Problems:
1. What is credit? List 2 types of credit cards and what is the major difference between them?
2. What are secured and unsecured credit cards?
3. What is a Store Credit Card? List 3 examples.
4. List 3 advantages and 2 disadvantages of Finance Companies.
5. What is a billing cycle?
6. What is the difference between a Cash Advance APR and an Introductory APR?
7. What is the Truth in Lending Act?
8. Suppose you maintain an average monthly balance of $500 on your credit card. You are charged 16% annual interest rate.
a) How much are you spending on a monthly basis?
b) How much are you spending on a yearly basis?
9. Suppose you maintain an average monthly balance of $468 on your credit card. You are charged 24% annual interest rate.
a) How much are you spending on a monthly basis?
b) How much are you spending on a yearly basis?
10. Suppose you max out your $1,500 limit credit card with an APR of 8.48%. You want to pay off the loan in 1 years.
a) Calculate the monthly payments.
b) Calculate the total payment over the term of the loan.
c) How much goes to principle?
d) How much goes to interest?
11. Suppose you max out your $15,750 limit credit card with an APR of 14%. You want to pay off the loan in 3 years.
a) Calculate the monthly payments.
b) Calculate the total payment over the term of the loan.
c) How much goes to principle?
d) How much goes to interest?
12. Suppose you owe $48,000 in student loans at an APR of 6%. You planned to pay back the loan in 10 years.
a) Calculate the monthly payments.
b) Calculate the total payment over the term of the loan.
c) How much goes to principle?
d) How much goes to interest?
13. Suppose you received $1,525 in student loans each semester for 4 years at an APR of 12% for 10 years.
a) How much did you borrow over the 4 years of college?
b) Calculate the monthly payments on the loan.
c) Calculate the total payment over the term of the loan.
d) How much goes to principle?
e) How much goes to interest?