Chapters 4-6 Flashcards
1) A credit card is a type of:
Credit Service or loan
2) An all-in-one account that provides a complete financial service program for a single fee is known as:
Asset management account
When selecting a _______, you should consider all of the following to be major factors: Convenience, Fee structure, and other charges, Personal service, Rates for savings and borrowed funds
Financial services provider
What type of financial institution offers a full range of financial services including checking, savings, lending, and other services?
Commercial bank
John needed some cash quickly, so he received a short-term loan based on the proportional value of an old ring. Where did he go?
Pawn shop
What is a drawback of a regular savings account?
Low-interest
Earning interest on previously earned interest is called:
Compounding
The Truth in Savings Act requires financial institutions to disclose the _____ on savings accounts.
APY 100= interest/principle
Lee wants his retail purchases to be deducted directly from his checking account. What should he use?
Debit card
Laura bought a used car and was told that she needed a personal check with guaranteed payment. She obtained a:
Certified check
If a check is lost or stolen, you should use a
Stop payment order
What is the APY for a savings account with a $250 balance that receives $9 interest for the year?
100=9/250
100(0.036)
3.6%
What is the APY for a one-year $4,000 certificate of deposit with $280 interest?
100=280/4000
100(0.07)
7%
APY
Annual Percentage Yield
Southern Home Lending offers home equity loans up to 80 percent of the home value for its customers. If Sue Jones has a home valued at $290,000 and a current mortgage of $87,000, how much can she borrow in a home equity loan from Acme?
290,000(80%) = 232,000 - 87,000
145,000
If Vince charged $270 on his credit card with a 21 percent APR and he paid his balance in full within the grace period, how much was he required to pay?
270 – because he paid it off before the interest charge
APR
Annual Percentage Rate
Peter borrowed $360 to be repaid in one year. He paid 10 percent interest and a service charge of $19. What is his finance charge?
interest + service charge
36 + 19 = 55
Finance Charge
A fee for borrowing money, added to a monthly credit card bill.
Karen received a $1,060 loan from the bank for a vacation. The bank is using the simple interest formula for this one-year, 8.25 percent loan. What is her total interest?
(Total amount)(%)(rate)
(1,060)(8.25)(1)
8,745(1)
8,745
Total interest
A total fee for borrowing money
Purchasing a car so a homemaker can return to work, Borrowing for a college education, Purchasing an item that costs less now than it will later, and Paying for a medical emergency are all valid reasons for using:
Credit card
The greatest disadvantage of using credit is:
Temptation to overspend
Examples of closed-end credit
Mortgage, automobile loan, personal loan, student loan
