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Exam 8: Managing Your Credit

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Question 41

Multiple Choice

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For good financial management,you should treat a credit card as

A) a source of funds.
B) a means of convenience.
C) a way to finance everything.
D) an inexpensive form of financing.

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Question 42

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Credit cards are commonly used for purchases such as clothing,car repairs,or the purchase of a new car.

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Question 43

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Which of the following is not a method by which financial institutions calculate finance charges on credit cards?

Advantages of using credit include the ability to make purchases when cash inflow is low and the convenience of not carrying cash or checks.

Which of the following is not true about annual fees on credit cards?

Describe how credit cards affect your personal budget,income statement,and balance sheet.Has credit allowed you to expand your purchases?

It is good financial planning to pay only the minimum credit card payment and thus maintain a balance since interest rates are low on credit cards.

Because credit card interest rates are usually quite high,you should pay off your credit card balances before you invest funds anywhere else.

When applying for a credit card,the amount of savings that you have will not be a factor in the credit card company's decision.

New regulations that provide clearer and more favorable financing rules for individual credit card users do all of the following except

Compute the new balance on a credit card assuming that: -Beginning balance = $450 -Purchases during the month = $300 -Payments made within the grace period = $250 -Interest rate = 18% (a)$550 (b)$503 (c)$516 (d)$1,000

One of the disadvantages of credit cards is that they allow you to spend beyond your means.

Which of the following personal information would not be asked on a credit card application?

The easiest way to establish credit is to

Assuming you were charged simple interest on a loan of $4,900 which requires you to repay in one year $5,292,what rate of interest would you be charged? (Round interest rate to the nearest hundredth percent if necessary.) (a)9.26% (b)8% (c)7.41% (d)11%

If you borrowed $8,700 at 6 percent for one year,what would your total interest be if you are charged simple interest? (a)$600 (b)$9,222 (c)$522 (d)$600

Credit cards can eliminate the need for carrying large amounts of cash.

Cash advances are

In applying for a credit card,the potential creditor will look at your ________ to determine if you have funds to cover future debt payments if necessary.

Credit cards have all of the following advantages except