Understanding Credit Cards and Financing

False (B)

Your income

<p>interest</p> Signup and view all the answers

<p>Making monthly payments but not owning the vehicle (B)</p> Signup and view all the answers

<p>True (A)</p> Signup and view all the answers

<p>Unsecured loans = Loans that do not require collateral Secured loans = Loans that require the borrower to pledge an asset Revolving credit = Credit that can be used repeatedly as debts are paid down Interest rates = The cost of borrowing money expressed as a percentage</p> Signup and view all the answers

<p>Their payment history to lenders (C)</p> Signup and view all the answers

<p>Errors or signs of identity fraud (A)</p> Signup and view all the answers

<p>True (A)</p> Signup and view all the answers

<p>Paying off debts from smallest to largest.</p> Signup and view all the answers

<p>depreciating</p> Signup and view all the answers

<p>Merchant fee = Fee charged to stores for credit card transactions Cash advance fee = Fee charged for withdrawing cash using a credit card Annual fee = Yearly fee for maintaining a credit card account Over-the-limit fee = Fee charged when spending exceeds credit limit</p> Signup and view all the answers

<p>Pay for it in cash (C)</p> Signup and view all the answers

<p>True (A)</p> Signup and view all the answers

<p>Principal</p> Signup and view all the answers

<p>credit card companies, banks, and lenders</p> Signup and view all the answers

<p>True (B)</p> Signup and view all the answers

Credit card companies make the most money by charging interest on the balance that customers don't pay off each month.

Secured loans require the borrower to put something valuable, known as collateral, at risk if the loan is not repaid. This lessens the lender's risk, which often leads to lower interest rates.

A credit score is a numerical representation of a person's creditworthiness, based on their past history of borrowing and repayment. It's used by lenders to assess the risk of lending to someone and determine interest rates.

Leasing a car is agreeing to make monthly payments for a set period on a vehicle you don't own. At the end of the lease, you return the car and may have the option to buy it.

Building wealth through your income requires mindful management. This includes saving, investing, and minimizing unnecessary spending. Your income is the foundation of your wealth-building journey.

When you finance a car, you're taking out a loan to pay for it. This means you'll pay back more than the sticker price due to interest charges and other financing costs.

The Second Foundation in personal finance is about getting out of debt and staying out of debt. It emphasizes managing finances wisely to avoid accumulating unnecessary debt.

Taking out a home equity line of credit (HELOC) allows you to borrow money against the equity you've built up in your home. Although it's often used for home improvements, the funds can be used for any purpose.

Checking your credit report regularly for inaccurate information, such as unauthorized accounts or incorrect balances, which could indicate identity theft.

The method of paying off debt starting with the smallest balance, regardless of interest rates, to gain momentum and motivation. This approach prioritizes faster debt reduction and can boost confidence.

Loans taken out for education, like student loans, are generally considered acceptable debt as they can lead to future financial gain through higher salaries and career advancements.

Credit scores primarily reflect your ability to manage debt responsibly, not necessarily your overall financial prudence.

Buying with credit can lead to excessive spending because you're not physically handing over cash, making it easier to overspend and accumulate debt.

Credit card companies charge businesses a percentage of each purchase made using their cards. This fee contributes to their profits and helps cover the cost of providing credit.

The total amount of the car loan, including taxes and fees, which represents the overall cost of borrowing.

Spending and financial decisions reflect personal values and priorities. They contribute to your overall financial well-being, shaping your financial future.

A lease agreement typically includes a mileage limit, and exceeding this limit may result in a penalty charged by the leasing company.

It's important to check your credit report to ensure no unauthorized accounts have been opened in your name, which could be a sign of identity theft and affect your credit score.