9 Personal Finance: Chapter 4 Review – Flashcards

Which of the following is not a factor in determining a FICO score? A) Getting a personal loan from a bank B) Using credit cards C) Paying cash for all purchases D) Taking out a mortgage on a house

Which of the following is not a good idea for getting out of debt? A) Quit borrowing money B) Get a part-time job or work overtime C) Sell something D) Borrow money from your parents to pay for the debt

Which of the following things cannot be done with a debit card but can be done with a credit card? A) Go into debt B) Rent a car C) Purchase something online D) Purchase an airline ticket

What factors affect a credit score? A) Type of debt B) New debt C) Duration of debt D) All of the above

Which of the following is not a recommended step in the Drive Free method of purchasing a car? A) Plan your purchase in advance using the sinking fund method of saving. B) Place your savings in a mutual fund so that your money can make more money. C) Start with an inexpensive car and gradually move up in car value as your savings increases. D) Explore new car dealerships for the best interest rate.

What is paycheck garnishment? A) A court-ordered attachment that allows a lender to take monies owed directly from a borrower?s paycheck B) Process of taking something back for failure to make payments C) Process by which the holder of a mortgage sells the property of a homeowner who has fallen behind on payments D) A legal procedure for dealing with debt problems of individuals and businesses

Which of the following is not a credit myth? A) The lottery and other forms of gambling will make you rich. B) You have ?arrived? financially once you get approved for a credit card. C) Debt is a tool and should be used to create prosperity. D) Borrowing money can have serious consequences and prevent you from building wealth.

T/F You must establish credit in order to buy a house.

T/F If you are a victim of identity theft, you are only responsible for paying back half of the debt.

T/F You need to have a credit card to rent a car or check in to a hotel.

T/F Teens are a huge target of credit card companies today.

T/F Co-signing a loan is a good way to help a friend or relative.

A decrease or loss in value (inflation, depreciation)

A yearly fee that's charged by the credit card company for the convenience of the credit card (interest rate, annual fee)

An interest rate charged to a customer during the early stages of a loan; the rate often goes up after a specified period of time (introductory rate, new customer fee)

When a person owes more on an item (like a car or house) than it is worth, the person is said to be (secured, upside down) on the loan.