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Basics Beginner:
Managing Your Debt
Test your knowledge
Choose wisely. There is only one correct answer to each question.
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Review your answers below to learn more.
1.
If you file for bankruptcy, the bankruptcy will stay on your credit record for _______ years.
Choose wisely. There is only one correct answer.
2
10
25
50
10. After 10 years, it will disappear.
2.
A disadvantage of refinancing a short-term loan to a long-term loan is that _______.
Choose wisely. There is only one correct answer.
Interest is lower
It may cost more in the long term
The monthly payments are lower
You do not get a tax break
It may cost more in the long term. Taking longer to pay a short-term loan costs more over time.
3.
Paying only the minimum amount due on a credit card bill _______.
Choose wisely. There is only one correct answer.
Decreases the cost and time it takes to repay
Decreases the cost but increases the time it takes to pay
Increases the cost and the time it takes to repay
Increases the cost but reduces the time it takes to repay
Increases the cost and the time it takes to repay. It is best to repay higher interest rate loans faster.
4.
Your creditors may be willing to work out debt repayments rather than have you file for bankruptcy.
Choose wisely. There is only one correct answer.
True
False
True. Creditors would rather receive some payment than risk not getting any payments should you resort to bankruptcy.
5.
To determine how much you should pay each month on credit card bills, _______.
Choose wisely. There is only one correct answer.
Divide the balance by the number of months you want to pay it off
Use a financial calculator
Use the minimum amount due
Use twice as much as the minimum amount due
Use a financial calculator. Enter the number of months, interest rate, and principal balance to calculate the monthly payment.
6.
When you pay back a loan, the amount of the monthly loan payments is determined by _______.
Choose wisely. There is only one correct answer.
The principal
The interest
The number of months payments must be made
All of the above
All of the above. Principal, interest, and the term (months) of the loan determine how much each monthly payment should be.
7.
Debt is always a bad thing.
Choose wisely. There is only one correct answer.
True
False
False. Provided we use it wisely and pay it back, debt can provide us with many much-needed things, including assets that can rise in value.
8.
Which of the following are ways to lower your monthly debt payments?
Choose wisely. There is only one correct answer.
Reduce the principal
Reduce the interest rate
Extend your payments over a longer period
All of the above
All of the above. These are all ways to reduce your monthly debt payments.
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DONE