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

Bradley currently has a Visa card from his bank with the following terms: 21 percent on purchases, 25 percent on cash advances with a 3 percent cash-advance fee on the amount, and a default or penalty rate of 33 percent. His current statement shows a balance of $9,000. Lately, he has been having a hard time paying more than the minimum payment of 3 percent of his balance. -What is the current APY on this 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. -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.)

Over 70% of the 25 biggest credit card issuers do not charge annual fees.

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

Which of the following is not a typical potential problem that can occur in a credit bureau file?

Which of the following is a disadvantage of credit cards?

Most credit cards have a ________ grace period from the date of the bill to make payments.

Leon is 28 years old and pays cash for everything he buys.He has never had credit in his name and never missed or been late on any bills he has ever had.He recently went online to check what his credit score was.Where do you think his credit score would be?

In an emergency,you used your credit card for a $500 cash advance.You just received your statement and your total balance due is $1,859,and the cash advance was the most recent charge.You want to be sure to pay for the cash advance so you send in a payment of $700.Your credit card has an APR of 12 percent.How much of your payment will apply to the cash-advance balance?

Bradley currently has a Visa card from his bank with the following terms: 21 percent on purchases, 25 percent on cash advances with a 3 percent cash-advance fee on the amount, and a default or penalty rate of 33 percent. His current statement shows a balance of $9,000. Lately, he has been having a hard time paying more than the minimum payment of 3 percent of his balance. -What is the APY on Bradley's default,or penalty,rate?

Tawnya currently has six bank credit cards,five retailer credit cards,and a T&E card left over from when she was in sales.She wants to make sure her credit score is as high as it can be.What advice would you give her to improve her credit score?

According to the Keown book,the national average FICO score is around

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 to find out how to adjust it. He just applied for two additional credit cards. -Jerome would be considered a

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

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

Sometimes retailers will give you up to a 5% discount if you pay cash for their products instead of using your credit card.Why?

Your credit card company cannot increase your rate for the first 12 months after you open an account unless

Crystal tried to use her Macy's credit card at Target but was unsuccessful because her Macy's credit card is a single-purpose card and can only be used at Macy's.

The use of credit involves receiving cash,goods,or services with an obligation to pay later.Which statement is not an opening line to the use of credit in a shopper's language?

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