit card for?

Question 8

Capital

Answer 8

• Credit Card companies evaluate your worth

Money earned, assets, etc.

Question 9

Capacity

Answer 9

Refers to your ability to repay your debt

Question 10

What do the 3 C’s make up?

Answer 10

Credit Score

Question 11

Credit Line

Answer 11

The maximum amount of credit extended to a borrower

Question 12

Annual Percentage Rate (APR)

Answer 12

The annual rate charged for borrowing or earned through an investment and is expressed as a percentage that represents the actual yearly cost of funds over the terms of a loan

Question 13

Balance

Answer 13

The amount available in an account for withdrawal or use

Question 14

Cash Back Rewards

Answer 14

Denoting a form of incentive offered to buyers of certain products where they receive a cash refund after making their purchase

Question 15

Annual Fee

Answer 15

Any fee that is charged on an annual basis

Question 16

Minimum Payment

Answer 16

The smallest amount of a credit card bill that a consumer can pay

Question 17

Credit Score Ranges

Answer 17

300-599: Poor
600-669: Average
670-699: Good
700-729: Great
730-850: Excellent

Question 18

How to Keep Your Credit Score Strong

Answer 18

• Complete credit applications accurately
• Use your credit cards responsibly (don’t exceed credit limit)
• Pay minimum amount of balance on time
• Pay bills on time

Question 19

Fair Credit Reporting Act

Answer 19

• Regulates collection of credit information and access to credit report
• Ensures fairness, accuracy, and privacy of personal information
• Enables customers to get free credit scores

Question 20

Equal Credit Opportunity Act

Answer 20

• Prohibits discrimination on the basis of race, color, religion, national origin, gender, marital status, age, or received public assistance

Question 21

Fair Credit Billing Act

Answer 21

• Protects consumers from unfair credit billing

- Provides guidelines for consumers and creditors to manage billing statement disputes

Question 22

Electronic Fund Transfer Act

Answer 22

• Passed to establish consumer rights, liabilities, and responsibilities of participants

Question 23

Fair Debt Collection Practices Act

Answer 23

• Prohibits debt collectors from using abusive, unfair, or deceptive practices to collect money from you

Question 24

Discover Credit Cards

Answer 24

• 4 types
• No annual fee
• Cash-back incentives (1% back on every purchase)
• 0% introductory APR for 12 months
• Interest rate: 11.24%-23.24%

Question 25

Chase Credit Cards

Answer 25

• 8 types
• 0% introductory APR for 12 months
• No annual fee
• Cash-back incentive
• Balance transfer fees
• Interest rate: 16%-23%