UNIT 40 CREDIT AND LOANs

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A credit card has a 20% interest rate that is charged yearly on any unpaid balance. What is this rate called?

Annual Percentage Rate

If your monthly statement says you must pay at least $25 by the 18th of each month, what is that $25 called?

Minimum Payment

When applying for credit, a lender might ask about how long you’ve worked at your current job. This question helps determine your:

Character

Which type of credit allows you to borrow up to a limit and repay repeatedly, such as a credit card?

 D. Open-end credit

How often can you request a free credit report from each of the three credit bureaus?

Once per year

A credit card charges a $49 annual fee. What is the cost of simply having the card for a year?

 $49 per year

A card offers 0% APR for six months, then increases to 21%. What is the APR after the intro period?

21%

You take a $1,000 cash advance, and the fee is 4% of the amount. What fee will you pay?

$40

If your card gives you 25 days to pay off your balance before charging interest, what is that 25-day period called?

Grace Period

A Chapter 7 bankruptcy can stay on your credit report for how many years?

10 years

Late payments and other negative marks (not including bankruptcy) remain on your credit report for how long?

7 years

When a borrower’s property can be taken if they don’t repay a loan, that loan is called:

Secured Credit

When a car is used to guarantee repayment of an auto loan, the car is the:

Collateral

Owning a home would most directly demonstrate which of the three C’s of credit?

Capital

An online ad offers “4 easy payments of $22.99” for a smartwatch. This is an example of:

Installment credit

A new borrower with no credit history wants to buy a car but can’t get a loan alone. What can help?

cosigning with a parent

The highest amount you’re allowed to charge on a credit card is called your:

Credit limit

If a lender places a legal claim on your property for unpaid debt, that’s known as a:

Lien

Paying monthly utility bills in full to continue service is an example of what type of credit?

Service Credit

3 Cs of credit stand for

Character, Capacity, Capital

Which three features are most important to compare when choosing a credit card?

. APR, Grace Period, Credit Limit

Which of the following would not help you build good credit?

Opening many cards and spending heavily

Four people apply for a $25,000 car loan. Which applicant is likely the best choice for approval?

A. The one with steady income, long employment, and a 720 credit score

Who ultimately decides whether to approve or deny a loan?

The lender or bank issuing the loan

If a purchase balance carries over to the next month with an APR of 20%, what monthly interest rate is charged?

1.67%

If your statement says “Minimum Payment Due: $30,” what must you pay by the due date to avoid a late fee?

$30

If your credit card has a $10,000 limit and you currently owe $8,400, how much credit is still available?

$1,600