True/False
Indicate whether the statement is true or
false.
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1.
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If you close a credit card account before the stated time in the credit card
agreement, a cancellation fee may be charged.
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2.
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Credit is the ability to borrow money and pay it back later, usually without
interest.
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3.
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A good way to get started with credit is to open a checking account and get a
debit card.
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4.
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Service credit is often provided by utility companies and doctors.
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5.
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A cosigner with good credit may be required by the bank if there is no
collateral for the loan.
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6.
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Finance charges increase the cost of items purchased by a credit card.
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7.
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No interest is charged on the unused portion of a line of credit.
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8.
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A lender of a variable-rate loan may adjust the interest rate at any time but
must provide a 30-day notice.
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9.
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A person who borrows money is called a creditor.
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10.
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The balance on a charge card must be paid in full each month.
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Multiple Choice
Identify the choice that best completes the
statement or answers the question.
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11.
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Protections offered by many credit card companies include
a. | replacement of goods damaged or stolen within 90 days of purchase | b. | relief from
liability of fraudulent charges made without your knowledge | c. | emergency
replacement for a lost card within 24 hours | d. | all of these |
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12.
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Which of the following is not a benefit of using credit cards?
a. | convenience and rewards | c. | protections from
fraud | b. | increased spending power | d. | interest earnings |
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13.
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Charge cards are a form of credit card that must be paid off in full each month.
These cards do not have interest fees, but instead have an annual fee or service charge. Which of the
following cards is considered a charge card?
a. | VISA® | c. | DISCOVER® | b. | American Express® | d. | MasterCard® |
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14.
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Curtis has a preapproved loan at his local bank. He can borrow against it, pay
it back and borrow again as needed. What has Curtis’s bank extended to him?
a. | A consumer loan. | c. | A line of credit. | b. | A revolving credit. | d. | A credit card. |
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Use the scenario on Georgia to answer
questions 15-16.
Georgia has purchased a home that she financed through her local
bank. Her loan is a mortgage loan for 30 years, and she makes monthly payments. When she completed
the loan paperwork, her banker obtained a statement of her credit history to determine her
eligibility for the loan. This report gave her a credit score. When she purchased her house
she had water, gas, electricity and cable tv services conntected for her use. She also purchased a
new stove and refrigerator from the local applicance store. She financed these through the appliance
store and will pay equal monthly payments for 1 year to the store.
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15.
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What type of credit is Georgia using to obtain the utilities services?
a. | revolving credit | c. | service credit | b. | installment credit | d. | store credit |
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16.
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What type of credit is Georgia using to purchase the appliances?
a. | revolving credit | c. | service credit | b. | installment credit | d. | store credit |
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17.
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What type of report did Georgia’s banker get a copy of to determine her
loan eligibility?
a. | The banker got a copy of her driver’s license record. | c. | The banker got a
copy of her college transcript. | b. | The banker got a copy of her birth
certificate. | d. | The banker got
a copy of her credit report. |
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18.
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What did the statement that the banker obtained tell thebanker about her
eligibility for the loan?
a. | It told him of her collegiate skills. | c. | It told him of her ability to repay
the loan. | b. | It told him of her ability to drive safely. | d. | It told him of her family medical
history. |
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19.
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What is the typical collateral for a mortgage loan?
a. | Her car. | c. | Her stove. | b. | Her house. | d. | Her
refrigerator. |
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20.
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Which of the following items would have the largest impact on Georgia’s
credit score?
a. | Her payment history. | c. | Her types of credit used. | b. | Her amounts
owed. | d. | Her open
accounts. |
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Matching
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a. | charge card | f. | installment credit | b. | collateral | g. | line of credit | c. | consumer
loan | h. | revolving
credit | d. | credit | i. | service credit | e. | credit card | j. | store account |
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21.
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The ability to receive services and pay for them later.
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22.
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Property used as security for a loan.
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23.
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A credit account that allows you to charge items or sevices onlay at that store
or with that merchant.
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24.
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The ability to borrow money and pay it back later
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25.
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An account on which you can charge purchases repeatedly up to a maximum
limit.
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26.
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A form of credit card where the balance must be paid in full each
month.
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27.
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A plastic card linked to a credit account that can be used for making
purchases.
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28.
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A direct loan of cash made to a consumer at a fixed interest rate for a set
period of time.
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29.
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Credit that finances the purchase of a single high-price item.
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30.
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A preapproved loan amount that a debtor can borrow against, pay back, and
borrow again as needed.
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