Podcast
Questions and Answers
What is the most aggressively marketed product?
What is the most aggressively marketed product?
Debt
How much do Visa, Mastercard, Discover, and American Express spend over a year on marketing?
How much do Visa, Mastercard, Discover, and American Express spend over a year on marketing?
4
There were no credit cards prior to which year?
There were no credit cards prior to which year?
1958
What is the term for money owed to another person or company?
What is the term for money owed to another person or company?
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Myth: You need a student _________ to go to college.
Myth: You need a student _________ to go to college.
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What is the truth about going to college?
What is the truth about going to college?
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What should you choose when selecting a school?
What should you choose when selecting a school?
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What is credit that automatically renews whenever a payment is made to reduce the debt?
What is credit that automatically renews whenever a payment is made to reduce the debt?
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What is something owned that is offered as security on a debt?
What is something owned that is offered as security on a debt?
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What is a legal claim against an asset until the debt is repaid?
What is a legal claim against an asset until the debt is repaid?
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What type of asset increases in value over time?
What type of asset increases in value over time?
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What is the difference between the amount owed on a home and what it could be sold for?
What is the difference between the amount owed on a home and what it could be sold for?
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What is the failure to repay a loan on time called?
What is the failure to repay a loan on time called?
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What type of loan is paid back in monthly installments?
What type of loan is paid back in monthly installments?
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What type of asset loses value over time?
What type of asset loses value over time?
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What term describes a lender who employs deceptive or unfair practices?
What term describes a lender who employs deceptive or unfair practices?
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Myth: I need to have a -------- score.
Myth: I need to have a -------- score.
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Truth: A credit score is an 'I ----- debt' score.
Truth: A credit score is an 'I ----- debt' score.
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A FICO score is not an indicator that you are ------- with money.
A FICO score is not an indicator that you are ------- with money.
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What is your most powerful wealth-building tool?
What is your most powerful wealth-building tool?
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You ----- rent an apartment without a FICO score.
You ----- rent an apartment without a FICO score.
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Without a FICO score, an extra ------ may be required.
Without a FICO score, an extra ------ may be required.
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What is a statistical number that represents a consumer's creditworthiness?
What is a statistical number that represents a consumer's creditworthiness?
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What is a company that collects credit rating information?
What is a company that collects credit rating information?
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Myth: I need a ------- card to rent a car and make purchases online.
Myth: I need a ------- card to rent a car and make purchases online.
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Truth: You can do both of these things with a ------ card.
Truth: You can do both of these things with a ------ card.
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What type of fee do most credit cards charge?
What type of fee do most credit cards charge?
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What is the average credit card debt for college students?
What is the average credit card debt for college students?
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Myth: Car --------- are a way of life.
Myth: Car --------- are a way of life.
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Truth: Avoid car ---- now and always.
Truth: Avoid car ---- now and always.
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What is the average new car payment in America?
What is the average new car payment in America?
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What is the original amount of a loan referred to as?
What is the original amount of a loan referred to as?
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What is the additional cost a lender charges for borrowing their money?
What is the additional cost a lender charges for borrowing their money?
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What is the amount of time you will be making payments on a loan?
What is the amount of time you will be making payments on a loan?
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What is the loss of value of an asset over time called?
What is the loss of value of an asset over time called?
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What is it called when the value of an asset falls below what is owed on it?
What is it called when the value of an asset falls below what is owed on it?
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Take ---- off the table.
Take ---- off the table.
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Pay off all debt using the
Pay off all debt using the
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Paying off debt is not a math problem—it is a -------- problem.
Paying off debt is not a math problem—it is a -------- problem.
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This is not a theory. It is a ------ process.
This is not a theory. It is a ------ process.
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Study Notes
Debt and Credit Overview
- Debt is the most aggressively marketed financial product in history.
- Major credit card companies such as Visa, Mastercard, Discover, and American Express spend over 4 billion dollars annually on marketing.
- The first credit cards were introduced in 1958.
Key Definitions
- Debt: The amount of money owed to another person or company.
- Revolving Credit: A type of credit that automatically renews as payments are made, reducing the outstanding debt.
- Collateral: Valuable assets offered as security for a loan, which can be forfeited if the debt is unpaid.
- Lien: A legal claim against an asset until the associated debt is repaid.
Asset Types
- Appreciating Asset: An asset that increases in value over time.
- Equity: The increase in home value over time, representing the difference between the amount owed and the potential sale price.
- Depreciating Asset: An asset that decreases in value over time, like a car.
Credit and Lending Myths
-
Myth: A student loan is necessary for college attendance.
- Truth: College can be attended debt-free by choosing affordable institutions.
-
Myth: A high FICO score is needed for financial success.
- Truth: A credit score reflects one's debt status, not overall financial health.
Financial Tools and Responsibilities
- Your income is identified as the most powerful tool for building wealth.
- A FICO score is not required to rent an apartment, though additional deposits may be needed without it.
- Credit Score: A numerical representation of a consumer's creditworthiness, typically managed by a Credit Bureau.
Credit Card Insights
- Many people believe a credit card is necessary for online purchases and car rentals.
- Truth: Debit cards can also be utilized for these transactions.
- The average college student's credit card debt stands at approximately $1,400.
- Annual fees are commonly charged by credit card companies.
Debt Management Strategies
- The average car payment in America is around $554 per month.
- Principal: The initial sum of a loan before interest is added.
- Interest: The extra cost charged by lenders for borrowing funds.
- Term: The duration, in months, over which loan payments are made.
Behavioral Approaches to Debt
- Paying off debt is primarily a behavioral challenge, not just a mathematical issue.
- Use the "debt snowball" method to systematically eliminate debts.
- Adopting a zero-debt lifestyle is encouraged as a sustainable financial practice.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
Test your knowledge of key concepts in finance with these Chapter 4 review flashcards. This quiz covers important terms and facts related to debt and credit cards. Challenge yourself and enhance your understanding of financial products and marketing strategies.
