Introduction to Business

Chapter 26: How to Get and Keep Credit

Chapter Practice Review Quizzes

1
Which is NOT required to develop a credit history?
A)apply for a credit card
B)be at least 21 years old
C)be approved for credit
D)make on-time payments to a creditor
2
Which is NOT an important question to ask when choosing a credit card?
A)What is the grace period?
B)What is the interest rate?
C)Are there any extra fees?
D)Can I use the card to purchase items on sale?
3
Which is NOT a benefit of credit cards?
A)You can make purchases without using cash.
B)You can make major purchases without waiting to save for them.
C)Credit cards offer lower interests rates.
D)Credit cards provide security in emergencies.
4
What is the annual percentage rate (APR)?
A)the cost of credit on a yearly basis
B)the cost of credit on a monthly basis
C)the amount you pay each month
D)the annual fee charged for using the credit card
5
Which term refers to a person who agrees to be responsible for a debt if the main applicant does not pay it?
A)consumer
B)creditor
C)borrower
D)cosigner
6
Which term refers to the amount of time you have to repay a debt without having to pay interest charges?
A)grace period
B)cash advance
C)credit limit
D)annual fee
7
Which is NOT one of the "three Cs of credit"?
A)capacity
B)character
C)credit
D)capital
8
Which term refers to a credit applicant's ability to repay a loan?
A)capacity
B)character
C)credit
D)capital
9
Which term refers to an interest rate that fluctuates over the life of the loan?
A)annual percentage rate
B)variable rate
C)fixed rate
D)finance charge
10
Which term refers to the up-front payment that is made when a product or service is purchased using an installment loan?
A)fixed rate
B)finance charge
C)principal
D)down payment
11
Which term refers to a loan that is backed by collateral?
A)fixed loan
B)unsecured loan
C)secured loan
D)variable loan
12
Which term refers to the amount of borrowed money that is still owed and on which interest is based?
A)secured loan
B)finance charge
C)down payment
D)principal
13
Which is true of consumers with low credit ratings?
A)They are charged higher interest rates.
B)They are charged lower interest rates.
C)They are required to make a smaller down payment.
D)They are required to borrow more principal.
14
Experts say that a person should use no more than what percent of their income for credit payments?
A)0.05
B)0.2
C)0.35
D)0.5
15
Which is NOT a sign that you are having credit problems?
A)The credit limit on your credit card is increased by your credit card company.
B)You get calls from bill collectors.
C)You have problems making minimum monthly payments on your credit cards.
D)Your wages are garnished.
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