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Exam 7: Credit Cards and Consumer Loans

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Question 61

Multiple Choice

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Using the rule of 78s,a borrower who repaid a 12-month loan after only 5 months would save ____ of his or her interest.

A) 7/12
B) 5/12
C) 50/78
D) 28/78

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Question 62

Multiple Choice

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The sum of outstanding balances owed each day during the billing period divided by the number of days in the period is the

A) periodic rate.
B) average daily balance.
C) APR.
D) annual fee.

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Question 63

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The date on which a credit cardholder makes a purchase or receives a credit is known as the transaction date.

Introductory rates are also known as teaser rates.

The Fair Credit Billing Act limits a cardholder's credit card liability for lost or stolen credit cards.

Consumer installment loans typically are made with a fixed interest rate.

Which type of credit card allows the holder to make purchases almost anywhere?

For an open-end credit account,a credit limit is set by the lender and represents the maximum outstanding debt allowed on the account.

You might find yourself obligated to pay an entire debt in full if you miss several payments because of the ____ clause found in most installment loan contracts.

Miako has just applied for a credit card that offers a 1.9 percent interest rate for 12 months.At the end of 12 months,the interest rate will be "prime plus 9 percent." Which of the following characteristics does this card have?

A credit card holder is not responsible for any fraudulent usage that occurs after he or she notifies the issuer of the loss.

The borrower will not receive the full amount of a loan when the ____ method is used to calculate interest.

A penalty APR is a high interest rate that is assessed whenever a borrower fails to uphold certain rules of the account.

Which of the following pieces of information does not have to be disclosed in credit card ads and applications?

Credit life insurance is generally a good buy for the borrower.

The due date is the last day of the month for which any transactions are reported on the statement.

Installment purchase agreements are also called

A fixed interest rate means that the rate will not change over the life of the loan.

If finance charges are not assessed on new credit card transactions during the period between the posting date and the due date,this period is called the ____ period.

The entire balance charged on travel and entertainment cards must be repaid within 30 days.