AnswersEA Academy Civics 9Credit, Interest, and Debt

Credit, Interest, and Debt Answers

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1
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Talia has a $4,000 auto loan. Noah has a credit card with a $4,000 credit line. How will their payments differ?

A
Talia’s payments will not include interest, while Noah’s payments will.
B
Talia will be able to skip some payments, while Noah will have a required minimum.
C
Talia’s payment requires the total balance all at once, while Noah’s payment will have monthly bills.
D
Talia will have a set amount due, while Noah will have a minimum monthly payment that could change.
2
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Phoebe takes out a student loan to afford college. She expects to get a job after college that provides enough income to pay off the loan. What risk does she also have to think about?

A
The lender could take away her diploma if she does not pay the loan.
B
The debt might make it harder for her to get other loans in the future.
C
She will have to work during college to afford her monthly payments.
D
She might lose her car to the lender if she cannot afford minimum payments.
3

What is one advantage of opening and using loans?

A
They help to build credit.
B
They lower expenses long-term.
C
They help to reduce debt.
D
They increase total income.
4

Louisa makes a payment that completely pays off her credit card. What happens to her line of credit as a result?

A
Louisa receives her money back from the lender.
B
Louisa still has to pay off the interest on the loan.
C
The entire amount is available for Louisa to use again.
D
The lender takes the credit card back from Louisa.
5

Review the table, which shows a credit card statement.

Question illustration
A
The payment will increase her credit by $500.
B
The payment will decrease her credit by $500.
C
Her available credit will remain the same.
D
Her available credit will double in amount.
6

Review the table, which provides information on personal loans.

Question illustration
A
Bank A
B
Bank B
C
Bank C
D
Bank D
7

Review the table, which compares the credit history of four potential borrowers.

Question illustration
A
Monica
B
Jarva
C
Alison
D
Katrina
8

Keyshia uses only some of the credit line on her credit card and pays off the balance every month. What might the lender of her loan do as a result?

A
shorten her repayment period
B
increase her credit limit
C
close her line of credit
D
take away one of her assets
9

Abby has the option of using her credit card, which has compound interest of 10%, for a $5,000 expense. She also sees an offer for a personal loan of $5,000, with 10% simple interest. Why might the loan be a better deal?

A
The personal loan will end up costing only $5,000 in the end, while the credit card will cost more.
B
If Abby opens an additional line of credit with the personal loan, her credit score will improve.
C
With simple interest, the interest will not accumulate if Abby does not pay the loan off quickly.
D
Personal loans do not have payment deadlines the same way that credit cards do.
10

Review the table, which shows a credit card statement.

Question illustration
A
$5,000
B
$425
C
$550
D
$80

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