Deck 6: Using Credit

Question 1

Credit report is routinely used to predict credit worthiness.

Answer 1

True

Question 2

A debt safety ratio of 5% would generally be a signal of financial trouble ahead.

Answer 2

False

Question 3

Never adding up all one's bills is one of the signs that one may be headed for serious credit problems.

Answer 3

True

Question 4

Saving is the preferred way to provide for financial emergencies.

Question 5

Credit should not consistently be used for non-durable goods.

Question 6

One should not use credit to purchase food,clothing,and other non-durables,even if it is only for convenience and the balance will be totally paid upon billing.

Question 7

Using more than 20 percent of one's take-home income to pay off consumer debt is one of the signs that one may be headed for serious credit problems.

Question 8

One can be overusing credit even though he can afford to make minimum monthly payments on time.

Question 9

Always paying cash is helpful in establishing a high level of creditworthiness.

Question 10

The heaviest users of consumer debt are in the 25-44 age group.

Question 11

Using credit is the ideal way to provide for financial emergencies.

Question 12

Credit cards with very low minimum balance requirements are in the consumer's best interest.

Question 13

Having arranged and fully repaid a small loan should help improve creditworthiness.

Question 14

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

Question 15

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

Question 16

Women should use a consistent,specified legal name on all credit applications and/or communications.

Question 17

The heaviest users of consumer debt are college students.

Question 18

A debt safety ratio of 25% might be a signal of financial trouble ahead.

Question 19

Having a checking account tells a creditor that you have some experience in managing your own funds.

Question 20

Paying only the minimum payment each time on a credit card usually enables one to pay off the balance fairly quickly.

Question 21

The two most popular bank credit cards are VISA and MasterCard.

Question 22

Credit reports on individual borrowers are issued by credit unions reporting agencies.

Question 23

The most common forms of open account credit are travel and entertainment cards.

Question 24

Individuals with better credit ratings usually can secure higher credit limits.

Question 25

Being late on credit payments only 2-3 times per year pay label you a "late payer" in your credit file.

Question 26

The most common forms of open account credit are bank credit cards and retail charge cards.

Question 27

Bank credit cards represent the most common kind of open account credit.

Question 28

The key to credit worthiness is to keep your debt safety ratio as high as possible.

Question 29

It is safe,and often required,to give your Social Security number as a form of identification when using a credit card.

Question 30

The required monthly payment on an open account will be the smaller of a minimum dollar amount or a specified percentage of the balance.

Question 31

Problems with credit cards often begin in college.

Question 32

Bank credit card purchases always begin accruing interest charges immediately.

Question 33

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

Question 34

Collateral (what you own)is one of the 5 Cs of credit.

Question 35

All Americans are entitled to receive a free copy of their credit report once a year from each of the "Big Three" credit reporting agencies.

Question 36

A credit limit refers to the maximum amount the cardholder can owe the issuer at any point in time.

Question 37

Credit reports on individual borrowers are issued by credit card issuers.

Question 38

Both character and capacity are included in the 5 Cs of credit.

Question 39

The two most popular bank credit cards are Discover and American Express.

Question 40

Bank credit card cash advances will begin accruing interest charges immediately.

Question 41

Credit cards often have penalties for late payment and for exceeding credit limits.

Question 42

Most organizations that issue credit cards have basically the same qualifications for card applicants.

Question 43

College alumni organizations often sponsor an affinity credit card that helps support the organization.

Question 44

Credit card users can often avoid finance charges entirely by paying their total balances by the stated due date.

Question 45

A revolving charge account requires the customers to pay off the debt 10 to 20 days after the billing date with no interest expense.

Question 46

The qualifications to receive an American Express card are less stringent than for most bankcards.

Question 47

Nearly all credit cards have annual fees.

Question 48

The most popular travel and entertainment credit card is American Express.

Question 49

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

Question 50

Advantages of balance transfers can include lower interest rates and the convenience of consolidation.

Question 51

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

Question 52

Bank credit cards often offer features such as buyer protection plans for a fee to all customers.

Question 53

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.

Question 54

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

Question 55

Generally speaking,the interest rates on credit cards are lower than any other form of credit.

Question 56

Balance transfers can be expensive,including fees and eventually high interest rates.

Question 57

The grace period on a credit card starts on the billing date and ends on the date the lender should receive the payment.

Question 58

Secured credit cards require that the card holder puts up collateral in order to get the card.

Question 59

Thirty-day or service credit accounts include utility bills,medical services,and credit card accounts.

Question 60

Open account credit is a form of credit extended to a consumer in advance of any transaction.

Question 61

Credit bureau files often include information such as political and religious affiliations in addition to financial information.

Question 62

Prepaid cards are used to pay for things,with the purchase amount electronically deducted from the card.

Question 63

A credit applicant will be granted credit only after establishing a complete file at the local credit bureau.

Question 64

Unsecured lines of credit provide tax advantages if you itemize deductions.

Question 65

Valid credit cards can legally be sent to you even though you have not applied for them.

Question 66

One can and should check his credit bureau file regularly.

Question 67

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

Question 68

An overdraft protection line of credit allows one to routinely bounce checks with little or no adverse consequences.

Question 69

Debit cards look like credit cards,but they work like checks.

Question 70

For a fee,credit bureaus can provide credit scores for prospective borrowers.

Question 71

Unsecured lines of credit are easy to use and often use some form of collateral as default protection.

Question 72

Home equity loans are one of the least expensive forms of consumer credit.

Question 73

Student credit cards are structured much differently than regular credit cards.

Question 74

Credit bureaus provide information about prospective borrowers.

Question 75

The proceeds of a home equity loan can be used for just about any purpose,and the interest paid is usually tax deductible.

Question 76

Prepaid cards are a form of credit that is very convenient to use and do not charge a service fee.

Question 77

For someone with a good credit rating,lenders will typically lend up to 100% of equity in a home using a home equity credit line.

Question 78

One can lose his home if he does not repay his home equity line of credit.

Question 79

Revolving credit lines are often accessed by writing checks.

Question 80

Debit cards are a form of credit that is very convenient to use.