C4 DEBT Study Guide for Assessment
Be sure to review the Credit Terms we learned in class. They can be found in the Schoology C4 folder in the C4 Debt: Credit Terms/Slides Assignment. (see this link)
C4 Debt: Credit Terms/Slides
Directions: Please answer ALL of the following questions. Each question will be similar to the assessment questions and concepts you will find on the test.
1. What's the difference between a credit card and a debit card?
2. Do you need a credit card to rent a hotel room or a car? Can you use a debit card? If so, how do you make using it safer/more secure?
3. Which is more painful psychologically, spending cash or using a credit card?
4. How much more do you typically spend on purchases if you use a credit card instead of cash? (Hint: answer in terms of a percentage range - look in your “Foundations in Personal Finance” Chapter 4 Debt Packet if you don’t remember.)
5. What is the problem with using credit cards even if you pay the balance off every month? (Hint: this has to do with spending)
6. Why should you pay more than the minimum balance on your monthly credit card bill?
What happens if you don't?
7. What percent of Americans don't pay off their credit card balances each month?
8. Why do credit card companies market so heavily to teenagers/young adults? There are several reasons, you should know them all.
9. Should you loan money to a friend or relative? What usually happens if you do? What is Dave Ramsey’s advice if someone asks you to co-sign on a loan with them?
10. What is the danger of co-signing a loan?
11. How old do you have to be to get your own credit card? (not be a joint card holder or authorized signer)
12. Why is financing a car (buying it with a loan) more expensive than buying it with cash that you’ve saved in a sinking fund? What other expenses (not including gas, maintenance…) do you have to pay if you take out a loan on a car besides just paying the loan payment?
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Chp. 4 DEBT Study Guide for Assessment
13. What's the difference between "secured" and "unsecured" loans? Give an example of each type of loan. AND "secured" and "unsecured" credit cards?
14. Is leasing a car economical? Explain why or why not.
15. What does Dave Ramsey recommend if you want to "Drive Free?" Be able to explain the process.
16. What are the FIVE Steps Out of Debt?
1.
2.
3.
4.
5.
17. How does debt affect your future and your ability to build wealth?
18. What is the KEY to Wealth Building?
19. Do you begin the debt snowball with the highest debt or the lowest debt? Be able to example the process, set up a debt snowball, look at an example and decide if it’s set up correctly.
20. What does it mean if a person is "upside down" on a car loan?
21. What are you responsible for if your identity is stolen?
22. What are the signs of identity theft?
23. How many credit bureaus are there?
24. What are the names of the three credit bureaus?
25. How long does account information stay on your credit report?
26. How long does a bankruptcy stay on your credit report?
27. How often should you AND how often can you obtain a free copy of your credit report?
28. What advice would you give to a young adult who wants to start building their credit reputation but doesn’t have any credit yet and doesn’t want to ask help from an adult?
Be sure to review the Credit Terms we learned in class. They can be found in the Schoology C4 folder in the C4 Debt: Credit Terms/Slides Assignment. (see this link)
C4 Debt: Credit Terms/Slides
Directions: Please answer ALL of the following questions. Each question will be similar to the assessment questions and concepts you will find on the test.
1. What's the difference between a credit card and a debit card?
2. Do you need a credit card to rent a hotel room or a car? Can you use a debit card? If so, how do you make using it safer/more secure?
3. Which is more painful psychologically, spending cash or using a credit card?
4. How much more do you typically spend on purchases if you use a credit card instead of cash? (Hint: answer in terms of a percentage range - look in your “Foundations in Personal Finance” Chapter 4 Debt Packet if you don’t remember.)
5. What is the problem with using credit cards even if you pay the balance off every month? (Hint: this has to do with spending)
6. Why should you pay more than the minimum balance on your monthly credit card bill?
What happens if you don't?
7. What percent of Americans don't pay off their credit card balances each month?
8. Why do credit card companies market so heavily to teenagers/young adults? There are several reasons, you should know them all.
9. Should you loan money to a friend or relative? What usually happens if you do? What is Dave Ramsey’s advice if someone asks you to co-sign on a loan with them?
10. What is the danger of co-signing a loan?
11. How old do you have to be to get your own credit card? (not be a joint card holder or authorized signer)
12. Why is financing a car (buying it with a loan) more expensive than buying it with cash that you’ve saved in a sinking fund? What other expenses (not including gas, maintenance…) do you have to pay if you take out a loan on a car besides just paying the loan payment?
Page 2...
Chp. 4 DEBT Study Guide for Assessment
13. What's the difference between "secured" and "unsecured" loans? Give an example of each type of loan. AND "secured" and "unsecured" credit cards?
14. Is leasing a car economical? Explain why or why not.
15. What does Dave Ramsey recommend if you want to "Drive Free?" Be able to explain the process.
16. What are the FIVE Steps Out of Debt?
1.
2.
3.
4.
5.
17. How does debt affect your future and your ability to build wealth?
18. What is the KEY to Wealth Building?
19. Do you begin the debt snowball with the highest debt or the lowest debt? Be able to example the process, set up a debt snowball, look at an example and decide if it’s set up correctly.
20. What does it mean if a person is "upside down" on a car loan?
21. What are you responsible for if your identity is stolen?
22. What are the signs of identity theft?
23. How many credit bureaus are there?
24. What are the names of the three credit bureaus?
25. How long does account information stay on your credit report?
26. How long does a bankruptcy stay on your credit report?
27. How often should you AND how often can you obtain a free copy of your credit report?
28. What advice would you give to a young adult who wants to start building their credit reputation but doesn’t have any credit yet and doesn’t want to ask help from an adult?