1 Which statement below BEST describes how student loans should be used responsibly during college? *
They can only legally cover the costs of tuition, room, and board.
In addition to tuition, room, and board, you can use them to pay other costs of attendance such as books, fees, and transportation.
You can use your student loans to pay for necessities OR to buy anything sold on campus, but you can’t use them for off-campus purchases.
Because student loans have such low interest rates, you can use them for large purchases including vacations and car payments while in college.
2 Reading through a credit card disclosure (aka the Schumer Box), you see the A.P.R. for a specific card is set at 9.99% – 23.99%. Which of the following statements is probably TRUE? *
When given a range of A.P.R.s like this, you can assume most cardholders pay the lowest rate listed
One of the primary factors determining your card’s A.P.R. is your credit score
With credit card A.P.R.s, cardholders like higher A.P.R.s because they earn more
The A.P.R. on credit cards is usually fixed so they won’t be adjusted as long as you are a cardholder
3 What financial product am I? I am a type of credit card that requires cardholders to make a security deposit equal to the credit limit on their account. Due to this deposit requirement, I am often a good choice for young people looking to establish their credit history. *
Standard credit card
Secured credit card
Overdraft credit card
Rewards credit card
4 Which statement accurately describes a revolving line of credit? *
You owe the same payment every month
You can buy additional items as you need them without getting approval for each purchase
They do not charge interest
One common example is a car auto loan
5 Which of the following is most likely to represent a fixed rate, secured debt? *
A home equity line of credit
A credit card
A peer-to-peer loan
A dealer financed auto loan
Ashton needs to get his car fixed in order to get to work, and he doesn’t have an emergency fund or enough cash in his account to pay for the repair, which costs $975.
6 Which option below is likely the WORST financial decision to solve his problem? *
Take out a home equity loan
Obtain a loan through a peer-to-peer lending website
Put the repair on his credit card
Take out a payday loan
7 A credit card offer comes in the mail with the bold print “0% A.P.R. for New Accounts.” Which important piece of information should you find before thinking about signing up? *
Can I get two or more cards with this offer?
Can I pay my credit card bill online?
What is the A.P.R. after the introductory period?
8 What kind of designs can I get on my card?
Which of the following statements about Federal student loans is TRUE? *
The Federal government offers numerous loan repayment plans, including standard, income-based, and graduated payments.
Federal student loans do not begin accumulating interest until after you graduate and are employed at least part time.
Federal student loans are typically more expensive than private student loans.
9 You must take the SAT or ACT to qualify for Federal student loans.
BestBank’s Visa credit card discloses an A.P.R. of “Prime Rate + 5.74% to Prime Rate + 22.74%.” If the Prime Rate increases from 3.25% to 4.25%, what impact would this have on A.P.Rs for cardholders? *
No change since credit card A.P.Rs don’t change as long as your account is open
Increase in A.P.R by 1%
Decrease in A.P.R. by 1%
Increase in A.P.R. by 22.74%
10 You see on a commercial that OrangeCo is offering a credit card with a 5% cashback program for all cardholders. Which question might help you evaluate how good this offer is? *
Does the cashback program apply to all purchases or only specific types of purchases like gas and groceries?
Can I get a debit card along with a new credit card?
Who does OrangeCo use as their spokesperson in the commercial?
11 Do I still get the cash back even when I return my purchases to the store?
Which of these statements best explains why it’s often a good idea to pay more than the monthly amount due on an amortized loan? *
Every time you pay extra, the lender will reduce the interest rate they’re charging by a small amount.
The extra payment will be applied to the principal amount you owe, which will pay down your debt more quickly.
The extra payment will be applied to the interest you owe, which will reduce the overall cost of your loan.
12 Amortized loans typically have much higher interest rates than credit cards, so they’re the best place to put your extra cash.
Which of these credit card payback strategies would result in your paying the HIGHEST amount of interest? *
Paying 20% of your credit card balance every month on time
Paying off your credit card bill in full every month
Making the minimum payment (3% of your credit card balance) every month on time
Making the minimum payment (3% of your credit card balance) every month with an occasional late payment
13 Each of the following financial products will help you build credit history EXCEPT: *
Secured credit card
14 Which of the following statements comparing credit and debit cards is TRUE? *
Far more businesses accept credit cards than debit cards
Credit cards pull money directly from your bank account, while debit cards get their money from Visa or Mastercard
Credit card companies provide you with a monthly statement, while debit cards do not
15 With debit cards, you’re spending your own money at point of sale, while with credit cards, you’re promising to pay back the money eventually
Which of the following statements is TRUE? *
Home equity loans or lines of credit are illegal in most states
Home equity loans or lines of credit are only available to people who have paid for their home in full
Home equity loans or lines of credit are not available to renters
16 Home equity loans or lines of credit are only useful for funding home improvement projects
Choose the option that BEST completes this sentence: Personal loans are called “personal loans” because… *
You apply for them in-person, at your own bank branch or at a competing branch (if they offer better rates).
You apply for them in-person or online, but whether you are given the loan depends on your personal credit score.
They are lent based on your personal credit history rather than secured by an asset like a house or car.
17 They are given to someone based on their personal familiarity with their banker.
If Suzanne applies for and receives a loan on a peer-to-peer lending website, who is supplying the funding to Suzanne? *
An investor hoping to make money on her interest payments
A friend or family member who trusts her to repay the funds
The Federal government, funding the loan with tax dollars
People who have received a loan in the past on the website and are now “paying it forward”
18 What statement about credit cards is TRUE? *
They can help you establish a credit history
Since they are tied directly to your checking account, they prevent you from spending money you do not have
If you need to carry a balance, the interest rates are generally quite low (less than 5%)
As long as you make the minimum payments it’s like getting a short-term interest free loan
19 If you are having trouble making loan or credit card payments, which recommendation below represents the LEAST useful piece of advice? *
Find an extra source of income by taking a second job, working longer hours, asking for a raise, etc
Stop making payments on some of your debts so you can focus on getting the most expensive or largest debts under control
Call your lenders and see if you can negotiate lower monthly payments, lower interest rates, or longer terms
Reduce spending in some other area of your budget so you can direct more funds toward debt payments
20 Elizabeth is considering buying a $30,000 car. Which financing option would have the LOWEST expected monthly payment and the HIGHEST expected total interest payments? *
$0 down payment, 6% interest, 60 months
$0 down payment, 6% interest, 84 months
$3000 down payment, 6% interest, 60 months
$3000 down payment, 0% interest, 36 months
21 Amy and Chuck each buy a house in the same neighborhood for $250,000. Amy’s monthly mortgage payment is $400 more per month than Chuck’s.
Which of the following statements would explain the difference? *
Amy chose a shorter term for her mortgage, so her monthly payments are higher
Chuck has a lower credit score, so his interest payments are also lower
Amy made a larger down payment, so her monthly payments are also larger
22 Chuck’s interest rate is higher, so his monthly payment due is also lower
Each of the following is an advantage to leasing a car EXCEPT? *
Monthly leases are frequently lower than a car payment would be on a loan for the same car.
Lease payments are not reported to the credit agencies, so it’s not as bad to miss a payment or two.
Leases allow you to get a newer model car more frequently than the typical car loan would.
23 Leases are typically short enough that the car stays under warranty for many repairs or service appointments.
Based on the Card Statement above, which of the following statements is TRUE? *
The cardholder is carrying a balance over from the last period.
The cardholder was charged interest on her balances for the last period because she made her payment on time.
If the cardholder makes her minimum payment of $35.00 by the due date, she will NOT be charged interest on her balances.
If the cardholder pays $523.20 by the due date on the bill, she will pay NO interest to the credit card company.
24Based on the Card Statement above, how much credit does this cardholder have available to use? *
25 Which of the following statements is TRUE? *
If you make the minimum payment on your card by the due date, the credit card company will not charge you interest.
If you pay your balance in full after the due date, the credit card company will not charge you interest.
If you pay your balance in full after the due date, you will be charged interest.
If you pay your balance in full by the due date, you will be charged interest.
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