Hands On Banking

1. Which one of the following statements is true about a credit card's "minimum payment"?

It is all you ever have to pay.

Minimum payments are really just a guideline and it's okay to pay less, but only once in awhile.

2. Your take-home pay, or net income, is:

The amount you receive after benefits, such as vacation pay and health insurance, have been added.

The amount you receive after taxes, insurance, or other costs have been subtracted.

The total amount you earn.

3. Charging on a credit card is essentially taking out a loan.

True

False

4. All of the following are good ways to establish a good credit record except:

Don't write a check for more money than you have in your account.

Pay your bills in full and on time.

Use your credit card to buy something you can't really afford.

Always keep your promises to repay the money you borrow.

5. The amount of interest you earn on money in your savings accout will depend a lot on which three factors?

The interest rate, how often you make deposits, and how the financial institution invests your money.

The interest rate, how long you keep the money in your account, and how the financia institution pays the interest.

The prime rate, your credit rating, and how you make the deposits (cash, check, or direct deposit).

6. What is APR?

A way to estimate the time or interest rate you would need to double your money on an investment.

A type of credit that is repaid to the lender in equal amounts, over a fixed period of time.

7. What's the significance of being pre-approved for a loan?

You'll get higher interest rates.

You'll know the amount that will be available to you to make the purchase.

You'll get a longer term for payment.

You won't need a down payment.

8. A good general guideline is to not borrow more than _____ percent of your annual net income.

10

20

30

40

9. Companies that keep track of everyone's credit history are called:

Big Brother

Collection Agencies

Credit Unions

Credit Bureaus

10. A good general guideline is to avoid having credit card debt that exceeds:

10% of your monthly net income

The amount of your school loans

The amount you save on a monthl basis

20% of your monthly gross income