Exam 6: Using Credit

Mike has a MasterCard with an annual fee of $25, an 18% interest rate, 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:

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. A FICO score above [ 700 | 800 ] is considered exceptional.

For a fee, local credit bureaus can provide credit information to members about prospective borrowers in their community.

A frequent flyer card can be aptly classified as a(n):

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. Information provided on a credit application is used by the lender to try to determine whether the applicant has the character and [ capacity | condition ] to handle the debt in a prompt and timely manner.

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

_____ are the credit cards issued in conjunction with a sponsoring group-most commonly some type of charitable, political, or professional organization.

The most common method used by lenders to apply finance charges on credit cards is the average daily balance (ADB) method, including new purchases.

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?

Credit offered in the form of _____ is most common in department and clothing stores and other high-volume outlets, where customers are likely to make several purchases each month.

The "5 Cs of Credit" are:

An unsecured personal credit line is a form of revolving credit.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. Cardholders who fail to make the minimum monthly payment on their credit card account are considered to be [ in default | overdrawn ] on their account.

Which of the following is the correct formula for calculating the debt safety ratio?

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. A person who does not pay her credit balance in full every month should look for a credit card with [ a low interest rate | no annual fee ].

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

Which of the following is not requested in a typical credit card application?

Which of the following forms of consumer credit is among the cheapest and offers limited tax deductions?

Which of the following is an example of phishing?

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