CHAPTER 13: Credit: Helpful or Hurtful?
SECTION 2: Types of Credit
1. What does the term consumer credit refer to? Credit extended for personal or house hold use, as opposed to business or commercial lending.
2. Short-term credit for consumers can take what three forms? service credit, installment credit, or credit cards.
3. Service credit is most widely used for what services? Utilities
4. A home mortgage is an example of what type of credit? Installment Credit
5. What is probably the most convenient way to make purchases? Credit cards
6. If your credit card had a monthly interest rate of 1½ percent, what is the actual APR? 18%
7. What is the name of an account that lets you continue charging items as long as you make the minimum payment? revolving account
8. How do charge cards differ from credit cards? The full balance must be paid each month.
9. What are at least five things you can do to safeguard your credit cards or charge cards? Sign your cards as soon as you get them, carry only one or two cards, photocopy both sides of all of your cards and keep the copies in a safe place, keep your eye on your card during transaction and get it back ASAP, Do not let anyone borrow your card.
10. What is the difference between a debit card and a prepaid card? debit card is linked to your checking account. a prepaid debit card is not. Instead, you pay in advance to load funds onto a prepaid card, and then use the money you have loaded onto the card.
11. What types of loans are backed by collateral? Secured Loans
12. Among the most common loan types, which two are usually unsecured? Personal and Auto Loans
13. The down payment on a home loan is typically around what percent of the selling price? 10-25%
14. What is a home equity line of credit? Preapproved loan amount that you can use anytime you want for any purpose.
15. What are four possible sources of loans? Banks, Credit Unions, S&Ls and consumer finance...