Question 1

Why is it important to carefully consider your credit cards when developing a budget, financial plan and personal financial objectives?

Accepted Answer

A)  You should include more than the minimum payments in the budget to pay off the balances as soon as possible and minimize interest expense. 
B)  Evaluate relative interest rates of all cards and other loans, and investments to understand how best to prioritize payments and decide on best use of excess cash flow. 
C)  A financial plan should really focus on investing excess cash flow for retirement. 
D)  Both A and B are correct. 
A)  You should include more than the minimum payments in the budget to pay off the balances as soon as possible and minimize interest expense. 
B)  Evaluate relative interest rates of all cards and other loans, and investments to understand how best to prioritize payments and decide on best use of excess cash flow. 
C)  A financial plan should really focus on investing excess cash flow for retirement. 
D)  Both A and B are correct.

Question 2

Sandy had a beginning balance on her MasterCard statement of $300. This month she had purchases of $400, payments of $300, and a $100 cash advance. To avoid interest charges, Sandy must make a payment of

Accepted Answer

A)  $400. 
B)  $500. 
C)  $100. 
D)  Sandy cannot avoid interest charges because of the cash advance. 
A)  $400. 
B)  $500. 
C)  $100. 
D)  Sandy cannot avoid interest charges because of the cash advance.

Question 3

Which of the following may not be a feature of some credit cards?

Accepted Answer

A)  Credit limits 
B)  Annual fees 
C)  Grace periods 
D)  Cash advances 
A)  Credit limits 
B)  Annual fees 
C)  Grace periods 
D)  Cash advances

Question 4

Which of the following is not a method by which financial institutions calculate finance charges on credit cards?

Accepted Answer

A)  Previous balance method 
B)  Ending balance method 
C)  Average daily balance method 
D)  Adjusted balance method 
A)  Previous balance method 
B)  Ending balance method 
C)  Average daily balance method 
D)  Adjusted balance method

Question 5

When using credit cards, there is no way to keep track of individual expenditures.

Accepted Answer

A) True 
 B)False

Question 6

As of November 14, Ben has an outstanding credit card balance of $1,100 from purchases made over the past month. The new billing period begins on November 15. Assume Ben's outstanding balance for the first 15 days of this new billing period (Nov. 15-29) is $1,100. Then on November 29, the financial institution receives a payment of $600 from Ben, reducing his balance to $500. This is the balance for the remaining 15 days. Using the average daily balance method and a monthly interest rate of 2.5%, Ben's finance charge would be

Accepted Answer

A)  $15.00. 
B)  $12.50. 
C)  $27.50. 
D)  $20.00. 
A)  $15.00. 
B)  $12.50. 
C)  $27.50. 
D)  $20.00.

Question 7

It is not difficult to find a credit card company that is eager to extend credit to you.

Accepted Answer

A) True 
 B)False

Question 8

Credit card companies offer many incentives, such as airline miles and bonuses to get you to use their cards.

Accepted Answer

A) True 
 B)False

Question 9

As of November 14, Ben has an outstanding credit card balance of $1,100 from purchases made over the past month. The new billing period begins on November 15. Assume Ben's outstanding balance for the first 15 days of this new billing period (Nov. 15-29) is $1,100. Then on November 29, the financial institution receives a payment of $600 from Ben, reducing his balance to $500. This is the balance for the remaining 15 days. Using the adjusted balance method and a monthly interest rate of 2.5%, Ben's finance charge would be

Accepted Answer

A)  $15.00. 
B)  $12.50. 
C)  $27.50. 
D)  $20.00. 
A)  $15.00. 
B)  $12.50. 
C)  $27.50. 
D)  $20.00.

Question 10

Which of the following is not true regarding cash advances on credit cards?

Accepted Answer

A)  They are treated just like other charges on your credit card. 
B)  There is a charge for interest from the time you take the advance to the time you pay it off. 
C)  There is also a transaction fee on most cash advances. 
D)  The grace period does not apply to cash advances. 
A)  They are treated just like other charges on your credit card. 
B)  There is a charge for interest from the time you take the advance to the time you pay it off. 
C)  There is also a transaction fee on most cash advances. 
D)  The grace period does not apply to cash advances.

Question 11

Which of the following methods of calculating finance charges on credit cards is least favorable to the cardholder?

Accepted Answer

A)  Previous balance method 
B)  Ending balance method 
C)  Average daily balance method 
D)  Adjusted balance method 
A)  Previous balance method 
B)  Ending balance method 
C)  Average daily balance method 
D)  Adjusted balance method

Question 12

The annual percentage rate (APR) is useful because it allows you to easily compare financing costs among various possible creditors.

Accepted Answer

A) True 
 B)False

Question 13

Prestige cards may charge higher annual fees, but offer extra benefits such as access to private jet programs and concierge service at hotels.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements is not true of prepaid cards?

Accepted Answer

A)  Many fees may be associated with them. 
B)  Some prepaid cards can be used to withdraw cash from ATMs. 
C)  They can be useful in rebuilding an individual's credit record. 
D)  They offer less protection against theft than standard credit cards. 
A)  Many fees may be associated with them. 
B)  Some prepaid cards can be used to withdraw cash from ATMs. 
C)  They can be useful in rebuilding an individual's credit record. 
D)  They offer less protection against theft than standard credit cards.

Question 15

A self-imposed credit limit indicates that you will use a credit card only if you will have the cash to cover the payment when you receive your credit card statement.

Accepted Answer

A) True 
 B)False

Question 16

In applying for a credit card, the potential creditor will look at your ________ to determine if you have funds to cover future debt payments if necessary.

Accepted Answer

The answer of In applying for a credit card, the...

Question 17

If you have exhausted all efforts to resolve an excessive credit card balance, personal bankruptcy may be your only option.

Accepted Answer

A) True 
 B)False

Question 18

A credit card whose interest rate changes as a specific market interest rate changes is said to have a

Accepted Answer

A)  variable rate. 
B)  fixed rate. 
C)  constant rate. 
D)  tiered rate. 
A)  variable rate. 
B)  fixed rate. 
C)  constant rate. 
D)  tiered rate.

Question 19

"Wise" use of credit cards includes

Accepted Answer

A)  tracking your purchases. 
B)  paying off the entire card balance monthly to avoid interest charges. 
C)  using credit if you find something "you just have to have." 
D)  Both A and B are correct. 
A)  tracking your purchases. 
B)  paying off the entire card balance monthly to avoid interest charges. 
C)  using credit if you find something "you just have to have." 
D)  Both A and B are correct.

Question 20

Assuming you were charged simple interest of 5% on a loan of $1,000 that requires you to repay in two payments, one at the end of the first six months and one at the end of the second six months, total payments on the loan would be

Accepted Answer

A)  $1,037.50. 
B)  $525.00. 
C)  $512.50. 
D)  $1,000.00. 
A)  $1,037.50. 
B)  $525.00. 
C)  $512.50. 
D)  $1,000.00.

Why is it important to carefully consider your credit cards when developing a budget, financial plan and personal financial objectives?

Sandy had a beginning balance on her MasterCard statement of $300. This month she had purchases of $400, payments of $300, and a $100 cash advance. To avoid interest charges, Sandy must make a payment of

Which of the following may not be a feature of some credit cards?

Which of the following is not a method by which financial institutions calculate finance charges on credit cards?

When using credit cards, there is no way to keep track of individual expenditures.

It is not difficult to find a credit card company that is eager to extend credit to you.

Credit card companies offer many incentives, such as airline miles and bonuses to get you to use their cards.

Which of the following is not true regarding cash advances on credit cards?

Which of the following methods of calculating finance charges on credit cards is least favorable to the cardholder?

The annual percentage rate (APR) is useful because it allows you to easily compare financing costs among various possible creditors.

Prestige cards may charge higher annual fees, but offer extra benefits such as access to private jet programs and concierge service at hotels.

Which of the following statements is not true of prepaid cards?

A self-imposed credit limit indicates that you will use a credit card only if you will have the cash to cover the payment when you receive your credit card statement.

In applying for a credit card, the potential creditor will look at your ________ to determine if you have funds to cover future debt payments if necessary.

If you have exhausted all efforts to resolve an excessive credit card balance, personal bankruptcy may be your only option.

A credit card whose interest rate changes as a specific market interest rate changes is said to have a

"Wise" use of credit cards includes

Assuming you were charged simple interest of 5% on a loan of $1,000 that requires you to repay in two payments, one at the end of the first six months and one at the end of the second six months, total payments on the loan would be

Overview of a Financial Plan

Planning With Personal Financial Statements

Applying Time Value Concepts

Using Tax Concepts for Planning

Banking and Interest Rates

Managing Your Money

Assessing and Securing Your Credit

Personal Loans

Purchasing and Financing a Home

Auto and Homeowners Insurance

Health and Disability Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Asset Allocation

Retirement Planning

Estate Planning

Integrating the Components of a Financial Plan

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Exam 8: Managing Your Credit

Why is it important to carefully consider your credit cards when developing a budget, financial plan and personal financial objectives?

Sandy had a beginning balance on her MasterCard statement of $300. This month she had purchases of $400, payments of $300, and a $100 cash advance. To avoid interest charges, Sandy must make a payment of

Which of the following may not be a feature of some credit cards?

Which of the following is not a method by which financial institutions calculate finance charges on credit cards?

When using credit cards, there is no way to keep track of individual expenditures.

It is not difficult to find a credit card company that is eager to extend credit to you.

Credit card companies offer many incentives, such as airline miles and bonuses to get you to use their cards.

Which of the following is not true regarding cash advances on credit cards?

Which of the following methods of calculating finance charges on credit cards is least favorable to the cardholder?

The annual percentage rate (APR) is useful because it allows you to easily compare financing costs among various possible creditors.

Prestige cards may charge higher annual fees, but offer extra benefits such as access to private jet programs and concierge service at hotels.

Which of the following statements is not true of prepaid cards?

A self-imposed credit limit indicates that you will use a credit card only if you will have the cash to cover the payment when you receive your credit card statement.

In applying for a credit card, the potential creditor will look at your ________ to determine if you have funds to cover future debt payments if necessary.

If you have exhausted all efforts to resolve an excessive credit card balance, personal bankruptcy may be your only option.

A credit card whose interest rate changes as a specific market interest rate changes is said to have a

"Wise" use of credit cards includes

Assuming you were charged simple interest of 5% on a loan of $1,000 that requires you to repay in two payments, one at the end of the first six months and one at the end of the second six months, total payments on the loan would be

Overview of a Financial Plan

Planning With Personal Financial Statements

Applying Time Value Concepts

Using Tax Concepts for Planning

Banking and Interest Rates

Managing Your Money

Assessing and Securing Your Credit

Personal Loans

Purchasing and Financing a Home

Auto and Homeowners Insurance

Health and Disability Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Asset Allocation

Retirement Planning

Estate Planning

Integrating the Components of a Financial Plan

Filters