Class Directions: Match the correct term with the correct definition by placing the letter on the appropriate blank. (1 point per question) 1. _____ A line of credit established in advance so the borrower does not have to apply for credit each time new credit is desired.
2. _____ A loan which the borrower must repay the amount in a specified number of equal payments.
3. _____ Short‐term loan that provides immediate cash by securing a borrower’s written check or receiving authorization for automatic withdrawal from the borrower’s depository institution account.
4. _____ Tangible items leased with the condition that the item will be owned by the renter if the term of rent (contract) is completed.
5. _____ A loan based on the value of personal property.
A. B. C. D.
Title loan Payday loan Closed‐end credit Refund anticipation loan E. Open‐end credit F. Pawn loan G. Rent‐to‐own loan
6. _____ The borrower gives the lender his/her automobile title in exchange for a set amount of cash.
7. _____ Short‐term cash advance secured by a taxpayer’s expected tax refund.
Directions: Determine if each statement is true or false and indicate T for true and F for false. (1 point per question)
Directions: Answer the following questions by writing a short answer. 15. Describe why a person is spending future income when using credit. (2 points) 16. Provide two examples of when credit, if used responsibly, can be a positive. (2 points) 17. Drew is considering purchasing a new vehicle. What are three things he should review closely on the contract? (3 points) 18. Laura is using a rent‐to‐own store to purchase a computer valued at $1,000. She is paying $25 per week for 104 weeks (2 years). Why might this loan contribute negatively to her financial well‐being? (2 points) 19. Edward is considering buying a home using credit. What are three questions he should ask himself to ensure he is using credit responsibly? (3 points) 20. Jonna is considering using a refund anticipation loan to have money for a deposit on a Caribbean vacation. What are two alternatives she should consider before using this type of credit?
Directions: Match the following words with the correct definition. (1 point each) 1. ______Transferring debt from one credit card to another 2. ______Charged if the account balance goes over the credit limit 3. ______The maximum amount of charges allowed to an account 4. ______ The cost of credit expressed as a yearly interest rate 5. ______ The interest rate that may be charged right after a credit card account is opened 6. ______ An interest rate that may change depending on other factors, such as the prime rate 7. ______ A yearly fee that may be charged for having a credit card 8. ______ Charged when a cardholder does not make the minimum monthly payment by the due date 9. ______ The interest rate charged on new transactions if the penalty terms in the credit card contract are triggered Directions: Write a short answer for the following questions: 10. Is a 13% or 18% APR for a credit card better? Why? (1 point) 11. Describes the three main steps in obtaining a credit card. (3 points)
a. Annual Fee b. Annual Percentage Rate (APR) c. Balance transfers d. Credit Limit e. Introductory rate f. Late‐payment fee g. Over‐the‐limit fee h. Penalty APR i. Variable‐rate APR
12. How can a consumer avoid paying interest on a credit card? (1 point) 13. What are two differences between a debit card and a credit card? (2 points) 14. Describe two pieces of information on a credit card statement that you should review closely and why. (2 points) 15. What typically happens if a cardholder makes a late credit card payment? (1 point) 16. Identify three positive ways to manage your credit card use? (3 points) Directions: For the following questions, please indicate if the statement is True or False by writing a T or F on the line. (1 point each) 17. _______ Credit card applicants will always be accepted for the card they apply for, but they may have to pay a higher interest rate. 18. _______ People under the age of 21 can never receive a credit card. 19. _______ An individual’s liability for unauthorized credit card charges is much higher than an individual’s liability for unauthorized debit card purchases, regardless of when the fraud is reported. 20. _______ It is better to use a debit card rather than a credit card when purchasing items online.
Directions: Match the following definitions with the correct terms by placing the appropriate letter on each blank provided. (1 point each) 1. _______ A record of the borrower’s past loan and credit‐related transactions. a. Tax Lien 2. _______ A loan of a certain amount of money that a borrower must repay in a specified number of equal payments. b. Open‐end Credit c. Credit 3. _______ When goods, services, and/or money is received in exchange for a promise to pay back a definite sum of money at a d. Closed‐end Credit future date. e. Credit Report 4. _______ A person or organization who makes funds available to borrow. f. Credit History g. Lender 5. _______ A legal claim by a government entity to take an individual’s property or income when their taxes are not paid in full.
Directions: Place an N on the line if the statement will create negative credit; place a P on the line if the statement will create positive credit. (1 point each) 6. _______ Maintaining a reasonable amount of unused credit. 7. _______ Routinely paying bills late. 8. _______ Numerous credit applications in a short period of time. 9. _______ Checking credit reports annually to search for mistakes. 10. _______ Having many of the same types of credit accounts.
Directions: Circle the correct letter for each of the following questions. (1 point each)
11. Which of the following is NOT on a credit report? a. Late medical payments b. Repayment history c. Buying habits d. Public Records
12. A negative credit report may impact an individual’s ability to receive all of the following EXCEPT? a. Insurance b. Apartment c. Loan d. A traffic ticket
Directions: Choose from the answer bank to indicate how long each type of information remains on your credit report. Answers may be used more than once. (1 point each)
13. _______ Inquiries 14. _______ Late or missed payments 15. _______ Open accounts considered to be in “good standing”
a. b. c. d. e.
ANSWER BANK Never on a credit report Two years Seven Years Ten years Always on a credit report
16. _______ Medical information 17. _______ Closed accounts Directions: Answer the following questions in short answer format.
18. Describe the difference between open‐end and closed‐end credit and provide an example of each. (4 points)
19. Describe three ways a twenty year old may begin building credit. (3 points)
