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

Wally currently has a balance of $14,500 on his credit cards and he is having a hard time making the minimum payments on them.He has missed several payments and is now paying the default APR of 29.99%.He and his wife own a nice home with $40,000 in equity.They have $7,500 in a certificate of deposit with a 4% APR.He has come to you in tears asking for advice.What would you tell him to do?

Everyone who accessed your credit report within the last seven years appears in an "inquiry" list that appears on your credit report.

List five signs that you have the credit card habit.

Only Prestige or Premium credit cards offer a grace period.

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.

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?

A low FICO score

It is against the law for your potential employer to use your credit score for employment considerations.

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

Using your credit card for a cash advance in an emergency is probably a good idea.Using cash advances for non-emergencies is a terrible idea.Explain the characteristics that make cash advances very dangerous.

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

Which of the following apply to getting a cash advance with a credit card?

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 will be Monty's minimum payment due?

People with high credit card balances still need to invest money on a regular basis.

Which of the following is an advantage of credit cards?

How long do you have to begin an investigation into a billing problem under the Fair Credit Billing Act?

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. -What should Susan do in regards to her credit card balance?

What four steps should you take if you think your identity has been stolen?

On October 1st Joe charged $900 to his credit card,on October 10th he charged another $1,300 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.

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. -It is now three months later and Monty has missed two payments in a row and he is now paying the default or penalty rate on his balance.How much interest per month will Monty be accruing on his unpaid balance?