credit and debt

Question 1

Debt is the most aggressively marketed product…..

Answer 1

ever

Question 2

Visa, Mastercard, Discover, and American Express spend over….. a year on marketing alone.

Answer 2

4 billion

Question 3

There were no credit cards prior to

Answer 3

1958

Question 4

Two of the four keys mentioned in the brief history of debt and why they are important.

Answer 4

1- 1972- first student loans
2- 1976- visa card created

Question 5

Debt

Answer 5

money owed to another perosn or company

Question 6

What does “introductory rate” mean?

Answer 6

When your low or zero interest time period is temporary on a credit card.

Question 7

What does a minimum monthly payment do?

Answer 7

cover your interest charges, but you’re barely making a dent in the actual debt total. It keeps you in debt for years.

Question 8

…… credit is when you have to put down a security deposit or use something as collateral.

Answer 8

Secured

Question 9

…… credit is when the lender doesn’t require you to put down a security deposit or collateral.

Answer 9

Unsecured

Question 10

….. credit is how most credit cards work

Answer 10

revolving

Question 11

…… credit is when there’s an agreement or a contract that puts you on a schedule of payments.

Answer 11

installment

Question 12

Myth: you need student …… to go to college

Answer 12

loan

Question 13

Truth: you can go to college

Answer 13

debt-free

Question 14

Revolving Credit

Answer 14

credit that automatically renews whenever a payment is made to reduce the debt.

Question 15

Collateral

Answer 15

Something owned (that has value) offered as security on debt; if the debt is not repaid as agreed, the item is forfeited to the lender.

Question 16

What makes your loan secure?

Answer 16

When the borrower is required to put up collateral. If the borrower fails to make payments on the loan the lender can take and sell the collateral to recoup their costs

Question 17

What makes a loan unsecured?

Answer 17

Credit loans or loans that don’t require collateral (like a credit card)

Question 18

Personal loans are?

Answer 18

loans from a bank, credit union, or other lender. They are usually a fixed amount and have fixed payments. They come with higher interest rates and fees. SOme have penalties if you pay them off too early. Usually don’t have to put up collateral.

Question 19

Lien

Answer 19

a legal claim against (or right to own) an asset until the debt (loan) is repaid.

Question 20

Home mortgage

Answer 20

a loan that
- lasts 15-30 yrs
- is a financial lien against a property
- the house is collateral (the lender owns, until the house is paid.

Question 21

What kind of asset is a house?

Answer 21

an appreciating asset

Question 22

appreciating asset

Answer 22

an asset that increases in value over time

Question 23

equity

Answer 23

the increase in value of a home overtime; the difference between the amount owed and what the home could be sold for.

Question 24

Default

Answer 24

a failure to repay a loan on time

Question 25

sources and types of credit

Answer 25

- credit cards - secured and unsecured loans - personal loans - home mortgage -home equity loans -student loans -auto loans

Question 26

depreciating asset

Answer 26

an asset that loses value overtime such as a car that is worth less every year

Question 27

installment credit

Answer 27

a loan for a fixed amount of money that's paid back in monthly installments.

Question 28

predatory lender

Answer 28

a lender who uses deceptive, unfair, or fraudulent practices on borrowers who are desperate for cash

Question 29

Myth: I need to have a ....... score

Answer 29

FICO

Question 30

Truth: A credit score is an "I ....... debt" score

Answer 30

A FICO score is not an indicator that you are ..... with money

Question 31

Your most powerful wealth-building tool is your ........

Answer 31

income

Question 32

You ....... rent an apartment without a FICO score

Answer 32

can

Question 33

without a FICO score, an extra ........ may be required.

Answer 33

deposite

Question 34

Credit score

Answer 34

a statistical number used to represent a consumer's creditworthiness.

Question 35

credit bureau

Answer 35

a company that collects credit rating information and makes it available to creditors.

Question 36

what are some credit bureaus

Answer 36

Experian, TransUnion, and Equifax

Question 37

Why should you monitor your credit report?

Answer 37

because many have errors, and checking your report often will help you identify identity theft and fraud.

Question 38

How many times can you check your credit report each year for free?

Answer 38

once, from each of the 3 main credit bureaus

Question 39

Myth: I need a ...... card to rent a car and make purchases online

Answer 39

credit

Question 40

Truth: You can do both of these things with a ....... card

Answer 40

debit

Question 41

most credit cards will charge you an ...... fee

Answer 41

annual

Question 42

the average college student's credit card debit is.....

Answer 42

1,400

Question 43

common credit card fees

Answer 43

- interest charges - cash advance fees=higher interest rate - annual fees - over-the-limit fees -late payment fees -merchant fees- credit card company charges the store

Question 44

principal

Answer 44

the original amount borrowed before interest

Question 45

interest

Answer 45

the additional cost a lender charges for borrowing their money

Question 46

term

Answer 46

the amount of time, in months that you'll be making payments

Question 47

depreciation

Answer 47

the loss of value of an asset over time

Question 48

negative equity

Answer 48

when the value of an asset falls below what is owed on it

Question 49

what is the 3rd foundation

Answer 49

pay cash for your car

Question 50

what is the 2nd foundation

Answer 50

get out and stay out of debt

Question 51

first foundation

Answer 51

save $500 for and emergency fund

Question 52

what is the snowball method

Answer 52

-list debts in order from smallest to largest and make minium payments on everything but the little one -attack the smallest debt, when it's gone add that payment to the next debt and any extra money you can squeeze in on the budget. keep making minimum payments on the other debts -once the debt is gone, take its payment and apply it to the next smallest debt. that creates a snowball, and as it rolls over it pick up more snow (money).

Question 53

if a loan is repaid, the _____ of the borrower-used as security for the debt- could be sold by the lender

Answer 53

collateral

Question 54

a ______ is a number that indicates the likelihood of someone repaying debt

Answer 54

credit score

Question 55

a ________ reports on a person's credit history

Answer 55

credit bureau

Question 56

the amount of time you have to pay back a loan is called the _____ of the loan

Answer 56

term

Question 57

when and item is worth less than what you owe on it, that's called ____________

Answer 57

negative equity

Question 58

making fixed payments on a loan over a set period of time is an example of ______-

Answer 58

installment credit

Question 59

when and asset loses value over time, that's _______

Answer 59

depreciation

Question 60

when you fail to repay a loan on time, you're referred to as being in _____

Answer 60

default

Question 61

the first step of the snowball method is to list all your debts.......

Answer 61

from smallest to largest amounts

Question 62

checking your credit report regularly can help you spot signs of.....

Answer 62

fraud, identity theft, and errors

Question 63

with a debit card, you can do everything you can do with a credit card except what

Answer 63

go into debt

Question 64

a clothing store credit card is an example of what type of debt?

Answer 64

revolving credit

Question 65

what is factored into the loan payment on a new car

Answer 65

term, interest, and principal

Question 66

what is NOT factored into the loan payment on a new car

Answer 66

equity

Question 67

predatory lenders use what prey on people?

Answer 67

unfair practices, deceptive tactics and fraudulent info

Question 68

which ISN'T a marketing tactic yo get you yo use credit?

Answer 68

50% off sale.