Question 1

Gary Simpson notices that his neighbor has a brand new Ford F150 truck parked in the driveway.Even though his current car is fine,Gary decides that he needs a new car and goes out and purchases a Tundra with a six-year loan.Which one of the following best explains Gary's spending,which can lead to overindebtedness?

Accepted Answer

A)  Misunderstanding or lack of communication
B)  The use of money to punish
C)  The expectation of instant comfort
D)  Keeping up with the Joneses
E)  Overindulgence of childrenF) B) and E)
G) C) and D)

Question 2

If you want to take advantage of the interest-free period on your credit card,you must pay your bill in full every month.

Accepted Answer

A) True 
 B)False

Question 3

After you have selected a product,you should buy it immediately before the store runs out of it.

Accepted Answer

A) True 
 B)False

Question 4

The Fair Debt Collection Practices Act regulates the ways debt collection agencies do business.

Accepted Answer

A) True 
 B)False

Question 5

According to a consumer affairs columnist,the nation's number one family financial problem is:

Accepted Answer

A)  poor money management.
B)  overindebtedness.
C)  medical costs.
D)  insurance costs.
E)  unemployment.F) B) and E)
G) A) and D)

Question 6

The Rule of 78s dictates that a borrower pays:

Accepted Answer

A)  more interest at the beginning of the loan period.
B)  more interest at the end of the loan period.
C)  more interest in the middle of the loan period.
D)  less interest than indicated by the APR.
E)  equal amounts of interest throughout the loan.F) A) and B)
G) C) and D)

Question 7

Explain the concept of "float."

Accepted Answer

Credit cards usually provide a "float" p...

Question 8

List several national nonprofit organizations that provide information and assist people with debt problems by phone and online.

Accepted Answer

American Consumer Credit Counseling (www...

Question 9

Which of the following financially supports the Consumer Credit Counseling Service with contributions?

Accepted Answer

A)  National Foundation for Consumer Credit
B)  Community-minded organizations and individuals
C)  Federal Reserve Banks
D)  The Federal Home Loan Bank
E)  TaxpayersF) A) and E)
G) A) and D)

Question 10

If you declare a Chapter 7 bankruptcy,you do not have to pay alimony,child support,or educational loans.

Accepted Answer

A) True 
 B)False

Question 11

If you default on your automobile loan,most automobile financing agreements:

Accepted Answer

A)  require an advance notice be sent to you before your car is repossessed.
B)  permit your creditor to repossess your car at any time without notice.
C)  permit the federal consumer credit laws to protect your car from being repossessed.
D)  allow you to not pay the full balance due on your automobile loan.
E)  allow you to pay fifty percent of the balance due on your automobile loan.F) A) and B)
G) All of the above

Question 12

If creditors give you no credit for payments made during the billing period,it is called the adjusted balance method.

Accepted Answer

A) True 
 B)False

Question 13

Randy Ice starts the month with a balance on his credit card of $800.On the 10th day of the month,he purchases $200 in clothes with his credit card.On the 15th day of the month he makes a payment on his credit card of $300.The average daily balance for the month including the new purchase is $683.The average daily balance for the month excluding the new purchase is $550.The bank charges 1.5 percent per month and uses the average daily balance excluding new purchases method.What would Randy's finance charges be for the month?

Accepted Answer

A)  $4.50
B)  $7.50
C)  $8.25
D)  $10.25
E)  $12.00F) D) and E)
G) B) and C)

Question 14

If you receive a phone call from a debt collector,s/he must send you a written notice within ________ days.

Accepted Answer

A)  5
B)  10
C)  15
D)  20
E)  30F) A) and E)
G) A) and B)

Question 15

Jerrod Dean starts the month with a balance on his credit card of $800.On the 10th day of the month,he purchases $200 in clothes with his credit card.On the 15th day of the month he makes a payment on his credit card of $300.The bank charges 1.5 percent interest per month using the adjusted balance method (and excludes new purchases) .What would Jerrod's finance charges be for the month?

Accepted Answer

A)  $7.50
B)  $13.25
C)  $11.25
D)  $15.00
E)  $18.00F) A) and E)
G) B) and E)

Question 16

Borrowing from credit unions has several advantages but does not include:

Accepted Answer

A)  costly credit life insurance.
B)  sympathy toward borrowers with legitimate payment problems.
C)  personalized service.
D)  the same range of consumer loans that banks offer.
E)  None of theseF) B) and C)
G) C) and E)

Question 17

The rule of 78s formula dictates that you pay less interest at the beginning of a loan.

Accepted Answer

A) True 
 B)False

Question 18

Don't make the mistake of trusting which of the following counseling providers that promise to help you clean up your credit report for a fee:

Accepted Answer

A)  University
B)  Military base
C)  Credit repair clinic
D)  Credit union
E)  State housing authorityF) A) and C)
G) B) and D)

Question 19

Explain simple interest.

Accepted Answer

Simple interest is the interest computed...

Question 20

Which one of the following is often the source of the least expensive loan?

Accepted Answer

A)  Parents or family members
B)  Banks
C)  Savings and loan associations
D)  Finance companies
E)  Loan sharksF) A) and B)
G) None of the above

Exam 7: Choosing a Source of Credit: the Costs of Credit Alternatives

Correct Answer
verified

Correct Answer
verified

Which of the following financially supports the Consumer Credit Counseling Service with contributions?

Correct Answer
verified

The rule of 78s formula dictates that you pay less interest at the beginning of a loan.

Correct Answer
verified

Explain simple interest.

Correct Answer
verified
Simple interest is the interest computed...
View Answer

Explain the concept of "float."

Correct Answer
verified
Credit cards usually provide a "float" p...
View Answer

Correct Answer
verified

According to a consumer affairs columnist,the nation's number one family financial problem is:

Correct Answer
verified

The Fair Debt Collection Practices Act regulates the ways debt collection agencies do business.

Correct Answer
verified

If you declare a Chapter 7 bankruptcy,you do not have to pay alimony,child support,or educational loans.

Correct Answer
verified

If you default on your automobile loan,most automobile financing agreements:

Correct Answer
verified

If you receive a phone call from a debt collector,s/he must send you a written notice within ________ days.

Correct Answer
verified

The Rule of 78s dictates that a borrower pays:

Correct Answer
verified

List several national nonprofit organizations that provide information and assist people with debt problems by phone and online.

Correct Answer
verified
American Consumer Credit Counseling (www...
View Answer

After you have selected a product,you should buy it immediately before the store runs out of it.

Correct Answer
verified

Which one of the following is often the source of the least expensive loan?

Correct Answer
verified

Borrowing from credit unions has several advantages but does not include:

Correct Answer
verified

If creditors give you no credit for payments made during the billing period,it is called the adjusted balance method.

Correct Answer
verified

Don't make the mistake of trusting which of the following counseling providers that promise to help you clean up your credit report for a fee:

Correct Answer
verified

If you want to take advantage of the interest-free period on your credit card,you must pay your bill in full every month.

Correct Answer
verified

Exam 7: Choosing a Source of Credit: the Costs of Credit Alternatives

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following financially supports the Consumer Credit Counseling Service with contributions?

Correct AnswerverifiedShow Answer

The rule of 78s formula dictates that you pay less interest at the beginning of a loan.

Correct AnswerverifiedShow Answer

Explain simple interest.

Correct AnswerverifiedSimple interest is the interest computed...View AnswerShow Answer

Explain the concept of "float."

Correct AnswerverifiedCredit cards usually provide a "float" p...View AnswerShow Answer

Correct AnswerverifiedShow Answer

According to a consumer affairs columnist,the nation's number one family financial problem is:

Correct AnswerverifiedShow Answer

The Fair Debt Collection Practices Act regulates the ways debt collection agencies do business.

Correct AnswerverifiedShow Answer

If you declare a Chapter 7 bankruptcy,you do not have to pay alimony,child support,or educational loans.

Correct AnswerverifiedShow Answer

If you default on your automobile loan,most automobile financing agreements:

Correct AnswerverifiedShow Answer

If you receive a phone call from a debt collector,s/he must send you a written notice within ________ days.

Correct AnswerverifiedShow Answer

The Rule of 78s dictates that a borrower pays:

Correct AnswerverifiedShow Answer

List several national nonprofit organizations that provide information and assist people with debt problems by phone and online.

Correct AnswerverifiedAmerican Consumer Credit Counseling (www...View AnswerShow Answer

After you have selected a product,you should buy it immediately before the store runs out of it.

Correct AnswerverifiedShow Answer

Which one of the following is often the source of the least expensive loan?

Correct AnswerverifiedShow Answer

Borrowing from credit unions has several advantages but does not include:

Correct AnswerverifiedShow Answer

If creditors give you no credit for payments made during the billing period,it is called the adjusted balance method.

Correct AnswerverifiedShow Answer

Don't make the mistake of trusting which of the following counseling providers that promise to help you clean up your credit report for a fee:

Correct AnswerverifiedShow Answer

If you want to take advantage of the interest-free period on your credit card,you must pay your bill in full every month.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Simple interest is the interest computed...
View Answer

Correct Answer
verified
Credit cards usually provide a "float" p...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
American Consumer Credit Counseling (www...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified