Personal Finance Final Study Guide Part 1, Questions and Answers 2024

Personal Finance Final Study Guide Part 1, Questions and Answers 2024 T/F Most online financial institutions and businesses will regularly send you emails asking you to update your account information by going to a link in their emails. False What statement is TRUE about "phishing scams"? Phishing scams cannot hurt you if you do not respond to them What answer best describes a Nigerian scam? Nigerian scammers nearly always want you to send money back to them. What is FoolProof's definition of "looking like a fool"? Falling for anything which makes companies and other people think you're too stupid or too young to know better. Do many companies like it when you look like a fool? Definitely! The job of many companies is to make money, not to do what is right for you... If you look like a fool, they make more money. Vinnie (our friend in the video) had many credit cards, and he did have fun with them! Then he nearly went broke. What was the main thing Vinnie did wrong? He used one credit card to pay other credit card bills. T/F Native advertisers are required to show all sides of an issue in articles they publish. False If you mismanage your checking account by bouncing checks repeatedly or ignoring overdraft notices, which of the following results may happen to you? [Tricky question: read all answers.] All of the above. (1. You will be charged a penalty fee for a "returned" (bounced) check. 2. You may pay higher rents or interest rates because of your poor credit history. 3. If you aren't aware of your "negative balance" and don't put more funds in your account you bounce more checks and receive more penalty fees.) Which answer applies to "fine print"? Fine print is usually where virtually all the important information is located. Which answer applies to "fine print"? You should always read the fine print. Which answer applies to "fine print"? The fine print can say the opposite of the big print. Which answer applies to "fine print"? Many companies like fine print because you can be confused by it, and make the wrong decision. You owe $1,000 on a credit card and choose to pay the minimum payment each month. Which answer is correct? Credit card companies love you when you only make minimum payments! Why? You're throwing your money away by paying extra interest each month. You owe $1,000 on a credit card and choose to pay the minimum payment each month. Which answer is correct? Making minimum payments means it could take thirty or forty years to pay off that $1,000 credit card bill. Having a bad credit history impacts every one of these items but one. Which is the one item not impacted by bad credit history? The fact that I am a good person. T/F Good credit is the key to financial freedom. True What is the best explanation of "debt-to-income" ratio? The ratio of how much money individuals owe in relation to how much money they make. Which statement gives the best definition of financial credit? Financial credit is an arrangement for you to pay at a later date. Loans and credit cards are forms of credit. Financial credit is also a way that lenders, businesses, and potential employers determine whether someone is trustworthy. What is the best way to hurt your credit rating? Make all your payments early except your credit cards. It's OK to pay them late. T/F Your credit score is based on your payment history. True Which statement best illustrates how good credit can give you power? Having good credit can lead to a better paying job and better interest rates on a loan, for a car, a home, etc. With bad credit you are more dependent on others. Which statement is correct? Bad credit means you may have to live at home with your parents for a long time. It also means you may have trouble getting a good job, and trouble getting a loan. And even if you get a loan, you will pay a lot more in interest. You mailed in your credit card payment late but when you wrote the check you dated it for January 13th even though the due date is the 15th. Which statement is true? The payment is still late because the payment was not received by the due date. You add your sister to your cell phone plan and she runs up your bill. Whose credit will be hurt if the bill is not paid? Mine - I am always responsible for my accounts. If you are renting an apartment with a roommate and all of the utilities are in your roommate's name why would your payments not help or hurt your credit rating? Because unless my name is on the account the credit bureaus do not recognize the payments. T/F The more times your credit is checked when applying for credit cards or loans will help build your credit rating. False T/F After obtaining bad credit there is no easy fix to get good credit other than building back up through years of paying your bills on time every month and decreasing your debt-to-income ratio. True T/F If you mail in your credit card payment on the day it is due, it is not late. False T/F How long you've had an account - like a credit card or a cell phone account - has nothing to do with determining your credit score. False You own a credit bureau. You're trying to decide which person is the better credit risk. Which statement/person would you choose as the better credit risk? Ted is just about to pay off his 36-month loan on his used RAV4. He's made 35 monthly payments on time to his credit union and is sending the 36th payment in on time, too. Good credit gives you options. Bad credit takes away your options. Choose the one correct answer. You have good credit. You can choose the credit card with the lowest interest rate. T/F Credit is an arrangement for you to pay at a later date. It is one way to determine trustworthiness. True Which of these people has "bad credit"? Tamara's parents co-signed a car loan for her new wheels. Her monthly payment is due by the 15th of each month. So far she has made the payment each month. But on three months, she sent her payment after the due date on the coupon because she had not yet received her bi-weekly paycheck from her part-time job. On more than one occasion she was more than 30 days late. T/F Many companies always look out for the consumer and give them repayment plans that can be paid off in the shortest amount of time possible. False What is a "debt-to-income" ratio? How much money you owe in total versus how much you make.