Question 1

What vital areas are typically evaluated in "scoring"?

Accepted Answer

The important vital areas include:
‑annu

Question 2

One of the following lists constitutes the five Cs of credit. Select the correct one.

Accepted Answer

A)  character, capacity, capital, collateral, characteristics 
B)  character, capacity, capital, collateral, co-insurance 
C)  character, capacity, capital, collateral, careful 
D)  character, capacity, capital, collateral, conditions 
E)  character, capacity, capital, collateral, credence 
A)  character, capacity, capital, collateral, characteristics 
B)  character, capacity, capital, collateral, co-insurance 
C)  character, capacity, capital, collateral, careful 
D)  character, capacity, capital, collateral, conditions 
E)  character, capacity, capital, collateral, credence

Question 3

Credit card insurance is usually unnecessary since your liability on credit card losses is limited by law to

Accepted Answer

A)  $ 0 
B)  $50 
C)  $100 
D)  $500 
E)  none of the above 
A)  $ 0 
B)  $50 
C)  $100 
D)  $500 
E)  none of the above

Question 4

Teaser rates are very low. How long do they last? Is there any real benefit in them?

Accepted Answer

Introductory teaser rates can be as low

Question 5

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 was considering obtaining a new credit card but was told that too many applications for credit can cause one's FICO score to decrease?

Accepted Answer

A) True 
 B)False

Question 6

A(n) ________ card is a credit card that does not offer revolving credit and requires full payment of the balance at the end of each month.

Accepted Answer

A)  T&E 
B)  premium 
C)  affinity 
D)  traditional charge account 
E)  single-purpose 
A)  T&E 
B)  premium 
C)  affinity 
D)  traditional charge account 
E)  single-purpose

Question 7

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.
-Using the Adjusted Balance Method: If Monty sends in a payment for $1,000, how much will the finance charge be on his remaining balance? (Use the $6,000 balance for your calculations).

Accepted Answer

A)  $75 
B)  $90 
C)  $110 
D)  There is not enough information to solve this question. 
A)  $75 
B)  $90 
C)  $110 
D)  There is not enough information to solve this question.

Question 8

List five signs that you have the credit card habit.

Accepted Answer

‑You only make the minimum payment each

Question 9

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 is the APY on Monty's default or penalty rate?

Accepted Answer

A)  36% 
B)  36.99% 
C)  42.58% 
D)  48.66% 
A)  36% 
B)  36.99% 
C)  42.58% 
D)  48.66%

Question 10

Credit cards are a form of ________ credit.

Accepted Answer

A)  open ended 
B)  revolving 
C)  installment 
D)  both A and B above 
E)  both A and C above 
A)  open ended 
B)  revolving 
C)  installment 
D)  both A and B above 
E)  both A and C above

Question 11

Typically, the credit card issuer allows you a grace period, which means

Accepted Answer

A)  you do not have to make a payment during the current month. 
B)  you are not charged any interest during this grace period. 
C)  you must pay your balance off in full to benefit from the grace period. 
D)  interest charges are reduced during this time. 
E)  both B and C apply 
A)  you do not have to make a payment during the current month. 
B)  you are not charged any interest during this grace period. 
C)  you must pay your balance off in full to benefit from the grace period. 
D)  interest charges are reduced during this time. 
E)  both B and C apply

Question 12

For the average consumer there is usually a set limit on open or revolving credit accounts.

Accepted Answer

A) True 
 B)False

Question 13

Credit scoring is

Accepted Answer

A)  quite expensive for the lender. 
B)  not a flawless method of determining creditworthiness. 
C)  an inefficient but necessary process. 
D)  all of the above 
A)  quite expensive for the lender. 
B)  not a flawless method of determining creditworthiness. 
C)  an inefficient but necessary process. 
D)  all of the above

Question 14

A convenience user doesn't really care what the APY is on their credit cards.

Accepted Answer

A) True 
 B)False

Question 15

Mary is 38 years old and many of her friends have gotten into trouble using their credit cards to buy things they can't afford. She feels lucky that her grandmother told her that credit is dangerous and that she should always pay cash for everything. So far, Mary has never had credit in her name and even paid cash for her car. From a personal finance perspective, what advice would you give to Mary?

Accepted Answer

A)  Nothing, it looks like we all could take advice from her! 
B)  Make sure that you keep a lot of money in liquid investments in case of an emergency. 
C)  It's great that you don't owe any money, but you really need to establish credit in your name so you will have it if you need it in the future. 
D)  You might want to talk with your insurance agent because having no credit history is probably causing you to pay higher rates for your insurance. 
E)  Both C and D would be good advice for Mary. 
A)  Nothing, it looks like we all could take advice from her! 
B)  Make sure that you keep a lot of money in liquid investments in case of an emergency. 
C)  It's great that you don't owe any money, but you really need to establish credit in your name so you will have it if you need it in the future. 
D)  You might want to talk with your insurance agent because having no credit history is probably causing you to pay higher rates for your insurance. 
E)  Both C and D would be good advice for Mary.

Question 16

A low FICO score

Accepted Answer

A)  is a good credit score. 
B)  can cost you quite a bit when you get a mortgage loan. 
C)  may result in a credit card rate half the rate of that paid by those with a high FICO score. 
D)  is the only factor the lender considers when determining whether to give you credit. 
A)  is a good credit score. 
B)  can cost you quite a bit when you get a mortgage loan. 
C)  may result in a credit card rate half the rate of that paid by those with a high FICO score. 
D)  is the only factor the lender considers when determining whether to give you credit.

Question 17

On October 1ˢᵗ Joe charged $900 to his credit card, on October 10ᵗʰ he charged another $1300 to his credit card, and on October 15ᵗʰ he charged an additional $100. His credit card charges him an Annual Percentage Rate (APR) of 18% compounded monthly. Using the Average Daily Balance Method calculate Joe's finance charge for the month of October.

Accepted Answer

A)  $7.12 
B)  $28.16 
C)  $212.36 
D)  $523.14 
E)  None of the above are correct answers. 
A)  $7.12 
B)  $28.16 
C)  $212.36 
D)  $523.14 
E)  None of the above are correct answers.

Question 18

By law you have certain rights in connection with the credit bureau. They are

Accepted Answer

A)  the right to view your personal credit report. 
B)  the right to point out errors found in your file. 
C)  the right to request the credit bureau to correct mistakes in your file. 
D)  the right to file a statement presenting your view of a disputed issue. 
E)  all of the above 
A)  the right to view your personal credit report. 
B)  the right to point out errors found in your file. 
C)  the right to request the credit bureau to correct mistakes in your file. 
D)  the right to file a statement presenting your view of a disputed issue. 
E)  all of the above

Question 19

Nancy tried to use her Macy's credit card at K-Mart but was unsuccessful. Why?

Accepted Answer

A)  K-Mart only accepts K-Mart credit cards. 
B)  Her Macy's credit card is a single purpose card and can only be used at Macy's. 
A)  K-Mart only accepts K-Mart credit cards. 
B)  Her Macy's credit card is a single purpose card and can only be used at Macy's.

Question 20

A secured credit card is a good tool to help establish credit.

Accepted Answer

A) True 
 B)False

What vital areas are typically evaluated in "scoring"?

One of the following lists constitutes the five Cs of credit. Select the correct one.

Credit card insurance is usually unnecessary since your liability on credit card losses is limited by law to

Teaser rates are very low. How long do they last? Is there any real benefit in them?

A(n) ________ card is a credit card that does not offer revolving credit and requires full payment of the balance at the end of each month.

List five signs that you have the credit card habit.

Credit cards are a form of ________ credit.

Typically, the credit card issuer allows you a grace period, which means

For the average consumer there is usually a set limit on open or revolving credit accounts.

Credit scoring is

A convenience user doesn't really care what the APY is on their credit cards.

A low FICO score

By law you have certain rights in connection with the credit bureau. They are

Nancy tried to use her Macy's credit card at K-Mart but was unsuccessful. Why?

A secured credit card is a good tool to help establish credit.

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Understanding and Appreciating the Time Value of Money

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Consumer Loans: The Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

Securities Markets

Investing in Stocks

Investing in Bonds and Other Alternatives

Mutual Funds: An Easy Way to Diversify

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Events Fitting the Pieces Together

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

What vital areas are typically evaluated in "scoring"?

One of the following lists constitutes the five Cs of credit. Select the correct one.

Credit card insurance is usually unnecessary since your liability on credit card losses is limited by law to

Teaser rates are very low. How long do they last? Is there any real benefit in them?

A(n) ________ card is a credit card that does not offer revolving credit and requires full payment of the balance at the end of each month.

List five signs that you have the credit card habit.

Credit cards are a form of ________ credit.

Typically, the credit card issuer allows you a grace period, which means

For the average consumer there is usually a set limit on open or revolving credit accounts.

Credit scoring is

A convenience user doesn't really care what the APY is on their credit cards.

A low FICO score

By law you have certain rights in connection with the credit bureau. They are

Nancy tried to use her Macy's credit card at K-Mart but was unsuccessful. Why?

A secured credit card is a good tool to help establish credit.

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Understanding and Appreciating the Time Value of Money

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Consumer Loans: The Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

Securities Markets

Investing in Stocks

Investing in Bonds and Other Alternatives

Mutual Funds: An Easy Way to Diversify

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Events Fitting the Pieces Together

Filters