7 Questions
Which type of credit allows you to borrow funds over and over again, up to a certain limit?
Open-end credit
What is the main characteristic of closed-end credit?
It is a one-time loan that is paid back over time
Which type of credit is a home equity line of credit (HELOC) an example of?
Open-end credit
Which one of these is an example of revolving credit?
Credit card
What is the main difference between credit cards and debit cards?
Credit cards allow you to borrow money to be repaid later, while debit cards take money directly out of your bank account
What is the purpose of a Schumer Box?
To help consumers understand and compare credit card fees and rates
What does the Annual Percentage Rate (APR) represent in a credit card?
The interest rate you pay on financed purchases
Study Notes
Types of Credit
- Revolving credit allows borrowing funds repeatedly up to a certain limit.
- Closed-end credit has a fixed loan amount and repayment period.
Home Equity Line of Credit (HELOC)
- A HELOC is an example of revolving credit.
Credit Cards vs. Debit Cards
- Credit cards allow borrowing money from the issuer to make purchases.
- Debit cards use the cardholder's own money for transactions.
Credit Card Disclosures
- A Schumer Box is a table on credit card agreements that summarizes key terms.
- The Annual Percentage Rate (APR) represents the total cost of borrowing, including interest and fees, over a year.
Test your knowledge on consumer credit with this quiz! Learn about the two main categories of consumer credit - open-end (revolving) credit and home equity - and understand how they work. See if you can answer questions on credit cards, loans, interest rates, and more!
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