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Exam 8: Managing Your Credit

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Question 1

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A credit card issued by a financial institution and secured by funds deposited by the cardholder is a

A) prepaid card.
B) protected card.
C) secured card.
D) proprietary card.

E) None of the above
F) B) and D)

Correct Answer

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C

Question 2

True/False

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You should invest in risky investments instead of paying off your credit card debt because the return might be higher than the cost of financing.

A) True
B) False

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Question 3

Multiple Choice

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The easiest way to establish credit is to

The interest you pay when using credit cards can have a major impact on the total amount you owe.

All of the following are disadvantages of proprietary credit cards, except

There is no cost to the merchant when you use a MasterCard or Visa credit card.

When using your credit card frequently, it is wise to

A credit card statement lists purchases that were made with the credit card as well as any balance carried forward from the previous statement.

If you find yourself with an excessive credit card balance, the first thing you should do is

When you apply for a credit card, the potential creditor will look at which of the following as a source of future debt payments if necessary?

Credit cards have all of the following advantages, except

If you have credit problems, you should contact a credit repair service instead of trying to resolve the issues yourself.

Identifying specific goals for managing your credit is an important part of your personal financial plan.

If you discover an error on your credit card statement, you should not pay any portion of the balance until the matter has been resolved.

Describe the advantages and disadvantages of credit cards.

If you pay your total credit card balance before the grace period, you normally are not charged any interest.

Suppose you have a credit card balance of $500 that you were unable to pay off. During the current month you purchase another $250 worth of products. You made a payment during the grace period of $300. Assuming your retail credit card company charges an annual interest rate of 22%, compute your new balance.

Credit cards are generally used for such purchases as

If your credit card company decides to increase your interest rate, it must notify you 30 days in advance.

The ________ is usually about 20 days after the credit card statement is closed.