UGBA 196 Midterm questions & answers graded A+ 2023 /2024

UGBA 196 Midterm What does your FICO score represent? - correct answer delinquency and default rate of a large number of people with similar credit history What factors determine your FICO score? (5) - correct answer on time bills, debt to credit ratio, length of credit history, new accounts/applications for credit, mix of credit cards and loans Credit Card Act - correct answer ⁃ no interest rate increase for 1 year unless introductory rate has come to an end or you are 60+ days late on a payment ⁃ card holder must be notified 45 days in advance of rate change or you can close the account/pay off balance at old interest rates ⁃ 60+ days late in making minimum payment, you can be charged interest default rate. on time payments for 6 months restores original rate ⁃ interest rate increases can only be applied to new charges ⁃ promotional rate periods must be for at least 6 months ⁃ overdraft fees only allowed if cardholder agrees to them ⁃ credit holds cannot result in overdraft unless executed ⁃ statements must show how many months to pay off if minimum payment is made as well as how much to pay each month to be debt free in 36 months ⁃ fees may not exceed 25% of credit limit during first year ⁃ no legal limit or cap on interest rates on outstanding balances ⁃ grace period: statements mailed 21 days before payment due date, no charges prio grace period - correct answer statements mailed 21 days before payment due date, no charges prior to this day Where are card payments in excess of minimum applied? - correct answer balance with highest interest rate credit card warnings - correct answer late payment, minimum payment, 30 day warning of account closure credit card promotional rates - correct answer must last at least 6 months first year of credit card fees - correct answer fees may not exceed 25% of credit limit credit cards/under 21 - correct answer need cosigner and permission to increase credit limit credit card payments - correct answer same day every month 5pm, no fees for online/phone interest default rate (percent, what causes it/stops it) - correct answer 28-35%, 60+ days late in making minimum payment, on time payments for 6 months stops it overdraft fees (cost, interest, rule) - correct answer fee as high as $39, you can be charged interest on these fees, only allowed if cardholder agrees to them credit card statement rules - correct answer show how many months to pay off balance, how much to pay to be debt free in 3 years, toll free credit counseling What happens when you make a late payment? - correct answer interest charges will increase if not paid, fees up to $39 Why do people have prenuptial agreements nowadays? - correct answer people marry later so they want to protect their assets upon death How long before a marriage should you establish a prenuptial agreement? - correct answer 60-90 days What percent of marriages have prenuptial agreements? - correct answer 50%