Exam 6: Using Credit Cards: The Role of Open Credit

Why is it important for young people to establish a good credit history as soon as possible?

Susan has always maintained an excellent credit rating over the years. She has an annual income of $63,000, has lived at her current residence thirteen years, and has worked at the same job for eight years. Susan works in a clerical position, has two credit cards and maintains two bank accounts. Susan is very conservative and has all of her savings ($12,000) in a NOW account at her local bank. One of her credit cards has a balance of $550 and has an APR of 23%. Susan has been making monthly minimum payments on the credit card. Out of curiosity she would like to know how her credit card companies judge her creditworthiness and what she can do to improve her financial situation. -Susan is not married and a female. Which of the following Consumer Credit Laws prohibits credit discrimination on the basis of her status?

Which of the following is the best strategy for controlling and managing your credit cards and open debt?

Financially savvy people take advantage of the grace period on major purchases and pay the balance off in full; thus avoiding finance charges.

Which method sums the outstanding balances owed each day during the billing period and divides by the number of days in the period?

Consider the "Five Cs of Credit." The category that considers your current income level and current borrowing level is

What can you do if you cannot pay your credit card bills?

One of the more important factors in determining your credit score is the length of your credit history.

Non-profit Credit Counselors should be avoided due to their high fees.

Monty currently has a Visa card from his bank with the following terms: 18% on purchases, 24% on cash advances with a 4% cash advance fee on the amount, and a default or penalty rate of 36%. His current statement shows a balance of $6,000. So far he has only taken one cash advance, withdrawing $1,000 from a casino in Las Vegas a year ago, which he has already paid off. Lately he has been having a hard time paying more than the minimum payment of 4% of his balance. The only assets he owns are a seven-year-old car and a $2,500 certificate of deposit that has a 5% APR. -What advice would you give to Monty concerning his use of credit cards?

Which of the five Cs of credit would your actual home be in relation to your mortage?

Jerome has three major credit cards and makes payments on them each month. He has had one of them for six years, another for three years, and the last for eleven months. Making just the minimum payment has become automatic at this point, and Jerome barely even looks at the statements. Jerome is beginning to think that his approach to credit may be faulty, and he wants fo find out how to adjust it. He just applied for two additional credit cards. -Most likely, Jerome is

Susan has always maintained an excellent credit rating over the years. She has an annual income of $63,000, has lived at her current residence thirteen years, and has worked at the same job for eight years. Susan works in a clerical position, has two credit cards and maintains two bank accounts. Susan is very conservative and has all of her savings ($12,000) in a NOW account at her local bank. One of her credit cards has a balance of $550 and has an APR of 23%. Susan has been making monthly minimum payments on the credit card. Out of curiosity she would like to know how her credit card companies judge her creditworthiness and what she can do to improve her financial situation. -Susan has never seen a copy of her credit report. Which of the following is NOT a credit bureau?

In an emergency, you used your credit card for a cash advance of $100. You just received your statement and your total balance due is $985.00. You want to be sure to pay for the recent cash advance so you send in a payment of $400. Your credit card has an APR of 12%. How much of your $400 payment will apply to the cash advance balance?

Assuming the APR on your credit card is 18% and your average daily balance this month was $10,000, what will your interest or finance charges for the month be?

Monty currently has a Visa card from his bank with the following terms: 18% on purchases, 24% on cash advances with a 4% cash advance fee on the amount, and a default or penalty rate of 36%. His current statement shows a balance of $6,000. So far he has only taken one cash advance, withdrawing $1,000 from a casino in Las Vegas a year ago, which he has already paid off. Lately he has been having a hard time paying more than the minimum payment of 4% of his balance. The only assets he owns are a seven-year-old car and a $2,500 certificate of deposit that has a 5% APR. -If Monty buys a new television for $800 this month and sends in a credit card payment of $1,200 when he gets his statement, how much interest will he pay on the television for the month?

One of the five C's of credit is capacity. Most likely, what information would potential creditors consider in evaluating your capacity?

Consider the "Five Cs of Credit." The category that considers the size of your investment holding or portfolio is

Having completed a personal finance class, you are now ready to give some advice to your free-spending friends. Which one is unwise?

The percentage of the credit card sale the retailer owes to the credit card company is the