FM QUIZ - Unit 4

Find an extra source of income by taking a second job, working longer hours, or borrowing from family if they can afford to help

Stop making payments on some of your debts so you can focus on getting the most expensive or largest debts under control

Explore whether a free or non-profit credit counseling service could help

Continue making all payments and call your lenders and see if you can negotiate lower monthly payments, lower interest rates, or longer terms

You can make an emergency purchase that you otherwise don’t have the money to pay for right now

It will not affect your credit score or credit history

Since it is tied directly to your checking account, it prevents you from spending money you do not have

If you need to carry a balance, the interest rates are generally quite low (less than 5%)

This is required by federal law for tax purposes

This allows the card holder to pay their bill quickly and close the card when they’re ready

This helps cardholders develop financial independence

This enables the credit card company to make more money

Open a credit card, with your parent or guardian as a cosigner

Become an authorized user on a credit card used by your parent or guardian

Take out a payday loan

Open and use a secured credit card

All 3 cards are completely different.

Debit cards and credit cards are the same.

All 3 cards are completely the same.

Debit cards and prepaid debit cards are the same.

Credit cards pull money directly from your bank account, while debit cards get their money from Visa or Mastercard

With debit cards, you're spending your own money at point of sale, but with credit cards, you're getting a loan that you need to pay back later

Credit card companies provide you with a monthly statement, while debit cards do not

Far more businesses accept credit cards than debit cards.

Payday loans must be paid in full within two weeks, and if not, the only option is to renew the loan for a high penalty fee, which she did approximately 12 times

Upfront, Denise knew there would be $450 of fees attached to the loan, but she took out the loan anyway

Denise not only paid the $300 she owed, but she prepaid an extra $450 in case she needs another loan in upcoming months

The minimum monthly payment for payday loans is usually only $10 or $15, so a lot of interested accumulated

Receiving a large down payment

Qualifying for a low interest rate

Having a wide selection of term lengths

Bargaining for a great sales price

Fixed-rate mortgages have a fixed interest rate for a few years, after which time the interest rate fluctuates according to general market conditions

The two mortgages work the same way but are called different names depending if they come from a bank or a credit union

djustable-rate mortgages have a fixed interest rate for a few years, after which time the interest rate fluctuates according to general market conditions

Fixed-rate mortgages have a constant payment every month, but an interest rate that increases throughout the term of the loan

They usually have higher interest rates as compared with unsecured loans

In the event of default, the borrower loses nothing except for the down payment

They are a good choice to use for student loans

If the borrower does not make payments, the lender can repossess the item