Deck 6: Using Credit

Question 1

Saving is the preferred way to provide for financial emergencies.

Answer 1

True

Question 2

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

Answer 2

True

Question 3

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

Answer 3

True

Question 4

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

Question 5

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

Question 6

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

Question 7

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

Question 8

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

Question 9

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 10

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

Question 11

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

Question 12

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

Question 13

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

Question 14

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

Question 15

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

Question 16

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

Question 17

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

Question 18

Credit report is routinely used to predict credit worthiness.

Question 19

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 20

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

Question 21

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

Question 22

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

Question 23

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

Question 24

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

Question 25

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

Question 26

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

Question 27

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

Question 28

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

Question 29

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

Question 30

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 31

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 32

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

Question 33

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

Question 34

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

Question 35

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

Question 36

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

Question 37

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 38

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

Question 39

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

Question 40

Bank credit card purchases always begin accruing interest charges immediately.

Question 41

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

Question 42

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

Question 43

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

Question 44

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

Question 45

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

Question 46

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

Question 47

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

Question 48

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

Question 49

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

Question 50

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

Question 51

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

Question 52

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 53

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

Question 54

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

Question 55

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

Question 56

Nearly all credit cards have annual fees.

Question 57

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

Question 58

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

Question 59

Revolving credit lines are often accessed by writing checks.

Question 60

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

Question 61

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

Question 62

Generally,finance charges are computed only on the unpaid balance from previous months' purchases.

Question 63

Credit bureaus provide information about prospective borrowers.

Question 64

The Wage Earner Planner requires debtors to give up most of their assets.

Question 65

Families who have a source of income and who want to retain their assets above the protected amount would select Chapter 13 rather than Chapter 7 bankruptcy.

Question 66

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

Question 67

A woman's income can legally be discounted when she applies for credit.

Question 68

Before filing for bankruptcy,debtors should consider seeking the help of a credit counselor.

Question 69

The most common method of computing finance charges on a credit card is the average daily balance method including new purchases.

Question 70

A Chapter 13 bankruptcy filing would result in the discharge of most of your debts.

Question 71

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

Question 72

The amount of finance charges one pays on a credit card depends only on APR and the amount one charges.

Question 73

Your credit limit is determined by a number of factors,such as financial position,earning power,etc.

Question 74

The intent of a Wage Earner Plan is to eliminate most of the debtor's obligations.

Question 75

One can and should check his credit bureau file regularly.

Question 76

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

Question 77

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

Question 78

The majority of persons filing bankruptcy file Chapter 7 bankruptcy.

Question 79

A credit card user's credit rating will be harmed if she pays only the minimum monthly payment on a credit card.

Question 80

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