11 questions
To avoid being charged for unauthorized fees or sales by a credit card company, customers should
save their credit card sales slips and compare them with their credit card statement.
check that all payments appear on their credit card statement.
check that any purchase returns appear on their credit card statement.
all of the above
A grace period allows you to avoid paying finance charges if you pay your credit card balance in full by the due date.
True
False
If a monthly periodic rate is used, divide the Annual Percentage Rate (APR) by 12.
True
False
If a daily periodic rate is used, divide the Annual Percentage Rate (APR) by 365.
True
False
Which of the following is the most common method for calculating finance charges on a credit card?
adjusted balance method
average daily balance method
mean balance method
previous balance method
Which of the following reasons might be used to discourage a friend from getting a cash advance on a credit card?
interest charges begin accumulating immediately
payments are applied to any purchase balance before the cash advance balance creating higher finance charges
the interest rate for cash advances is higher than for purchases
all of the above
Total finance charges include both periodic finance charges and fees charged.
True
False
Which of the following is NOT a strategy for managing or reducing debt?
Use a debit card instead of cash.
Transfer high interest credit card balances to lower interest accounts.
Pay more than the minimum payment on credit cards.
Pay off credit cards with the highest interest rates first.
Which of the following is NOT a factor that influences an indvidual's credit score?
debt-to-income ratio
length of credit history
amounts owed to creditors
payment history
A consolidation loan is money that is borrowed to pay off all of your debts.
True
False
On June 1st, Jared has a $1,500 beginning balance on his credit card. He decides to stop making charges on his card and work towards paying it off. His credit card has an APR of 18%. Monthly periodic finance charges are calculated using the previous balance method. If Jared makes monthly payments of $150, how much will he owe in 6 months? How much will he have paid in periodic finance charges?
$705.73, $105.73
$843.09, $12.65
$978.41, $14.68
$1,372.50, $22.50