Choose wisely. There is only one correct answer to each question.
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1.
Paying only the minimum amount due on a credit card bill _______.
Increases the cost and the time it takes to repay. It is best to repay higher interest rate loans faster.
2.
Your creditors may be willing to work out debt repayments rather than have you file for bankruptcy.
True. Creditors would rather receive some payment than risk not getting any payments should you resort to bankruptcy.
3.
You will usually have to pay additional costs for the privilege of consolidating your loans.
True. Take these costs into account before you consolidate loans.
4.
A good way to reduce your monthly debt payments is to pay only the minimum amount due on credit card statements.
False. Paying the minimum amount due on credit card statements will only increase the time and money paid on a debt.
5.
Which type of loan typically has a lower interest rate: secured or unsecured?
Secured. Secured loans, which are backed by collateral (such as a house or car), have lower interest rates, because having collateral lowers the risk of loss for the lender.
6.
Which type of goods usually become worth less over time?
Consumer goods. Consumer goods are bought to be used up. Investment goods are bought to provide income or appreciation of value.
7.
Which of the following is TRUE about using a consumer credit counseling or debt consolidation service?
Creditors are willing to work with these services to renegotiate or consolidate your debt. Although creditors are willing to work with you and a credit counseling or debt consolidation service, you must be wary because some are shady, charge high fees, or could damage your credit rating if they renegotiate your debt.
8.
When calculating payments for debts that use different interest rates, it is most effective to use the debt with the highest interest rate.
True. This can help you pay off your total debt faster.