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Credit Unit Test
Test Description: After completing Unit 4 - Credit - take this test and see how you do
Instructions: Answer all questions to get your test result.
1) What is one benefit of borrowing money from a friend or family member instead of from the bank?
A
You don't have to repay your friends or family if you don't want to
B
Friends and family will typically work with you to set up a repayment plan you can afford
C
You can borrow more money from a friend or family member because they have more cash than banks
D
Friends and family cannot legally charge you interest on the loan, but banks can
2) Justin really wants to attend the 8th-grade graduation ceremony, dance, and field day, but all the tickets combined cost $75, and he doesn't have that much. Justin has no job, gets no allowance, and his birthday was just last month, so he's not expec
A
Kylie will have to give him the money, even if she doesn't want to
B
It might cause problems in their friendship if Justin doesn't repay her on time or if he then asks for even more money
C
As soon as she lends him the money, they won't be able to be friends any more
D
The school won't sell him tickets if they know he borrowed the money instead of earning it himself
3) What is the key difference between a credit card and a debit card?
A
Credit cards allow you to borrow money to pay for things, while debit cards take money straight from your own checking accoun
B
Wealthy people use credit cards, while people with lower incomes use debit cards
C
You can only use credit cards if you are over 25, but you can use debit cards as long as you are over 18
D
Credit cards come from credit unions, while debit cards come from banks
4) Craig isn't sure if he should open up a credit card account or get a bank loan. What question is MOST useful in helping him decide which financial product he should get?
A
Are you trying to make a bunch of small purchases over time or one large purchase?
B
How much money do you have in your bank account?
C
Are you using the money to purchase an item that is a need or a want?
D
Are you responsible with your money?
5) Kervin really wants to buy a new bike because his old one is too small now. He's trying to decide if he should use his debit card or credit card. What's one reason he should be careful about using credit?
A
Credit will take the money straight from his checking account, lowering his bank balance
B
Credit will force him to buy a cheaper bike than he could with debit
C
Credit will force him to pay taxes on his bike purchase
D
Credit will charge him interest every month until he repays his full balance
6) Which statement about credit card interest rates is TRUE?
A
A high interest rate means you'll pay MORE money total
B
A high interest rate means you'll pay LESS money total
C
Most credit cards do not charge any interest rate
D
The more money you spend on purchases, the higher your interest rate will be
7) Which age group tends to have the most credit card debt?
A
Young adults
B
Credit card debt is evenly distributed among all age groups
C
Middle-aged people
D
Senior citizens
8) What is the best way to avoid going into large debt on your credit card?
A
Pay half your balance every month
B
Pay your full balance every month
C
Pay the minimum monthly payment on time every month
D
Avoid paying the bill every month so your bank account stays high
9) Each of the following factors impacts your credit score EXCEPT...
A
Bank account balance
B
Length of credit history
C
Payment history
D
Mix of credit types
10) Katherine has been using her credit card very responsibly in hopes of raising her credit score. Which score would indicate that Katherine now has a prime score?
A
950
B
750
C
550
D
350
11) Miguel's parents keep telling him he should worry about his credit score. He says, Why bother? Why should Miguel care?
A
If his credit score is positive, lenders will allow him to pay back only a portion of his loan instead of the whole balance
B
A low credit score will make it easier for him to get loans or credit cards with better interest rates
C
A high credit score will make it easier for him to get loans or credit cards with better interest rates
D
Miguel will not be able to apply for colleges if he doesn't have a strong credit score
12) When discussing a loan, such as a college loan or auto loan, what does the word principal mean?
A
The total amount of money you owe
B
The amount of interest you pay over the whole length of the loan
C
The total amount you borrowed
D
The total number of months you will have to repay the loan
*select an answer for all questions
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