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Exam 8: Managing Your Credit

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Question 41

Multiple Choice

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As of November 14,Ben has an outstanding credit card balance of $1,100 from purchases made over the past month.The new billing period begins on November 15.Assume Ben's outstanding balance for the first 15 days of this new billing period (Nov.15-29) is $1,100.Then on November 29,the financial institution receives a payment of $600 from Ben,reducing his balance to $500.This is the balance for the remaining 15 days. Using the average daily balance method and a monthly interest rate of 2.5%,Ben's finance charge would be

A) $15.00.
B) $12.50.
C) $27.50.
D) $20.00.

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Question 42

Multiple Choice

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When obtaining a credit card you should try to obtain

A) the highest maximum limit possible.
B) a maximum limit high enough to cover necessary monthly purchases.
C) a maximum limit high enough to cover anything you might wish to purchase.
D) the lowest maximum limit possible to restrict your usage.

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Question 43

True/False

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

On a credit card,a finance charge is applied to

Credit has its advantages and disadvantages.Which of the following is false?

The Consumer Financial Protection Bureau was created in 2010 to ensure that credit card companies are treated fairly.

Credit cards are commonly used to pay for items such as clothing,car repairs,or a new car.

You should cancel any credit card that is not sponsored by a company that sells necessities.

Credit card companies' fees cannot exceed ________of the initial credit limit.

One disadvantage of a proprietary credit card is that it limits your purchases to a single merchant.

When using credit cards,there is no way to keep track of individual expenditures.

Your credit card statement must state how long it will take you to pay off the existing balance due when paying only the minimum amount each month.

You are presented two choices to borrow funds for a significant unexpected expenditure.it will take at least three years to pay off the loan assuming you make more than the minimum payment.Which choice is the least cost alternative in terms of interest paid over the life of the loan?

Credit cards have all of the following advantages except

The ________ is usually about 20 days after the credit card statement is closed.

As of November 14,Ben has an outstanding credit card balance of $1,100 from purchases made over the past month.The new billing period begins on November 15.Assume Ben's outstanding balance for the first 15 days of this new billing period (Nov.15-29) is $1,100.Then on November 29,the financial institution receives a payment of $600 from Ben,reducing his balance to $500.This is the balance for the remaining 15 days. Using the previous balance method and a monthly interest rate of 2.5%,Ben's finance charge would be

All of the following are disadvantages of proprietary credit cards except

Because of the short-term nature of credit card lending,the condition of the economy is not considered.

Identifying specific goals for managing your credit is an important part of your personal financial plan.

Describe the advantages and disadvantages of credit cards.