Question 1

Which of the following statements comparing credit and debit cards is TRUE?

Accepted Answer

With debit cards, you're spending your own money at point of sale, but with credit cards, you're getting a loan that you need to pay back later

Answer

Credit cards pull money directly from your bank account, while debit cards get their money from Visa or Mastercard

Answer

Far more businesses accept credit cards than debit cards

Answer

Credit card companies provide you with a monthly statement, while debit cards do not

Question 2

Which of these statements best explains why it's often a good idea to pay more than the monthly amount due on an amortized loan?

Accepted Answer

The extra payment will be applied to the principal amount you owe, which will pay down your debt more quickly

Answer

Every time you pay extra, the lender will reduce the interest rate they're charging by a small amount

Answer

The extra payment will be applied to the interest you owe, which will reduce the overall cost of your loan

Answer

Amortized loans typically have much higher interest rates than credit cards, so they're the best place to put your extra cash

Question 3

Which of these credit payback strategies would lead to the HIGHEST overall cost?

Accepted Answer

Making the minimum payment (3% of your credit card balance) every month with an occasional late payment

Answer

Making the minimum payment (3% of your credit card balance) every month on time

Answer

Paying off your credit card bill in full every month

Answer

Paying 20% of your credit card balance every month on time

Question 4

Taylor is about to go car shopping, and she has $5000 saved that she can use for a down payment while still having extra cash in her emergency fund. She expects the exact model car she’s looking for to cost $35,000. If her top priority is having the lowest monthly payments possible, which advice should she follow?

Accepted Answer

Put in $5000 for your down payment, and choose a loan with a long term length

Answer

Put in $3500 for your down payment, and choose a loan with a long term length

Answer

Put in $0 for your down payment, and choose a loan with a short term length

Answer

Put in $2500 for your down payment, and choose a loan with a short term length

Question 5

Reading through a credit card’s Schumer Box, you see the APR for a specific card is set at 9.99% - 23.99%. Which statement is true?

Accepted Answer

Your APR will be within that range, depending on the strength of your credit history

Answer

In this case, you want the highest APR in the range because you’ll earn more

Answer

The APR on credit cards is usually fixed, so it won't be adjusted as long as you are a cardholder

Answer

When given a range of APRs like this, you can assume most cardholders pay the lowest rate listed

Question 6

A loan with a shorter term length will have __________ monthly payments, and you will pay __________ in total interest.

Accepted Answer

higher, less

Answer

higher, more

Answer

lower, more

Answer

lower, less

Question 7

Why do credit card companies offer low minimum payments

Accepted Answer

To maximize their profits

Answer

To prevent customers from going into debt

Answer

To help improve the economy

Answer

To improve their customer service ratings

Answer

All of the above

Question 8

What are the two most important factors in calculating your credit score?

Accepted Answer

Payment history and total debt

Answer

Length of credit history and new credit inquiries

Answer

Amounts owed and length of credit history

Answer

Payment history and types of accounts

Question 9

Which of the following statements about credit scores does this bar graph support?

Accepted Answer

It is more difficult for young people to borrow because they have less payment history for a lender to rely upon

Answer

It is easier for young people to get loans at lower interest rates because they are likely to have never been late with a payment

Answer

Credit scores tend to drop as you grow older because you are more likely to miss a payment at some point

Answer

When young people borrow, they are likely to have lower interest rates because their credit scores are lower

Question 10

All of the following would show up on a credit report EXCEPT...

Accepted Answer

Salary of your current job

Answer

Student loan activity

Answer

Credit card payment history

Answer

Payment history of your car loan

Question 11

Your friend confides in you that he has a low credit score. What is the single best way for him to improve his score?

Accepted Answer

Make on-time payments

Answer

Cancel his credit cards

Answer

Check his credit score

Answer

Get a car loan

Question 12

Which statement is correct?

Accepted Answer

No credit is better than bad credit

Answer

No credit is the samething as having bad credit

Answer

Bad credit is better than no credit

Question 13

Josh has a credit card with $1,000 limit. He has used 60% of his credit limit by purchasing $600 worth of items.  This is an example of:

Accepted Answer

utilization

Answer

authorized user

Answer

variable credit

Answer

installment credit

Question 14

Which is the best definition of credit?

Accepted Answer

ability to purchase goods or services before paying for them

Answer

the ability to own nice things regardless of your income

Answer

piggybacking off of someone's credit score to build credit

Answer

the amount money that a person borrows from a lender

Question 15

Car loans are the same payment every month until the loan is paid off.  This is an example of _________ credit.

Accepted Answer

installment credit

Answer

variable credit

Answer

unsecured credit

Answer

revolving credit

Question 16

What is the best way to start building credit?

Accepted Answer

open a credit card and use for small purchases and pay it off in full every month

Answer

take out a car loan

Answer

get a job

Answer

opening at least 3 credit cards

Question 17

What is an authorized user?

Accepted Answer

Someone with credit lets someone with no credit to be an user on their credit card

Answer

Someone adds another persons name to their vehicle's registration

Answer

When you are given special privileges because of good credit

Answer

When you get approved for a line of credit

Question 18

Which statement is true regarding credit scores

Accepted Answer

the higher your score the better your credit

Answer

the lower your score the better your credit

Question 19

Which is an example of a variable credit?

Accepted Answer

credit cards

Answer

mortgages

Answer

car loans

Answer

rent

Question 20

Which weighs the most when it comes to credit scores?

Accepted Answer

payment history

Answer

length of credit history

Answer

new credit

Answer

utilization

Question 21

If you forgot to pay your credit card bill that was due on January 1st, when can the credit company report this to credit bureau if you still have not made a payment?

Accepted Answer

February 2nd

Answer

February 1st

Answer

January 1st

Answer

January 2nd

Question 22

Utilization percentages should stay below what amount?

Accepted Answer

30%

Answer

25%

Answer

20%

Answer

50%

Question 23

Credit mix is a healthy balance between _________ and ___________.

Accepted Answer

installment and revolving

Answer

fixed and secured

Answer

fixed and variable

Answer

secured and unsecured

Question 24

Where can you find out the history of a used vehicle?

Accepted Answer

Carfax

Answer

Carvana

Answer

Kelly Blue Book

Answer

Car Genius

Question 25

You bought a car for $28,000. According to data, vehicles depreciate by 20% each year.  If you wanted to sell your call 1 year later, what do you think you could get for it?

Accepted Answer

$22,400

Answer

$16,800

Answer

$5,600

Answer

$28,000

Question 26

Closing credit cards that have $0 balance will help your credit score go up.

Accepted Answer

False

Answer

True

Question 27

Having a credit card and never using it will have what affect on your credit score?

Accepted Answer

credit score go down

Answer

credit score go up

Answer

credit score will not change

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