Podcast
Questions and Answers
What is one consequence of using a credit card that is often not shown in commercials?
What is one consequence of using a credit card that is often not shown in commercials?
A home equity line of credit (HELOC) can only be used for home repairs and renovations.
A home equity line of credit (HELOC) can only be used for home repairs and renovations.
False
What is the greatest tool to building wealth according to personal finance principles?
What is the greatest tool to building wealth according to personal finance principles?
Your income
Credit card companies generate significant profits by charging __________ to customers who only pay part of their monthly debt.
Credit card companies generate significant profits by charging __________ to customers who only pay part of their monthly debt.
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Which of the following accurately describes leasing a car?
Which of the following accurately describes leasing a car?
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The majority of Americans live paycheck to paycheck.
The majority of Americans live paycheck to paycheck.
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Match the following terms with their descriptions:
Match the following terms with their descriptions:
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Which of the following is part of the formula that determines a person's FICO score?
Which of the following is part of the formula that determines a person's FICO score?
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What should you regularly check your credit report for?
What should you regularly check your credit report for?
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Credit cards with flashy rewards often come with high annual fees.
Credit cards with flashy rewards often come with high annual fees.
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What does the debt snowball method involve?
What does the debt snowball method involve?
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A car is considered a __________ asset.
A car is considered a __________ asset.
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Match the types of fees with their definitions:
Match the types of fees with their definitions:
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Which option is the smartest way to buy a car?
Which option is the smartest way to buy a car?
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Loans that help advance one's life, like student loans, are considered acceptable debts.
Loans that help advance one's life, like student loans, are considered acceptable debts.
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What is the total sum of a car loan, including taxes and fees, called?
What is the total sum of a car loan, including taxes and fees, called?
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Credit is not a wealth-building tool; it's a business that makes money for __________.
Credit is not a wealth-building tool; it's a business that makes money for __________.
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When reviewing a credit report, it's crucial to verify that no lines of credit have been opened without your knowledge.
When reviewing a credit report, it's crucial to verify that no lines of credit have been opened without your knowledge.
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Study Notes
Credit Card Commercials & Reality
- Credit card commercials often don't show the reality of paying for purchases over months or years.
- They don't accurately depict the immediate impact on credit scores.
- They often paint an overly positive picture of the credit card experience.
Home Equity Line of Credit (HELOC)
- A HELOC can be used for more than just home repairs and renovations.
Credit Scores & Lenders
- Credit scores are used by lenders to assess the likelihood of repayment.
- They indicate financial responsibility and loanworthiness.
- Credit scores aren't necessarily linked to overall financial success or collateral availability.
Credit Card Purchases & Interest
- Using credit cards involves borrowing money with interest, which can be costly.
- Interest rates vary, but the use of credit often involves higher rates than other payment options.
Car Financing & Sticker Price
- Financing a car typically results in paying more than the listed price (sticker price).
Paycheck-to-Paycheck Living
- Many Americans live on a paycheck-to-paycheck basis.
Wealth Building & Income
- Your income is a key factor in building wealth.
Secured vs. Unsecured Loans
- Secured loans require collateral.
FICO Score Components
- A person's payment history to lenders is a critical component of their FICO score.
Credit Card Necessity
- Credit cards aren't always essential for everyday transactions.
Car Leasing
- Leasing allows you to use a vehicle without owning it.
The Second Foundation of Personal Finance
- The Second Foundation involves building wealth and giving.
- It doesn't prescribe saving a $500 emergency fund or paying for a car in cash.
Credit Card Profitability
- Credit card companies make a significant portion of their profit from charging interest to customers who don't pay the full balance.
Appreciating Assets
- A home is an example of an appreciating asset.
Credit Reports & Identity Fraud
- Regularly checking your credit report can help detect errors or signs of identity theft.
Credit Card Rewards & Fees
- Credit cards with attractive rewards often come with high annual fees.
Car Lease Penalties
- Lease agreements can include penalties for exceeding mileage or other stipulations.
Debt Snowball Method
- The debt snowball method prioritizes paying off debts from smallest to largest.
Acceptable Debts
- Student loans can be acceptable debts.
Predatory Lenders
- Predatory lenders are often criticized for charging excessive fees and targeting those in a vulnerable position.
Credit Score vs. Financial Management
- A credit score is an indicator of debt repayment ability, not comprehensive financial management.
Credit vs. Cash/Debit Spending
- Individuals using credit often spend more than with cash or debit.
Best Car Purchase Method
- Paying for a car in cash is often considered the best option from a financial standpoint. It avoids interest costs.
Avoiding Debt
- The best way to avoid falling into debt is usually to prioritize buying only what one can afford with cash.
Credit as a Business Model
- Credit card companies and banks are in the business of making money with credit services and loans..
Depreciating Assets
- A car is a depreciating asset (its value tends to decrease over time).
Credit Report Checking
- Reviewing personal credit reports for inaccuracies is important.
Merchant Fees
- Credit card companies charge a fee to merchants for each credit card transaction.
Car Loan Terms
- The total amount of a car loan, including taxes and fees, is often referred to as the term or the principal.
Financial Spending
- How you spend and give money reflects your personal values and is an important consideration in financial management.
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Description
This quiz explores the realities of credit cards, credit scores, and car financing. Learn about the true costs of credit card use, how credit scores are assessed by lenders, and the implications of financing a car. Test your knowledge to make informed financial decisions.
