Exam 6: Using Credit

William uses his bank credit card frequently; however,he always pays off the total balance on the card each month.What should William look for in a credit card given the way he uses a credit card?

Chapter 7 bankruptcies remain in your credit file for 7 years.

Chapter 7 bankruptcy will typically

The lender uses a credit application to determine whether the borrower has the ____ to handle the debt.

Denise (a single taxpayer)contributes $6,000 annually to her church.In addition,she owns a home in which she has $20,000 equity,and she itemizes deductions.If she pays $1,000 interest on credit cards,$6,000 interest on her home equity loan,and is in the 26% marginal tax bracket,calculate Denise's tax savings from these interest payments.

Paying a loan off much quicker than scheduled is one way to build a good credit rating.

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

Interest rates on credit cards tend to be lower than most other forms of consumer credit.

Mike has a MasterCard with an annual fee of $25,18% interest,and a $1,000 credit limit.He always pays the total outstanding balance monthly.His most recent monthly statement lists last month's payment,new charges this month totaling $1,500,and a $30 fee.That fee is most likely the result of

____ would be a proper use of credit.

Thirty-day or regular charge accounts require the customers to pay off the debt 10 to 20 days after the billing date with no interest expense.

The purpose of a credit report is to evaluate the kind of risk you pose to the lender.

Theresa is a bit of a spendthrift.She has trouble saying no when it comes to buying things.Which of the following cards would keep her out of debt?

The quality of your credit rating is maintained by

Auto loans are an example of open-end credit since you can add to the debt when you purchase another vehicle.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement. -Your chances of being approved for a loan [increase | decrease] the higher your credit score.

Appropriate reasons to use credit include for

Credit scoring systems are often used by lenders to determine your creditworthiness.

Rebate credit cards work best for those who use the rebates,charge a lot,and do not carry high monthly balances.

The more credit cards one has,the better one's credit score.