FIN 3300 Chapter 6 and 7 Exam
Questions and Answers
_ determines your credit capacity - ANSWER-Budget
_ out of 10 U.S. households carry 1+ credit cards - ANSWER-7
_% borrowers (carrying balances & paying finance charges) - ANSWER-55
_% convenience users (pay balances in full each month) - ANSWER-45
"Sign" new cards ASAP "_" - ANSWER-Photo ID Required
2 types of credit - ANSWER-Closed-end
Open-end
Add-on interest - ANSWER-Interest is calculated on the full amount of the original
principal, added to the principal, and the total of both is divided by the number of
payments to be made
Simple interest is "added on" to Principal up front
Adjusted balance method - ANSWER-Finance charges are calculated after subtracting
payments made during the billing period
Advantages of credit - ANSWER-Current use of goods and services
Permits purchase even when funds are low
A cushion for financial emergencies
Advance notices of sales
Easier to return merchandise
Convenient when shopping
One monthly payment
Safer than cash
Needed for hotel, car reservations and shopping online
, Can take advantage of float time/grace period
May get rebates, airline miles or other bonuses
Indicates financial stability
After Chapter 7 Bankruptcy, You May No Longer Owe... - ANSWER-Retail store
charges
Bank credit card charges
Unsecured loans
Unpaid hospital or physician bill
Mortgage payments
After Chapter 7 Bankruptcy, You Still May Owe... - ANSWER-Certain taxes and fines
Child support and alimony
Educational loans
Debts from willful or malicious acts (fraud, DWI,
Larceny, Embezzlement)
annual percentage rate (APR) - ANSWER-the percentage cost of credit on a yearly
basis
True rate of interest, so you can compare rates with other sources of credit. It is
important to shop for credit.
As many as _% co-signers repay the loans - ANSWER-75
Average daily balance method - ANSWER-Creditors (credit cards usually use this)
1) add your balances for each day in the billing period
2) divide this total by the number of days in the billing period
3) multiply this average by the monthly interest rate
Bankruptcy - ANSWER-a legal process in which some or all of the assets of a debtor
are distributed among the creditors because the debtor is unable to pay his or her debts
Questions and Answers
_ determines your credit capacity - ANSWER-Budget
_ out of 10 U.S. households carry 1+ credit cards - ANSWER-7
_% borrowers (carrying balances & paying finance charges) - ANSWER-55
_% convenience users (pay balances in full each month) - ANSWER-45
"Sign" new cards ASAP "_" - ANSWER-Photo ID Required
2 types of credit - ANSWER-Closed-end
Open-end
Add-on interest - ANSWER-Interest is calculated on the full amount of the original
principal, added to the principal, and the total of both is divided by the number of
payments to be made
Simple interest is "added on" to Principal up front
Adjusted balance method - ANSWER-Finance charges are calculated after subtracting
payments made during the billing period
Advantages of credit - ANSWER-Current use of goods and services
Permits purchase even when funds are low
A cushion for financial emergencies
Advance notices of sales
Easier to return merchandise
Convenient when shopping
One monthly payment
Safer than cash
Needed for hotel, car reservations and shopping online
, Can take advantage of float time/grace period
May get rebates, airline miles or other bonuses
Indicates financial stability
After Chapter 7 Bankruptcy, You May No Longer Owe... - ANSWER-Retail store
charges
Bank credit card charges
Unsecured loans
Unpaid hospital or physician bill
Mortgage payments
After Chapter 7 Bankruptcy, You Still May Owe... - ANSWER-Certain taxes and fines
Child support and alimony
Educational loans
Debts from willful or malicious acts (fraud, DWI,
Larceny, Embezzlement)
annual percentage rate (APR) - ANSWER-the percentage cost of credit on a yearly
basis
True rate of interest, so you can compare rates with other sources of credit. It is
important to shop for credit.
As many as _% co-signers repay the loans - ANSWER-75
Average daily balance method - ANSWER-Creditors (credit cards usually use this)
1) add your balances for each day in the billing period
2) divide this total by the number of days in the billing period
3) multiply this average by the monthly interest rate
Bankruptcy - ANSWER-a legal process in which some or all of the assets of a debtor
are distributed among the creditors because the debtor is unable to pay his or her debts
