Exam 6: Using Credit

Mike has a MasterCard with an annual fee of $25, an 18% interest, and a $1,000 credit limit. He always pays the total outstanding balance monthly. His most recent monthly statement lists the previous month's payment, new charges in the current month totaling $1,500, and a $30 fee. The fee is most likely the result of:

The key to creditworthiness is to maintain your debt safety ratio at 50% or above.

Any credit card purchase will effectively be an interest-free loan if you have a zero balance when the grace period begins and you:

Lenders' guidelines say that you are likely to have financial difficulties if your personal credit obligations exceed _____ of your take-home pay.

Clare's annual gross salary is $36,000, and her after-tax income is $28,800. What is Clare's maximum recommended monthly consumer credit payment?

Which of the following is a result of excess unused credit capacity?

Credit cards with very low minimum payment requirements are in the consumers' best interest.

It is necessary to give your Social Security number for identification when using a credit card.

You have a $926 balance on your credit card account. The minimum payment on your account is 2% of the latest balance or $20, whichever is greater. What will be the minimum payment this month?

Debit cards work like writing a check.

An improper use of extended credit is buying:

Which of the following is an example of phishing?

Using credit is the ideal way to meet basic living expenses.

Most families have only one source for consumer credit.

Which of the following modes of identity theft involves thieves obtaining your personal information from financial institutions and other sources under false pretenses?

A proper use of open account credit would be to buy:

Lindsey has a job with a monthly take-home pay of $3,500. Using the lender's guidelines for maximum debt safety ratio, what maximum debt burden per month can she assume? (Show all work.)

You should not give your credit card account number over the phone to people or organizations who call you.

A credit card application requests information that is routinely used to predict creditworthiness.

The intent of the Wage Earner Plan is to eliminate all of a debtor's obligations.