Question 1

A line of credit acts very much like

Accepted Answer

A) open-end/revolving credit. 
B) closed-end credit. 
C) installment credit. 
D) single-payment credit. 
A) open-end/revolving credit. 
B) closed-end credit. 
C) installment credit. 
D) single-payment credit. A

Question 2

Kay had three credit cards in her billfold when her wallet was stolen.She reported the cards missing as soon as she discovered the loss (one day),but the following unauthorized charges were incurred before she reported the stolen cards:
 
How much is Kay's maximum legal liability for the fraudulent charges on these cards?

Accepted Answer

A) $660 
B) $585 
C) $125 
D) $0 
A) $660 
B) $585 
C) $125 
D) $0 D

Question 3

Failure to pay the balance in full in a given month on a credit card with a grace period means that you

Accepted Answer

A) must pay interest on all new borrowings with the card since the last billing statement. 
B) pay a higher minimum payment the next month. 
C) pay all new borrowings in full the next month. 
D) stop using the card until the balance is paid. 
A) must pay interest on all new borrowings with the card since the last billing statement. 
B) pay a higher minimum payment the next month. 
C) pay all new borrowings in full the next month. 
D) stop using the card until the balance is paid. A

Question 4

"Gold," "silver," or "platinum" cards are all examples of ____ cards.

Accepted Answer

A) revolving 
B) prestige 
C) affinity 
D) travel and entertainment 
A) revolving 
B) prestige 
C) affinity 
D) travel and entertainment

Question 5

If you are a person who always pays off the total outstanding balance on your credit card each month,which of the following aspects of the credit card agreement will you be least interested in? (Assume there is a 21-day grace period.)

Accepted Answer

A) APR 
B) Annual fees 
C) Transaction fees 
D) Credit limit 
A) APR 
B) Annual fees 
C) Transaction fees 
D) Credit limit

Question 6

Zelda was approved for a $3,000,two-year,11 percent loan with the finance charges figured using the discount method.How much cash will Zelda receive from this loan?

Accepted Answer

A) $3,330 
B) $2,670 
C) $3,000 
D) $2,340 
A) $3,330 
B) $2,670 
C) $3,000 
D) $2,340

Question 7

The total cost of credit on a yearly basis stated as a percentage rate is its

Accepted Answer

A) APR. 
B) interest charge. 
C) finance charge. 
D) interest rate. 
A) APR. 
B) interest charge. 
C) finance charge. 
D) interest rate.

Question 8

The time period between billing dates on your credit cards is the

Accepted Answer

A) revolving period. 
B) transaction cycle. 
C) grace period. 
D) billing cycle. 
A) revolving period. 
B) transaction cycle. 
C) grace period. 
D) billing cycle.

Question 9

Obtaining money via a credit card cash advance is a low-cost alternative if you need a loan.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following should not be done when you find an error on your credit card statement?

Accepted Answer

A) Pay the remaining amount owed in full to isolate a disputed item. 
B) Withhold payment for the disputed item(s). 
C) Send a written notice of the error to the credit card issuer. 
D) Send all original documentation to the credit card issuer. 
A) Pay the remaining amount owed in full to isolate a disputed item. 
B) Withhold payment for the disputed item(s). 
C) Send a written notice of the error to the credit card issuer. 
D) Send all original documentation to the credit card issuer.

Question 11

The APR is approximately double the add-on rate on an installment loan.

Accepted Answer

A) True 
 B)False

Question 12

Single-payment,open-end,and service credit are lumped together under the category of

Accepted Answer

A) installment credit. 
B) closed-end credit. 
C) noninstallment credit. 
D) revolving credit. 
A) installment credit. 
B) closed-end credit. 
C) noninstallment credit. 
D) revolving credit.

Question 13

A sales finance company buys at a discount the installment sales contracts of merchants or directly finances retail sales.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following terms is not necessarily associated with a secured loan?

Accepted Answer

A) security interest 
B) collateral 
C) repossession 
D) the rule of 78s 
A) security interest 
B) collateral 
C) repossession 
D) the rule of 78s

Question 15

The last day of the month on which any transactions are reported on the credit statement is called the

Accepted Answer

A) due date. 
B) billing date. 
C) grace period. 
D) default date. 
A) due date. 
B) billing date. 
C) grace period. 
D) default date.

Question 16

A borrower who has failed to make a payment of principal or interest when due or meet any other requirement of a credit agreement is said to be in

Accepted Answer

A) arrears 
B) foreclosure 
C) rescission 
D) default 
A) arrears 
B) foreclosure 
C) rescission 
D) default

Question 17

Your credit card liability for fraudulent usage of your lost or stolen credit card is limited to $____ if you report the loss.

Accepted Answer

A) 0 
B) 50 
C) 500 
D) unlimited 
A) 0 
B) 50 
C) 500 
D) unlimited

Question 18

The method of paying off a loan through which a portion of each payment goes to the principal and a portion to interest with the interest portion declining and the principal portion increasing each month as the debt is paid down is called

Accepted Answer

A) acceleration. 
B) garnishment. 
C) amortization. 
D) leasing. 
A) acceleration. 
B) garnishment. 
C) amortization. 
D) leasing.

Question 19

Jason took his friend Jennifer out for her 21st birthday.He paid for the dinner with his Visa card and purchased a dozen red roses using his American Express green card.John will have to pay his ____ bill upon receiving the statement,but he will have the option of paying his ____ bill over several months.

Accepted Answer

A) American Express; Visa 
B) Visa; American Express 
C) He can make extended payments on both Visa and American Express. 
D) He will have to pay both Visa and American Express in full on billing. 
A) American Express; Visa 
B) Visa; American Express 
C) He can make extended payments on both Visa and American Express. 
D) He will have to pay both Visa and American Express in full on billing.

Question 20

Credit card companies can change the rules of the account if they give the borrower 45 days notice of the change.

Accepted Answer

A) True 
 B)False

A line of credit acts very much like

Failure to pay the balance in full in a given month on a credit card with a grace period means that you

"Gold," "silver," or "platinum" cards are all examples of ____ cards.

If you are a person who always pays off the total outstanding balance on your credit card each month,which of the following aspects of the credit card agreement will you be least interested in? (Assume there is a 21-day grace period.)

Zelda was approved for a $3,000,two-year,11 percent loan with the finance charges figured using the discount method.How much cash will Zelda receive from this loan?

The total cost of credit on a yearly basis stated as a percentage rate is its

The time period between billing dates on your credit cards is the

Obtaining money via a credit card cash advance is a low-cost alternative if you need a loan.

Which of the following should not be done when you find an error on your credit card statement?

The APR is approximately double the add-on rate on an installment loan.

Single-payment,open-end,and service credit are lumped together under the category of

A sales finance company buys at a discount the installment sales contracts of merchants or directly finances retail sales.

Which of the following terms is not necessarily associated with a secured loan?

The last day of the month on which any transactions are reported on the credit statement is called the

A borrower who has failed to make a payment of principal or interest when due or meet any other requirement of a credit agreement is said to be in

Your credit card liability for fraudulent usage of your lost or stolen credit card is limited to $____ if you report the loss.

The method of paying off a loan through which a portion of each payment goes to the principal and a portion to interest with the interest portion declining and the principal portion increasing each month as the debt is paid down is called

Jason took his friend Jennifer out for her 21st birthday.He paid for the dinner with his Visa card and purchased a dozen red roses using his American Express green card.John will have to pay his bill upon receiving the statement,but he will have the option of paying his bill over several months.

Credit card companies can change the rules of the account if they give the borrower 45 days notice of the change.

Understanding Personal Finance

Career Planning

Financial Statements,tools,and Budgets

Managing Income Taxes

Managing Checking and Savings Accounts

Building and Maintaining Good Credit

Vehicles and Other Major Purchases

Obtaining Affordable Housing

Managing Property and Liability Risk

Managing Health Expenses

Life Insurance Planning

Investment Fundamentals

Investing in Stocks and Bonds

Mutual Funds and Exchange Traded Funds

Real Estate and High-Risk Investments

Retirement and Estate Planning

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Exam 7: Credit Cards and Consumer Loans

A line of credit acts very much like

Failure to pay the balance in full in a given month on a credit card with a grace period means that you

"Gold," "silver," or "platinum" cards are all examples of ____ cards.

If you are a person who always pays off the total outstanding balance on your credit card each month,which of the following aspects of the credit card agreement will you be least interested in? (Assume there is a 21-day grace period.)

Zelda was approved for a $3,000,two-year,11 percent loan with the finance charges figured using the discount method.How much cash will Zelda receive from this loan?

The total cost of credit on a yearly basis stated as a percentage rate is its

The time period between billing dates on your credit cards is the

Obtaining money via a credit card cash advance is a low-cost alternative if you need a loan.

Which of the following should not be done when you find an error on your credit card statement?

The APR is approximately double the add-on rate on an installment loan.

Single-payment,open-end,and service credit are lumped together under the category of

A sales finance company buys at a discount the installment sales contracts of merchants or directly finances retail sales.

Which of the following terms is not necessarily associated with a secured loan?

The last day of the month on which any transactions are reported on the credit statement is called the

A borrower who has failed to make a payment of principal or interest when due or meet any other requirement of a credit agreement is said to be in

Your credit card liability for fraudulent usage of your lost or stolen credit card is limited to $____ if you report the loss.

The method of paying off a loan through which a portion of each payment goes to the principal and a portion to interest with the interest portion declining and the principal portion increasing each month as the debt is paid down is called

Credit card companies can change the rules of the account if they give the borrower 45 days notice of the change.

Understanding Personal Finance

Career Planning

Financial Statements,tools,and Budgets

Managing Income Taxes

Managing Checking and Savings Accounts

Building and Maintaining Good Credit

Vehicles and Other Major Purchases

Obtaining Affordable Housing

Managing Property and Liability Risk

Managing Health Expenses

Life Insurance Planning

Investment Fundamentals

Investing in Stocks and Bonds

Mutual Funds and Exchange Traded Funds

Real Estate and High-Risk Investments

Retirement and Estate Planning

Filters