Question 1

In the context of credit cards, which of the following statements is true of the annual percentage rate (APR)?
A) The higher the APR, the greater the interest expense on unpaid balances.
B) All credit card companies charge the same APR for all transactions.
C) Credit card companies do not charge the APR on discounted products.
D) The lower the APR, the lower the cardholder's credit score.

Accepted Answer

The APR represents the annual cost of borrowing on a credit card, expressed as a percentage. A higher APR means more interest will be charged on unpaid balances, increasing the total cost of borrowing.

Question 2

A charge just for the privilege of having a credit card, whether you use it or not, is referred to as a(n) _____.
A) annual fee
B) probationary fee
C) balance fee
D) royalty fee

Accepted Answer

An annual fee is a charge that credit card companies impose on cardholders for the privilege of having the card, regardless of whether it is used.

Question 3

In a credit card agreement, the _____ is the interest expense charged on a credit card.
A) late fee
B) annual fee
C) annual percentage rate
D) surcharge

Accepted Answer

The annual percentage rate (APR) is the interest expense charged on a credit card, representing the cost of borrowing on an annual basis.

Question 4

The Consumer Financial Protection Bureau:
A) prohibits credit card issuers from raising interest rates on existing balances unless the borrower is more than 60 days late in making the required payments.
B) prohibits credit card companies from issuing cards to anyone under the age of 21.
C) requires credit card issuers to give a 45-day notice before making significant changes to credit agreements.
D) eliminates confusing and potentially deceptive banking practices related to mortgages, credit cards, and other loan agreements.

Accepted Answer

The answer of The Consumer Financial Protection Bureau:
A) prohibits credit...

Question 5

Jamie is 19 years old and wants to apply for a credit card in the same bank where he is an account holder. In the context of the Credit Card Accountability, Responsibility and Disclosure Act of 2009, Jamie must:
A) provide proof of his sources of income every three months to prove his repaying ability.
B) have his parents or guardians cosign the credit card application.
C) submit legal papers of his family assets to satisfy credit card application requirements.
D) provide proof that he does not have accounts in other banks.

Accepted Answer

The Credit Card Accountability, Responsibility and Disclosure Act of 2009 requires individuals under 21 to have a cosigner or show proof of sufficient income to obtain a credit card.

Question 6

Wendy has purchased several furnishing items from a home decor store. She pays for the entire purchase through her credit card. Wendy has 21 days to pay back the amount to the issuer of the credit card. In the context of credit cards, the number of days Wendy is given to pay back the balance is called the _____.
A) grace period
B) face value period
C) vesting period
D) tie-up period

Accepted Answer

The grace period is the time during which a credit card holder can pay off their balance without incurring interest charges.

Question 7

In the context of protection for consumers, which of the following statements is true of the Dodd-Frank Act?
A) It requires credit card issuers to give a 45-day notice before making significant changes to credit agreements.
B) It requires lenders, insurance companies, and others who reject your application to provide you with a free copy of your credit score.
C) It requires anyone under the age of 21 who applies for a credit card to either verify proof of income or have an older adult cosign the application.
D) It places caps on certain types of fees that credit card issuers can charge.

Accepted Answer

The Dodd-Frank Act requires lenders, insurance companies, and others who reject your application to provide you with a free copy of your credit score.

Question 8

Identify a true statement about the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009.
A) It prohibits the issuance of credit cards to anyone under the age of 21.
B) It created the Consumer Financial Protection Bureau.
C) It prohibits issuers from raising interest rates on existing balances unless the borrower is more than 60 days late in making required payments.
D) It established the Securities and Exchange Commission to ensure that credit card issuers give a 45-day notice before making significant changes to credit agreements.

Accepted Answer

The CARD Act of 2009 includes a provision that prohibits issuers from raising interest rates on existing balances unless the borrower is more than 60 days late in making required payments.

Question 9

Which of the following is a condition included in a credit card agreement?
A) A charge is levied just for the privilege of having a credit card.
B) Transfer of balance from one credit card to another is not charged.
C) A late fee is not assessed if a payment is not received within the grace period.
D) An annual fee is charged only if your charges exceed your credit limit.

Accepted Answer

A credit card agreement typically includes an annual fee, which is a charge levied just for the privilege of having a credit card.

Question 10

Which of the following statements is true of credit cards?
A) They can improve your credit score by allowing you to establish a history of prompt payments.
B) They are solely issued to people who have a specific amount of savings in their retirement account.
C) Warranty is not offered on products purchased using a credit card.
D) Credit card companies do not charge an annual fee from cardholders if the card remains unused for at least 120 days.

Accepted Answer

Using a credit card responsibly by making prompt payments can help establish and improve your credit score.

Question 11

In the context of credit card practices, a mandate of the Credit Card Accountability, Responsibility and Disclosure Act of 2009 is that:
A) a credit card holder must not hold a joint bank account with his or her spouse.
B) anyone under the age of 21 must have an adult cosign the credit card application.
C) there should be no caps on the types of fees that credit card issuers can charge.
D) issuers must give a 10-day notice before making significant changes to credit agreements.

Accepted Answer

The Credit Card Accountability, Responsibility and Disclosure Act of 2009 requires that individuals under the age of 21 must have a cosigner or show proof of income to obtain a credit card.

Question 12

Benedict applies for a credit card with a credit limit of $30,000. However, the issuing bank rejects his application because of his low credit score. While rejecting his application, the bank provides him with a free copy of his credit score. In this scenario, the bank is following the mandate of the _____.
A) Federal Credit Union Act
B) Dodd-Frank Act
C) Glass-Steagall Act
D) Credit Card Accountability, Responsibility and Disclosure Act

Accepted Answer

The Dodd-Frank Act requires that consumers be provided with a free credit score if they are denied credit based on their credit score.

Question 13

The Consumer Financial Protection Bureau was created by the _____.
A) Responsibility and Disclosure Act
B) Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
C) Sarbanes-Oxley Act
D) National Consumer Disputes Redressal Commission and The Global Anti-Semitism Review Act of 2004

Accepted Answer

The Consumer Financial Protection Bureau was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

Question 14

Owing to his impulsive buying habits, Ronnie's unpaid credit card balances pile up to $9,000. As Ronnie does not have enough money to clear his bills, he is in a deep financial crisis. In this scenario, the first step that Ronnie should take is to:
A) stop using the card so that he does not worsen the situation.
B) consistently pay a substantial amount of the balance each month toward retiring the debt on his card.
C) borrow money from banks and other lenders to make the credit card payments.
D) approach the issuer of the credit card to increase the credit limit for future transactions.

Accepted Answer

Ronnie should first stop using the card to prevent further increasing his debt.

Question 15

Which of the following statements is true of the Credit Card Accountability, Responsibility and Disclosure Act of 2009?
A) It strictly restricts issuing credit cards to anyone under the age of 21.
B) It created the Consumer Financial Protection Bureau.
C) It places caps on certain types of fees that credit card issuers can charge.
D) It allows credit card issuers to raise the interest rates on existing balances soon after a purchase.

Accepted Answer

It places caps on certain types of fees that credit card issuers can charge.

Question 16

Hans has an account in Grancore Bank and uses a credit card issued by the bank. He uses the credit card for various forms of transactions. In the context of credit card usage, when Hans has unpaid balances, Grancore Bank will charge him a(n) _____ on the due amount.
A) annual percentage rate
B) nominal interest rate
C) monthly surcharge rate
D) floating interest rate

Accepted Answer

The annual percentage rate (APR) is the interest rate charged on unpaid credit card balances. It represents the yearly cost of borrowing and is applied to any unpaid balance after the due date.

Question 17

A disadvantage of using a credit card is that:
A) it is riskier than carrying cash because losing the card can cause the credit card issuer to file a case against the cardholder.
B) it makes it difficult for the credit card users to track their expenditures.
C) it makes it hard for some people to maintain financial discipline.
D) many retailers do not offer warranty for products purchased using credit cards.

Accepted Answer

Using a credit card can lead to overspending and accumulating debt, making it difficult for some individuals to maintain financial discipline.

Question 18

When using a credit card, _____.
A) making late payments can damage your credit history
B) tracking your expenditures is difficult
C) maintaining financial discipline is easier than when using a debit card
D) availing warranties for products purchased through the card is not possible

Accepted Answer

Making late payments on a credit card can negatively impact your credit history, as it is reported to credit bureaus and can lower your credit score.

Question 19

Frank bought furniture worth $5,230 for his new house and used his credit card to make the payment. However, because of financial constraints, he was unable to clear the outstanding amount within the bank's stipulated time. This resulted in the bank charging Frank an additional $27 This additional amount that Frank needs to pay to the bank is referred to as the _____.
A) rent for balance
B) charge-off
C) late fee
D) credit pay

Accepted Answer

The additional amount Frank needs to pay is referred to as a "late fee," which is charged when a payment is not made by the due date.

Question 20

With the use of credit cards, _____.
A) you cannot avail warranty on products purchased through the card
B) you can easily borrow money when you really need it
C) you are exempted from paying any annual usability fee
D) you get a grace period of 120 days to make outstanding payments

Accepted Answer

Credit cards allow users to borrow money up to a certain limit and pay it back later, often with interest.

Quiz 18: Appendix :personal-Finance-Appendix

In the context of credit cards, which of the following statements is true of the annual percentage rate (APR) ?

A charge just for the privilege of having a credit card, whether you use it or not, is referred to as a(n) _____.

In a credit card agreement, the _____ is the interest expense charged on a credit card.

The Consumer Financial Protection Bureau:

Jamie is 19 years old and wants to apply for a credit card in the same bank where he is an account holder. In the context of the Credit Card Accountability, Responsibility and Disclosure Act of 2009, Jamie must:

In the context of protection for consumers, which of the following statements is true of the Dodd-Frank Act?

Identify a true statement about the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009.

Which of the following is a condition included in a credit card agreement?

Which of the following statements is true of credit cards?

In the context of credit card practices, a mandate of the Credit Card Accountability, Responsibility and Disclosure Act of 2009 is that:

The Consumer Financial Protection Bureau was created by the _____.

Owing to his impulsive buying habits, Ronnie's unpaid credit card balances pile up to $9,000. As Ronnie does not have enough money to clear his bills, he is in a deep financial crisis. In this scenario, the first step that Ronnie should take is to:

Which of the following statements is true of the Credit Card Accountability, Responsibility and Disclosure Act of 2009?

Hans has an account in Grancore Bank and uses a credit card issued by the bank. He uses the credit card for various forms of transactions. In the context of credit card usage, when Hans has unpaid balances, Grancore Bank will charge him a(n) _____ on the due amount.

A disadvantage of using a credit card is that:

When using a credit card, _____.

With the use of credit cards, _____.