Types of Credit
2 years ago
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20 QuestionsShow answers
  • Question 1
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    Q.

    Where do banks get the money to lend out to consumers?

    answer choices

    From their clients' credit card accounts

    From their clients' savings accounts

    From the Federal government

    From their own money vaults

  • Question 2
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    Q.

    How do banks make money off of the credit they issue?

    answer choices

    They charge a large, one-time fee at the start of the loan

    They take out a small fee each month from your checking account

    They charge a high interest rate on the loan

    This is a trick question - they DON'T make money!

  • Question 3
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    Q.

    Which of the following is NOT a typical type of credit?

    answer choices

    Mortgage

    Overdraft

    Credit Card

    Pre-Paid Debit Card

  • Question 4
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    Q.

    Which of the following could be a SECURED loan? (hint: choose 2 correct answers)

    answer choices

    Auto loan

    Student loan

    Mortgage

    Overdraft

  • Question 5
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    Q.

    If the collateral for your secured loan can be taken away, why get a secured loan at all?

    answer choices

    Because they usually have a higher interest rate

    Because they usually have a lower interest rate

    Banks give you an extra 90 days to make a missed payment

    Banks typically don't charge interest for the first 12 months

  • Question 6
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    Q.

    What may NOT impact the interest rate on your loans?

    answer choices

    Your relationship with the financial institution

    Your credit score

    The loan amount

    Your level of education

  • Question 7
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    Q.

    True or False: A cosigner's credit history can be affected by the loan they are cosigned on.

    answer choices

    True

    False

  • Question 8
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    Q.

    Why does the amount of INTEREST you owe on a loan decrease over time?

    answer choices

    The institution trusts you more, so they lower the interest

    With each payment, principal increases; so interest lowers

    Banks are legally required to lower interest rates over time

    With each payment, principal decreases, so interest lowers

  • Question 9
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    Q.

    What information on a Schumer Box should you focus on when choosing a credit card? (hint: choose 3 correct answers)

    answer choices

    The term of the credit card

    Annual Percentage Rate (APR)

    Grace Period

    Fees

  • Question 10
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    Q.

    How do you avoid paying interest on your credit card (or any other loan for that matter)?

    answer choices

    Always make the minimum payment over time

    Pay interest 1st, then pay what you can on leftover balance

    Always make the full payment on time

    Pay the principal 1st, then pay what you can on interest

  • Question 11
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    Q.

    Which is TRUE when you make only the minimum payment each month?

    answer choices

    You ar charged interest on the remaining balance

    Your credit line is restored to its maximum amount

    Credit card companies have permission to sell your information

    It is the fastest way to pay off your debt

  • Question 12
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    Q.

    When can personal loans be a better option than credit cards? (hint: choose 2 correct answers)

    answer choices

    If you want to earn rewards and enjoy travel benefits

    If you want a lower interest rate

    If you want purchase protection & warranties

    If you need a lump sum of money right away

  • Question 13
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    Q.

    Which is TRUE about Payday loans?

    answer choices

    You can pay them back in installments

    You are charged a 1-time fee for the loan

    Most people successfully pay these loans back

    You need a credit card account to get one

  • Question 14
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    Q.

    A shorter auto loan term means ____ monthly payments & ____ total interest you'll pay.

    answer choices

    higher, less

    lower, more

    higher, more

    lower, less

  • Question 15
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    Q.

    Which of the following is TRUE about an auto LOAN and a LEASE? (hint: choose 2 correct answers)

    answer choices

    You must give the car back when a lease has expired

    Only a loan requires some kind of upfront payment

    You make monthly payments on both

    Monthly payments tend to be lower with a lease

  • Question 16
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    Q.

    True or False: Landlords are required to submit your payment history, which can boost your credit score.

    answer choices

    True

    False

  • Question 17
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    Q.

    Which is FALSE about what can happen if you fail to make your mortgage payments?

    answer choices

    After one missed payment, you can lose your home

    You will be charged fees

    Your credit score can take a hit

    Foreclosure process starts after 30 days of missed payment

  • Question 18
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    Q.

    How do federal student loans differ from private student loans?

    answer choices

    Fed loans have fewer and less flexible repayment options

    Fed loans generally have higher interest rates

    Private loan repayment may start while you're in school

    Private loans don't require a cosigner, fed loans do

  • Question 19
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    Q.

    When repaying your Federal student loans...(hint: choose 2 correct answers)

    answer choices

    repayment begins the day after you graduate

    a loan servicer will contact you before repayment begins

    you are required to begin with the Standard Repayment Plan

    you can choose from different repayment plans

  • Question 20
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    Q.

    How are credit cards and debit cards different?

    answer choices

    They're both linked to a checking account in different ways

    Some debit cards say VISA on them; credit cards don't

    With a credit card, you are borrowing from yourself

    A credit card can offer perks such as purchase protection

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