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Exam 8: Managing Your Credit

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Question 41

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Which of the following is not a method by which financial institutions calculate finance charges on credit cards?

A) Previous balance method
B) Ending balance method
C) Average daily balance method
D) Adjusted balance method

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Question 42

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Credit cards are commonly used for purchases such as clothing,car repairs,or the purchase of a new car.

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Question 43

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In applying for a credit card,the potential creditor will look at your ________ to determine if you have funds to cover future debt payments if necessary.

One of the disadvantages of credit cards is that they allow you to spend beyond your means.

Assuming you were charged simple interest on a loan of $4,900 which requires you to repay in one year $5,292,what rate of interest would you be charged? (Round interest rate to the nearest hundredth percent if necessary.) (a)9.26% (b)8% (c)7.41% (d)11%

Credit cards have all of the following advantages except

If you borrowed $8,700 at 6 percent for one year,what would your total interest be if you are charged simple interest? (a)$600 (b)$9,222 (c)$522 (d)$600

Advantages of using credit include the ability to make purchases when cash inflow is low and the convenience of not carrying cash or checks.

Compute the new balance on a credit card assuming that: -Beginning balance = $450 -Purchases during the month = $300 -Payments made within the grace period = $250 -Interest rate = 18% (a)$550 (b)$503 (c)$516 (d)$1,000

The easiest way to establish credit is to

It is good financial planning to pay only the minimum credit card payment and thus maintain a balance since interest rates are low on credit cards.

For good financial management,you should treat a credit card as

Which of the following personal information would not be asked on a credit card application?

Because credit card interest rates are usually quite high,you should pay off your credit card balances before you invest funds anywhere else.

When applying for a credit card,the amount of savings that you have will not be a factor in the credit card company's decision.

Credit cards can eliminate the need for carrying large amounts of cash.

Cash advances are

Which of the following is not true about annual fees on credit cards?

Describe how credit cards affect your personal budget,income statement,and balance sheet.Has credit allowed you to expand your purchases?

New regulations that provide clearer and more favorable financing rules for individual credit card users do all of the following except