UGBA 135 Final Exam Questions and Answers 2023 Complete
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Module
UGBA 135
Institution
UGBA 135
UGBA 135 Final Exam Questions and Answers 2023 Complete
What is "good debt"?
Taking out loans in order to pay off a car, a mortgage or an education or starting a business
What is considered "bad debt"?
- Borrowing money to support a lifestyle of living beyond one's means
What is the definiti...
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UGBA 135 Final Exam Questions and Answers 2023
Complete
What is "good debt"?
Taking out loans in order to pay off a car, a mortgage or an education or starting a
business
What is considered "bad debt"?
- Borrowing money to support a lifestyle of living beyond one's means
What is the definition of a Modern Day Millionaire?
- Financially independent, no government assistance, living the life they want to lead
What is a credit card?
- An unsecured line of credit
- based on good faith and credit history
- this is a risk for a bank
What is a debit card?
- A secured line of credit
- the bank is taking no risk in issuing one of these
What is a 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 - 30% on unpaid
balances
What is prepaid card?
- Offered by banks and non- banks - not linked to one's bank account
- entails high fees and interest
What is a payday loan?
- A high interest short term cash loan that is intended to be repaid by future paychecks
What is installment debt?
- Money that is borrowed to purchase large items such as a car or furniture paid over
time
- borrower purchases the item and pays for it at regular intervals until the loan is paid
back in full
What is a deferred interest plan
A plan that enables a consumer to purchase big - ticket items paying no interest or a
low "teaser" rate of interest over a promotional period.
What are Gift Cards?
- Stored value cards, usually for use at a specific retailer or merchant
What is a cashier's check?
- A check purchased by you from a bank, payable to a third party designated by you.
What is a certified Check?
- A personal check the bank guarantees as being supported by funds in your account
What is credit?
The amount of money a lender is willing to lend subject to repayment terms and
conditions such as interest, fees and penalties
What is Debt?
- The state of owing something such as money
,What is a Debtor (or borrower)?
- A person or entity with debt which owes or has the obligations to repay the debt
What is principle?
- The amount of money that is borrowed or loaned
What is interest
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 (annual percentage rate)
What is the Fixed Rate of Interest?
- A loan with an interest rate that will remain at a predetermined or "fixed" rate for the
life or term of the loan - the rate does not fluctuate.
What is an adjustable Rate of interest?
- A loan where the rate of interest is not fixed but may change at various specified times
- most commonly foun din homes where the interest rate is established for a few years
and is then changed to a new rate for the balance of the loan
What is the "go - to" rate?
- The interest rate you are charged on upaid credit card balances, in addition to the
variable rate to determine the total rate of interest on your account
What is revolving credit?
- credit or funds made available to you for use at any time - subject to the terms of
repayment - you can use your credit line over and over again up to its limit - it revolves
What is the default rate?
- an accelerated rate of interest, typically 28 - 35% charged on your credit balance as a
penalty - didn't make minimum payment on due date - or payment isn't honored by the
bank such as a bounced check
What is the balance transfer fee?
- The fee which might be charge by a new lender if you transfer the balance from your
credit card provider t another
- typically the fee is 2 - 5 %
What is the grace period?
- A period in the billing cycle during which no penalty is due as long as payment is
received on time by the lender
What is a stop payment?
- requesting the bank to reject a payment of a check when presented
What are pitfalls to be aware of?
- When mailing the payment, must be received by the date - not postmarked
How to reduce credit card debt?
- stop using your credit card
- save first, then make the purchase
- take an extra job or allocate extra money to pay down the balance
- use fist and bonuses to pay off the highest interest rate charges
- if you are carrying balances on several cards, make the minimum payment on all cards
-- if you cannot afford it, pay more on the account with the highest rate of interest and
the smallest balance.
- call your credit card issuer and ask for a lower rate
What do you do if you have fallen victim to credit card theft?
, - call bank immediately
- in the first 2 days - only liable for $50 losses
- after 2 days - liable to up to $500
- after 60 days, liable for everything
What do if you have fallen victim to credit card theft?
contact issuer or bank immediately
- if you call within 2 days limited to $50 of losses
- if you call beyond 2 liable for up to $500 losses
- if you call after 60 days - fully liable
What is bankruptcy?
-It can negatively impact your credit score for up to 10 years, does not relieve you of
obligations for taxes, alimony, child support or student loans
Who does the Card Act apply to?
Only to consumers credit cards and NOT to business credit cards
What are the 3 credit reporting agencies
- transunion
- equifax
- experian
What is a credit report?
An individual financial report which tells you whether you have been making your credit
card/loan payments on time and includes personal information
What is a credit score?
This determined by credit report but it NOT located - in order to change this number,
you must have an improved credit report
What is a FICO score?
A number used by lenders to determine if you are a good or bad credit risk based upon
the delinquency and default rate or a large number of people with credit history similar
to yours
What information is included on a credit report?
employment history, law suits, judgments, arrests, DUIs, bankruptcies and all loans
what is a voluntary request?
document? authorized by you so that a lender, landlord, employer (with written
permission) can legally get a copy of your credit score
what is an involuntary request?
Document? from lenders that re trying to solicit you by mail fro pre approved credit offer
Info on accessing credit cards
legally entitles to one free copy of your report each year from each of the three major
bureaus
what is the federally mandated website for free credit reports?
www.annualcreditreport.com
What is the FICO formula?
35% record of paying bills on time - for a significant period of time
30% debt to credit ration - which is the total balance on your credit
15% length of credit history
10% new accounts and recent applications for credit cards and loans
What is the best FICO score can be?
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