Question 1

How many alternatives do most consumers have in financing current purchases?
A)1
B)2
C)3
D)4
E)unlimited

Accepted Answer

The answer of How many alternatives do most consumers have...

Question 2

The market value of Karen's home is $120,000 and the balance on her mortgage loan is $80,000.The lender has agreed to let her borrow up to 75% of the total value of her home less the mortgage.How much can she borrow with a home equity loan?
A)$10,000
B)$40,000
C)$80,000
D)$90,000
E)$120,000

Accepted Answer

First, calculate 75% of the home's value: 75% of $120,000 = $90,000. Then, subtract the mortgage balance: $90,000 - $80,000 = $10,000. This is the amount she can borrow with a home equity loan.

Question 3

Your credit card company must send you a notice ________ days before they can increase your interest rate.
A)30
B)45
C)50
D)60
E)90

Accepted Answer

Credit card companies are required to send you a notice 45 days before they can increase your interest rate, according to federal regulations. This rule is designed to give consumers adequate time to make informed decisions about their credit card accounts, including the option to reject the increase and pay off the balance under the old terms.

Question 4

If you believe you have been refused credit due to discrimination,what are three steps you can take?

Accepted Answer

The answer of If you believe you have been refused...

Question 5

Which federal consumer credit law places the maximum cost of a credit report at $8?
A)Consumer Credit Reporting Reform Act
B)Fair and Accurate Credit Transactions Act
C)Fair Debt Collection Practices Act
D)Fair Credit Billing Act
E)Truth in Lending Act

Accepted Answer

The Consumer Credit Reporting Reform Act is part of the Fair Credit Reporting Act (FCRA) amendments, which include provisions to ensure fair and accurate credit reporting. One of these provisions caps the cost of purchasing your own credit report at a reasonable fee, historically set at $8, to ensure consumers can access their credit information affordably.

Question 6

Which federal consumer credit law requires "credit repair" companies to give consumers a written contract that can be canceled within three business days?
A)Fair and Accurate Credit Transactions Act
B)Fair Debt Collection Practices Act
C)Fair Credit Billing Act
D)Truth in Lending Act
E)Consumer Credit Reporting Reform Act

Accepted Answer

The answer of Which federal consumer credit law requires "credit...

Question 7

Elizabeth has a monthly net income of $1,400.She has a house payment of $600 per month,a car loan with payments of $300 per month,a Visa card with payments of $60 per month,and a credit card with a local department store with payments of $32 per month.What is Elizabeth's debt payment-to-income ratio? Is she within range of what experts suggest you spend on consumer credit payments?

Accepted Answer

The answer of Elizabeth has a monthly net income of...

Question 8

What is consumer credit? What are its advantages and disadvantages?

Accepted Answer

The answer of What is consumer credit? What are its...

Question 9

Which of the following federal consumer credit laws requires creditors to promptly credit customers' accounts and to return overpayments if requested?
A)Fair Credit Reporting Act
B)Truth in Lending Act
C)Equal Credit Opportunity Act
D)Fair Credit Billing Act
E)Consumer Credit Reporting Reform Act

Accepted Answer

The Fair Credit Billing Act requires creditors to promptly credit customers' accounts and to return overpayments upon request. This law is designed to protect consumers from unfair billing practices.

Question 10

Which of the following is not a valid reason for using credit?
A)To pay for a medical emergency
B)To purchase a car for a homemaker returning to the workforce
C)To purchase an item now for less money than it will cost later
D)To pay for everyday living expenses
E)To pay for a college education

Accepted Answer

Using credit to pay for everyday living expenses is not considered a valid reason because it indicates living beyond one's means, leading to potential debt accumulation without investing in assets or covering unexpected essential costs.

Question 11

The Consumer Financial Protection Bureau receives an average of how many complaints about the credit bureaus every year?
A)5,000
B)25,000
C)36,000
D)42,000
E)50,000

Accepted Answer

The Consumer Financial Protection Bureau receives an average of 36,000 complaints about the credit bureaus every year.

Question 12

Which of the following is true of the baby boom generation?
A)Represents about 30% of the population
B)Holds nearly 60% of the outstanding debt
C)Extensively uses debt
D)Born between 1946 and 1964
E)All of these

Accepted Answer

The baby boom generation, born between 1946 and 1964, represents about 30% of the population, holds nearly 60% of the outstanding debt, and extensively uses debt.

Question 13

Which of the following are most vulnerable to misusing credit?
A)Married couples
B)Shopaholics and young adults
C)Retired adults
D)Savers
E)Unemployed individuals

Accepted Answer

Shopaholics and young adults are often more vulnerable to misusing credit due to impulsive spending habits and lack of financial experience.

Question 14

Credit bureaus obtain data from which of the following?
A)Banks
B)Finance companies
C)Merchants
D)Credit card companies
E)All of these

Accepted Answer

Credit bureaus compile credit histories from a variety of sources, including banks, finance companies, merchants, and credit card companies, making all of these correct.

Question 15

Which federal consumer credit law requires issuers to display on monthly statements how long it would take to pay off the existing balance and the total interest cost if the consumer paid only the minimum due?
A)Fair Credit Reporting Act
B)Equal Credit Opportunity Act
C)Truth in Lending Act
D)Credit Card Accountability,Responsibility,and Disclosure Act
E)Fair Credit Billing Act

Accepted Answer

The Credit Card Accountability, Responsibility, and Disclosure Act (CARD Act) of 2009 requires issuers to display on monthly statements the time it would take to pay off the existing balance and the total interest cost if only the minimum payment is made. This is part of the act's provisions aimed at increasing transparency and helping consumers understand the implications of making only minimum payments.

Question 16

What are the two basic types of credit? Give examples of both.

Accepted Answer

The answer of What are the two basic types of...

Question 17

Which of the following is not true of mobile commerce?
A)Some smart phones are equipped to make purchases.
B)Consumers have shown increased interest in this concept.
C)A credit card company may provide a sticker that attaches to the phone rather than a physical credit card.
D)Apps can be used to quickly pay with a mobile phone.
E)Little interest in this concept has been shown by retailers and finance companies.

Accepted Answer

Retailers and finance companies have shown significant interest in mobile commerce due to its growing popularity and the convenience it offers to consumers. This contradicts the statement that there is little interest from these entities.

Question 18

Which of the following contains new protections for college students and young adults?
A)Fair Credit Reporting Act
B)Credit Card Accountability,Responsibility,and Disclosure Act
C)Truth in Lending Act
D)Equal Credit Opportunity Act
E)Fair Credit Billing Act

Accepted Answer

The Credit Card Accountability, Responsibility, and Disclosure Act (CARD Act) of 2009 contains new protections for college students and young adults, including provisions that restrict how credit card companies can market to them and require a co-signer for consumers under the age of 21 unless they can demonstrate the ability to make payments.

Question 19

What are the three most common types of closed-end credit?

Accepted Answer

The answer of What are the three most common types...

Question 20

What is revolving check credit?

Accepted Answer

The answer of What is revolving check credit?...

Quiz 6: Introduction to Consumer Credit

How many alternatives do most consumers have in financing current purchases?

The market value of Karen's home is $120,000 and the balance on her mortgage loan is $80,000.The lender has agreed to let her borrow up to 75% of the total value of her home less the mortgage.How much can she borrow with a home equity loan?

Your credit card company must send you a notice ________ days before they can increase your interest rate.

If you believe you have been refused credit due to discrimination,what are three steps you can take?

Which federal consumer credit law places the maximum cost of a credit report at $8?

Which federal consumer credit law requires "credit repair" companies to give consumers a written contract that can be canceled within three business days?

What is consumer credit? What are its advantages and disadvantages?

Which of the following federal consumer credit laws requires creditors to promptly credit customers' accounts and to return overpayments if requested?

Which of the following is not a valid reason for using credit?

The Consumer Financial Protection Bureau receives an average of how many complaints about the credit bureaus every year?

Which of the following is true of the baby boom generation?

Which of the following are most vulnerable to misusing credit?

Credit bureaus obtain data from which of the following?

Which federal consumer credit law requires issuers to display on monthly statements how long it would take to pay off the existing balance and the total interest cost if the consumer paid only the minimum due?

What are the two basic types of credit? Give examples of both.

Which of the following is not true of mobile commerce?

Which of the following contains new protections for college students and young adults?

What are the three most common types of closed-end credit?

What is revolving check credit?