| A | B |
|---|
| Annual Fee | A yearly fee that is charged by the credit card company for the convenience of the credit card |
| Annual Percentage Rat (APR) | Cost of borrowing money on an annual basis; takes into account the interest rate and other related fees on a loan |
| Credit Card | Type of card issued by a bank that allows users to finance a purchase |
| Credit report | a detailed report of an individual's credit history |
| Credit Score | A measure of an individual's credit risk; calculated from a credit report using a standardized formula |
| Debt Snowball | Preferred method of debt repayment; includes a list of all debts organized from smallest to largest balance; minimum payments are made to all debts except fror the smallest, which is attacked with the largest possible payment |
| Depreciation | A decrease or loss in value |
| Introductory rate | An interest rate charged to a customer during the early stages of a loan; the rate often goas up after a specified period of time. |
| Loan term | Time frame that a loan agreement is in force and before or at the end of which the loan should either be repaid or renegotiated for another term |
| Tax deduction | An expense, such as a charitable contribution, that can be deducted from on's taxable income |
| Items that factor into a FICO score | Getting a personal loan from a bank; using credit cards; taking out a mortage on a house |
| Ways to get out of dept | Quit borrowing money; get a part-time job or work overtime; sell something |
| What Things can be done with a Debit Card as well as a credit card | Rent a car; purchase something online; purchase a airline ticket |
| What are factors that affect a credit score | Type of debt, duration of debt, new debt |
| What are some steps to the Drive Free method of purchasing a car | 1. Start with an inexpensive care and gradually move up in car value as your savings increases; plan your purchase in advance using the sinking fund method of saving; place your savings in a mutual fund so that your money can make more money |
| What is a cost-effective option for purchasing a home? | C) The most ideal way to buy a house is with 100% down; if that is not an option, you should get no more than a 15-year, fixed rate mortgage with a down payment of at least 10%. |
| What is the first step in the debt snowball method | A) List your debts in order from smallest to largest balance and focus on paying the smallest debt off first. |
| What is paycheck garnishment? | A court-ordered attachment that allows a lender to take monies owed directly from a borrowerʹs |
| List three credit myths | 1.Debt is a tool and should be used to create prosperity. 2. a loan to a friend or relative is a way of helping them. 3. You must have a credit card or take out a car loan to build up your credit. 4. By co-signing a loan, you are helping a friend or relative; 4 Cash advance and payday loans are services for lower income people, 6. The lottery and other forms of gambling will make you rich. |
| If you do not have a FICO score, what factors will determine whether or not you qualify for a mortgage? | History of rental and utility payments and Amount of your down payment and employment history |
| A credit score is intended to measure what? | the risk of your not repaying debt |
| TRUE/FALSE. You must establish credit in order to buy a house. | False |
| TRUE/FALSE. If you are a victim of identity theft, you are only responsible for paying back half of the debt. | False |
| TRUE/FALSE. There are three credit bureaus: Experian, TransUnion and Equifax. | True |
| TRUE/FALSE. You can and should obtain a free copy of your credit report annually in order to check for any suspicious activity. | True |
| TRUE/FALSE. You need to have a credit card to rent a car or check in to a hotel. | False |
| TRUE/FALSE. It is okay to use a credit card if you pay it off every month. | False |
| TRUE/FALSE. The Federal Trade Commission (FTC) is one of many U.S. federal agencies that regulate the consumer credit system and enforce the laws related to it. | True |
| TRUE/FALSE. Under the Fair Credit Reporting Act (FCRA), any person or organization may check a personʹs credit information without having a legitimate need. | False |
| TRUE/FALSE. Teens are a huge target of credit card companies today. | True |
| TRUE/FALSE. Co-signing a loan is a good way to help a friend or relative. | False |
| Explain how the debt snowball works. | Put all your debts in order from smallest to largest; pay minimum payments on all your debts except for the smallest one; attack the smallest debt with intensity until it is paid off; apply the paid -off debtʹs payment to the next debt on the list, continuing to ʺsnowballʺ payments toward each larger debt. |
| What should you do if you think you are a victim of identity theft? | Obtain a copy of your credit report and look for any suspicious activity; place a fraud -victim alert on your credit bureau report; if your wallet is stolen, cancel all cards immediately, get replacements, and place a ʺstop paymentʺ on all lost or stolen cards; file a police report and keep a copy of the report for your personal records; report any suspicious charges and accounts to the appropriate credit issuers and credit bureaus immediately and cancel the accounts. |
| What are some things you can do to protect your personal information? | Use a paper shredder and destroy credit card offers and other documents with personal information, check your credit report annually, create strong passwords and keep them confidential, purchase identity theft protection, and never give out your Social Security number unless absolutely necessary. |
| Describe the negative consequences of taking on debt. What effect can debt have on your future? | Constantly owing money to others prevents you from paying yourself through saving and investing, making it difficult or even impossible to build wealth over time. |
| Explain why an adjustable rate mortgage (ARM) is a bad idea. | An ARM is a mortgage with an interest rate that changes based on market conditions. They are not recommended because there is increased risk of losing your home if your rate adjusts higher or you lose your job and your payment becomes too much for you to afford. |
| Explain why financing a car is a bad idea. | Spreading the purchase of a car over four or five years hinders your ability to pay off debt or save money during that time; you will be paying interest in addition to the purchase price; and the car depreciates quickly, which means you may end up owing more on the car than itʹs worth. |
| Describe the difference between a secured and an unsecured loan. | An unsecured loan is given to borrowers based on their financial resources or ability to repay the loan; a secured loan |
