Topic Test Answers

Of the following statements, which one or ones describe actions harmful to your credit score?I. Owing a lot of moneyII. Having many lines of creditIII. Making steady payments

Yvonne's credit card has an APR of 17.79% and a 30-day billing cycle. The following table details her credit card transactions in the month of June.DateAmount ($)Transaction6/1925.43Beginning balance6/762.74Payment6/1128.27Purchase6/2150.00PurchaseBetween the previous balance method and the daily balance method, which method of calculating Yvonne's June finance charge will result in a greater finance charge, and how much greater will it be?

You are considering buying one of two brands of barbecue grills. Brand F costs $650 and will last for about fifteen years. Brand G costs $200 and will last for about five years, so you will need to buy three of them over the years to equal one Brand F grill. In either case, you plan to pay for the grill with your credit card, which has an interest rate of 13.01%, compounded monthly. You will pay off a Brand F grill in five years of monthly payments, and you will pay off a Brand G grill in three years of monthly payments. Assuming that you have no other purchases on your credit card, over a fifteen-year period, which kind of grill will be cheaper, and how much cheaper will it be? (Round all dollar values to the nearest cent.)

From the statements below, identify the way or ways in which making only minimum monthly payments on a long-term credit purchase can be a disadvantage.I. It is illegal to make only the minimum payments for more than one year.II. Repeatedly making minimum payments harms your credit score.III. The total cost is higher if the length of the debt is longer.

Fran is going to transfer her credit card balance over to a new card. She has an existing balance of $752.69. Her current card charges her a transfer fee of 12.5%, added to her balance, for transferring her debt. The new card has an opening fee of $50, which is also added to her balance. She will also have to make an immediate minimum payment, which is 3.35% of her total balance. How much will her balance be after she makes this payment, assuming that she pays the minimum amount? Round all dollar values to the nearest cent.

What is the prime rate?

Eric is comparing the credit scores of his friends. The scores he gathered are found in the table below. 588838691818846725605732750Among this batch of credit scores, find whether the mean or the median is higher, and how much higher it is. (Round to the nearest whole point, if applicable.)

Pam has just moved into a new home and wants to purchase an oven. She expects to live in this house for the foreseeable future. She has narrowed her choices down to two options. Consider the following table, which describes the prices, daily electricity costs, and lifespans of the two ovens she is considering: Brand Brand U Brand V Price $2,250 $725 Avg. Cost/Day $0.16 $0.28 Lifespan 24 years 8 years Which brand will have the lower lifetime cost, and how much lower will it be? Hints: If the product's expected lifespans differ, assume that repurchase(s) at the same price is possible to equalize the lifespans. Remember that six of the twenty-four years will be leap years, and round all dollar values to the nearest cent.

Looking for some furniture for her new apartment, Susan visits the local swap meet in search of something cheap. Knowing that most swap meet vendors will not accept credit cards and that she will not have any money until her next payday, Susan decides to take out a $200 cash advance on her credit card at an interest rate of 32%.If Susan had no previous balance on her credit card, and she manages to pay off the balance within 1 month, how much will she have to pay in interest?

Marilyn has two credit cards, D and E. Card D has a balance of $691.64, and Card E has a balance of $1,014.22. The minimum monthly payment on Card D is 3.57% of the total balance, and the minimum monthly payment on Card E is 2.51% of the total balance. How much greater is the minimum payment on Card E than on Card D?

What is an open line of credit?

Of the following, which statement or statements accurately represent possible effects of a long-term credit purchase on your credit score?I. Showing a willingness to pay high interest rates increases your score.II. Making only minimum payments for an extended time can hurt your score.III. Regularly paying off a credit balance can boost your score.

Calvin’s credit card computes finance charges using the daily balance method. His card has a billing cycle of 30 days and an APR of 14.75%. The following table details Calvin’s transactions in the month of September.DateAmount ($)Transaction9/1716.54Beginning balance9/784.94Purchase9/1215.69Purchase9/20200.00PaymentWhat will Calvin’s starting balance be next month?

Andrew is on a 30-day billing cycle. His credit card has an APR of 16.60% and computes finance charges using the previous balance method. The table below shows transactions that Andrew made in March. Based on the information in the table, what will Andrew’s March finance charge be?DateAmount ($)Transaction3/11,794.30Beginning balance3/6440.15Purchase3/935.65Purchase3/22250.00Payment3/2551.71Purchase

You are a loan officer trying to decide which clients deserve your best rates. The table below shows the credit scores of several loan applicants.NameExperianEquifaxTransUnionKellin720783733Natasha699684784Edward789658782Lisa810679792Based on each applicant’s median credit score, who deserves your best interest rates?

Use the following compound interest formula to complete the problem. Victor has a credit card with an APR of 13.66%, compounded monthly. He currently owes a balance of $1,349.34. Assuming that Victor makes no purchases or payments, how much will he owe after one year, to the nearest cent?

Hal is going over the credit scores he received from the three major credit bureaus. He Experian score is 711, his Equifax score is 736, and his TransUnion score is 736. What is the mode of Hal’s credit scores? (Round to the nearest whole point, if applicable.)

Which of the following is not a disadvantage to cash advances on a credit card?

Patrick has a credit card with an APR of 15.40% and a billing cycle of 30 days. The following table shows Patrick’s credit card transactions in the month of August.DateAmount ($)Transaction8/11,466.22Beginning balance8/628.48Purchase8/9150.00Payment8/17115.75Payment8/2040.00Purchase8/2231.76PurchaseHow much greater will Patrick’s August finance charge be if his credit card company computes finance charges using the previous balance method than if it computes finance charges using the adjusted balance method?