Question 1

If you have no credit card and want to get a credit card, you could

Accepted Answer

Having a co-signer for a credit card account is a viable option for someone with no credit history or a poor credit score to get a credit card. The co-signer essentially guarantees the debt, making it less risky for the issuer to provide a credit card. Options A and B are generally not feasible for someone with no credit history, as rewards credit cards usually require a good credit score, and debit cards cannot simply be converted into credit cards.

Question 2

It's November and Mia's credit card has a balance of $7,500. The minimum payment due is $300. The APR is 23%. If she pays only the minimum payment this month, how much of the payment will go toward principal?

Accepted Answer

The answer of It's November and Mia's credit card has...

Question 3

A ________ requires the borrower to deposit the full amount of the line of credit at the bank as collateral before the credit card is issued.

Accepted Answer

A secured credit card requires the borrower to deposit the full amount of the line of credit at the bank as collateral before the credit card is issued. This deposit acts as security for the credit extended, making it a common option for individuals looking to build or rebuild their credit history.

Question 4

Which of the following is an individual, in addition to the borrower, who will be held responsible for repayment of the debt?

Accepted Answer

A co-signer is someone who agrees to be responsible for the repayment of the loan if the primary borrower fails to make payments. This individual signs the loan agreement alongside the borrower, legally binding themselves to the debt.

Question 5

It's April and Tamela's credit card has a balance of $1,200. The minimum payment due is $36. The APR is 24%. How much interest will she pay this month?

Accepted Answer

The answer of It's April and Tamela's credit card has...

Question 6

It's June and Miles's credit card has a balance of $2,200. The minimum payment due is $88. The APR is 21%. How much interest will he pay this month?

Accepted Answer

To calculate the interest for the month, use the formula: Interest = (APR/12) * Balance. Here, APR is 21%, so monthly rate is 21%/12 = 1.75%. Therefore, Interest = 0.0175 * $2,200 = $38.50. The closest option is A) $38.28.

Question 7

________ provide their owners with benefits linked to how much they purchase with their card.

Accepted Answer

Reward credit cards offer benefits such as cash back, points, or miles based on the amount of spending done with the card. These rewards can be used for various purposes, including travel, merchandise, or statement credits.

Question 8

Annual percentage rates (APRs) associated with a credit card can include

Accepted Answer

All of these APR types are associated with credit cards. Introductory APR is a lower rate offered at the beginning of an account, balance transfer APR applies to balances transferred from another credit card, and cash advance APR is the rate for borrowing cash against the credit card.

Question 9

Travel and entertainment cards use which of the following payment networks?

Accepted Answer

Travel and entertainment cards can use various payment networks, including MasterCard, Visa, and American Express.

Question 10

________ is the amount of time allowed to pay a bill without incurring interest.

Accepted Answer

A grace period is the specific amount of time given to the borrower to pay their bill without incurring any interest. It is a common term used in finance, particularly with credit cards and loans, where the lender allows a certain period after the due date for payment to be made without penalty.

Quiz 5: Checking Accounts, Credit Scores, and Credit Cards