UGBA 135 Final question n answers graded A+ 2023/2024

UGBA 135 Finalwhat is the greatest factor that determines your credit score? - correct answer paying bills on time over time the "cornerstone" of wealth is? - correct answer being frugal, not cheap but value oriented what is the minimum criteria for a credit score? - correct answer - at least one reported "account" which has been open for at least six months - at least one report that has been reported by a lender in the last six months and nothing that indicates you're deceased what is "good debt"? - correct answer taking out loans in order to pay off a car, a mortgage or an education or starting a business what is considered "bad debt"? - correct answer borrowing money to support a lifestyle of living beyond one's means the rule of 72 - correct answer the number of years it takes for a certain amount to double in value is equal to 72 divided by its annual rate of interest what are credit cards, debit cards, charge cards, prepaid cards? - correct answer - credit card: an unsecured line of credit, based on good faith and credit history, this is a risk for a bank - debit card: a secured line of credit, the bank is taking no risk in issuing one of these - charge card: issued by a retailer allowing you to charge purchases made only with their store, store credit usually carries high rates or interest as high as 20 to 30% on unpaid balances - prepaid card: offered by banks and non- banks, not linked to one's bank account, entails high fees and interest what is the credit card act and most important point? - correct answer 1) No increase interest rates for 12 months unless an intro rate expires 2) After one year of the intro rate expires the card holder must be notified 45 days in advance of any rate change 3) If you are more than 60 days late the issuer may charge you the interest default rate, which is typically 28-35%. However, if you make your payments on time for six consecutive months, the original rate must be restored. Some banks may refund part of the default rate for each month you pay on time as an incentive to get the account "cleaned up" 4) For an account in good standing, interest rate increases can only be applied to new charges 5) Promotional rate periods must be for a minimum of six months 6) Overdraft fees may not be charged unless the cardholder agrees to allow them. When you "accept" most modern day contracts you are probably agreeing to overdraft fees. Otherwise the issuer would reject the charge. Key point: all these things they have put into effect are for consumers and not busines what is principle? - correct answer the amount of money that is borrowed or loaned what is interest? - correct answer the cost of money; paid by the borrower to obtain the used of the principal or received by the lender for providing the principal; expressed as APR sometimes you can prepay interest and they will charge you a point (one percent of the loan) and it is paying your interest in advance and it will usually lower your interest - correct answer true are social security benefits taxable? - correct answer yes, 85% of them are what is the first thing you need to start a business? - correct answer an idea if you start a business, a lender will want you to personally guarantee a loan (i.e. a home) - correct answer true who pays for part A of medicare? - correct answer free to seniors who apply; financed by a 2.9% payroll tax on all earned income; 1.45% employer and 1.45% employee pays who pays for part B of medicare? - correct answer optional and means tested; financed by monthly premiums paid by the insured which currently range from about to $134 to $428 per month, based on a