1. In a credit application, besides one’s capacity to pay, and capital, creditors also consider which of the following?
a. Character
b. marital status
c. education
d. Previous earnings
2. A dangerous use of credit is:
a. borrowing for inexpensive items
b. borrowing inadequate amount of money
c. not paying interest charges
d. overspending your credit limit
3. The following are the benefits of borrowing (using credit) EXCEPT…
a. builds credit history
b. interest rate charged on unpaid balances
c. conveniet
d. need for use or service now
4. To establish good credit, you can do all of the following, EXCEPT:
a. pay all bills promptly
b. have overdraft protection for your checking account
c. open a savings account
d. open a store credit card and max out your new credit card
5. Which of the following describes a person who has capacity to repay a loan?
a. a person who just started a job today
b. a person with many debts
c. a person who has been working at a job for many years
d. a person who has not job
6. When people receive credit or borrow money they are:
a. going into debt
b. ruining the nation's economy
c. getting money back on the borrowed money
d. increasing their savings account.
7. Which of the following happens when you use your debit card at a machine designed to read it?
a. Your bank immediately pays the funds required to the store and then invoices you for the amount owed. amount on your next bank statement.
b. Your bank sends a check to the store at the end of each week.
c. Your card sends a message to your bank to transfer money from your checking account directly into the store’s bank account.
8. In the United States, the largest form of installment debt is for which type of purchase?
a. food and clothing
b. luxury items
c. home mortgages
d. cars
9. Which of the following is NOT a disadvantage of using credit?
a. overspending
b. interest increases the total cost of purchases
c. record of purchases
d. high interest rates on revolving accounts.
10. Allows purchases now with repayment later (plus interest)
a. debit card
b. installment credit
c. revolving credit
d. high interest rate