Chapter 8 (Managing your Credit) Flashcards
(25 cards)
a credit card that is honored by a specific retail establishment
retail (proprietary) credit card
maximum amount of credit allowed
credit limit
allows purchase beyond credit limit
overdraft protection
credit cards, such as gold or platinum cards, issued by a financial institution to individuals who have an exceptional credit standing
prestige cards
period between time of purchase and when payment is due
grace period
may be fixed, variable, or tiered
types of interest rates
the interest that you must pay as a result of using credit
finance charge
- most frequently used
- interest charged on average daily balance at the end of every day in the billing period
average daily balance method
interest charged on the balance at the beginning of the new billing period
previous balance method
interest is charged based on the balance at the end of the new billing period
adjusted balance method
What are the three types of finance charges?
- average daily balance method
- previous balance method
- adjusted balance method
the percentage of credit that must be paid as interest on an annual basis
simple interest rate
the simple interest rate including any fees charged by the creditor
annual percentage rate (APR)
the larger the interest rate, the higher the…
interest payments
a plan proposed to the court in which you repay at least a portion of your debt and pay attorney and filing fees
personal bankruptcy
What are the warning signs you’ve got to much debt?
A. you have less to spend than you used
B. you can’t sleep because you worry about your bills
C. you don’t have an emergency fund
D. All of the above
D. all of the above
Ideally, all your monthly debt, including your mortgage, should amount to no more than how much of your gross income?
A. 20%
B. 36%
C. 42%
D. 50%
B. 36%
What’s the worst kind of debt you can have?
A. mortgage
B. credit card
C. school loan
D. car loan
B. Credit card
If you make minimum payments on your credit card balance every monty:
A. you’re fine and can continue to charge
B. you can use any money you have left over to invest in stocks
C. it may take decades and thousands of dollars to pay it off
D. you risk ruining your credit rating
C. it amy take decades and thousands of dollars to pay it off
What should you look for on your credit reports?
A. late payments
B. charges you didn’t make
C. accounts you thought you had closed.
D. all of the above
D. all of the above
When buying a home, you should put every dime you’ve got towards the down payment?
False
Good debt is:
A. borrowing money for anything you really want but can’t afford
B. borrowing money for anything you really need but can’t afford
C. borrowing money to pay off your child’s debt
D. an oxymoron
C. Borrowing money for anything you really need but can’t afford
When should you borrow against a 401K?
A. when you have no other options
B. when you’re young
C. when you expect to be in a lower tax bracket in retirement
D. when yo plan on quitting your job
A. when you have no other options
It’s best to take out a home equity loan when:
A. you want to put in a pool
B. you want to pay off your credit card debt
C. you want to renovate your kitchen
D. you want to take a much deserved second honeymoon
C. you want to renovate your kitchen
