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Personal Finance Courses: Credit

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1.
The higher your credit score is, the _______ the interest rates will be on loans you take out.
Choose wisely. There is only one correct answer.
Lower. If you have a high credit score, that tells lenders that you are a responsible borrower, and they will charge you a lower interest rate than if your credit score were low.
2.
Which of the following is a good reason to have a credit card?
Choose wisely. There is only one correct answer.
A credit card can be valuable in case an emergency exceeds your available funds on hand. A credit card can be a lifesaver if you have to pay for emergency expenses that go beyond your savings.
3.
Which of the following alternatives to a credit card would save you the most money in interest and fees?
Choose wisely. There is only one correct answer.
Creating a savings plan to pay for an item without using credit. This option would save you the most money. Its only downside is that it might take you several months to save up the money.
4.
What collection efforts can a creditor that obtains a court judgment against you legally do?
Choose wisely. There is only one correct answer.
The creditor can take steps to garnish your wages and seize assets, such as bank accounts. The creditor can also file a lien against any real estate you own.
5.
Shopping for a good credit card deal is easy because there are only a few large organizations that offer credit cards.
Choose wisely. There is only one correct answer.
False. There are thousands of banks, credit unions, and other organizations that offer credit cards.
6.
It is more cost effective for you to buy something outright than pay for it with credit.
Choose wisely. There is only one correct answer.
True. You can avoid finance charges this way.
7.
The "principal" of a loan is the _______.
Choose wisely. There is only one correct answer.
Original amount borrowed. The principal is the original amount borrowed.