Chapter 7

Question 1

the process of making choices that reflect goals by considering all of the pros and cons along with the costs

Answer 1

systematic decision making

Question 2

being able to meet your financial goals through planned earning, spending, and saving

Answer 2

financial responsibility

Question 3

failing to live up to your financial obligations to meet your goals and needs

Answer 3

failing to live up to your financial obligations to meet your goals and needs

Question 4

an organized method for making good buying decisions

Answer 4

buying plan

Question 5

standards or rules by which something is judged

Answer 5

criteria

Question 6

the maximum amount you are willing to pay for an item

Answer 6

spending limit

Question 7

a refund of part of the purchase price of an item

Answer 7

rebate

Question 8

additional coverage that you can buy to pay for repairs or replacements needed beyond the original warranty period

Answer 8

extended warranty

Question 9

the ability to borrow money and pay it back later

Answer 9

credit

Question 10

money that must be repaid

Answer 10

debt

Question 11

a plastic card linked to a credit account that can be used to make purchases

Answer 11

credit card

Question 12

a credit account that allows you to charge items or services only at that store or with that merchant

Answer 12

store account

Question 13

an account on which the account holder can charge repeatedly up to a maximum limit

Answer 13

revolving credit

Question 14

a form of credit card for which the cardholder must pay the balance in full by the due date

Answer 14

charge card

Question 15

a direct loan of cash made to a consumer at a fixed interest rate for a set period of time

Answer 15

consumer loan

Question 16

credit used to finance the purchase of a single high-priced item through a series of equal payments made over a set period of time

Answer 16

installment credit

Question 17

property that can be used as security for a loan

Answer 17

collateral

Question 18

a preapproved loan amount that a debtor can borrow as needed with no collateral

Answer 18

line of credit

Question 19

the ability to receive services and pay for them later

Answer 19

service credit

Question 20

the total dollar amount of all interest and fees you pay for the use of credit

Answer 20

finance charge

Question 21

the amount you are required to pay each month on a credit account

Answer 21

minimum payment

Question 22

an interest rate that is set and does not change from month to month

Answer 22

fixed interest rate

Question 23

the amount of time you have to pay your current credit card balance in full to avoid paying interest

Answer 23

grace period

Question 24

the period of time between credit card billings

Answer 24

billing cycle

Question 25

an interest rate that goes up and down with inflation and other economic conditions

Answer 25

variable interest rate

Question 26

moving a balance from one credit card account to another

Answer 26

balance transfer

Question 27

money borrowed against your credit card account

Answer 27

cash advance

Question 28

a fee charged for violating a term of the credit agreement

Answer 28

penalty