How to reduce credit card debt
  • 1. What is the first step in reducing credit card debt?
A) Gamble to win money
B) Create a budget
C) Apply for more credit cards
D) Ignore the debt
  • 2. What is the 'snowball method' for debt repayment?
A) Paying off the smallest balance first
B) Paying only the minimum on all accounts
C) Paying off accounts randomly
D) Paying off the largest balance first
  • 3. What is the 'avalanche method' for debt repayment?
A) Paying off the highest interest rate balance first
B) Ignoring interest rates
C) Paying off the lowest interest rate balance first
D) Paying off accounts alphabetically
  • 4. What is a balance transfer?
A) Moving debt from one card to another
B) Ignoring your debt
C) Paying off all your debt immediately
D) Spending more than you earn
  • 5. What is a debt consolidation loan?
A) Canceling all your credit cards
B) Combining multiple debts into one loan
C) Adding more debt to your credit cards
D) Filing for bankruptcy
  • 6. Why is it important to stop using your credit cards while paying down debt?
A) To avoid paying annual fees
B) To punish yourself
C) To prevent accumulating more debt
D) To improve your credit score immediately
  • 7. What is the advantage of a lower interest rate?
A) Having a higher credit limit
B) Paying more in interest charges
C) Paying less in interest charges
D) Earning more rewards points
  • 8. How can you negotiate a lower interest rate with your credit card company?
A) Threaten to close your account without asking
B) Refuse to pay your bill
C) Ignore your credit card statements
D) Call and ask for a lower rate
  • 9. What is a hardship program offered by credit card companies?
A) A complete forgiveness of your debt
B) A free vacation
C) Temporary assistance for financial difficulties
D) A permanent increase in your credit limit
  • 10. What is a debt management plan?
A) A plan managed by a credit counseling agency
B) A plan to ignore your creditors
C) A plan to avoid all payments
D) A plan to accumulate more debt
  • 11. What is a potential downside of a debt consolidation loan?
A) Automatically improves your credit score
B) Requires no payments
C) Always lowers your interest rate
D) May require collateral
  • 12. What is the impact of making only minimum payments on credit card debt?
A) It takes longer and costs more in interest
B) It improves your credit score instantly
C) It has no impact on the total cost
D) It saves you money in the long run
  • 13. What is a good percentage of your income to allocate towards debt repayment?
A) 50% (if you're struggling to meet other expenses)
B) 15-20%
C) 0%
D) 5%
  • 14. How does your credit utilization ratio affect your credit score?
A) Higher utilization is better
B) Utilization only matters if you have late payments
C) Utilization has no impact on credit score
D) Lower utilization is better
  • 15. What is a credit utilization ratio?
A) The total amount of debt you owe
B) Your interest rate on your credit card
C) The amount of credit used vs. available credit
D) The number of credit cards you own
  • 16. What does 'APR' stand for?
A) Automated Payment Reminder
B) Annual Payment Reduction
C) Annual Percentage Rate
D) Approved Payment Request
  • 17. What is the danger of using credit cards for cash advances?
A) Lower interest rates than purchases
B) High fees and interest rates
C) No fees charged
D) Earning extra rewards points
  • 18. Which of the following is NOT a way to free up money for debt repayment?
A) Finding a higher-paying job
B) Selling unwanted items
C) Reducing discretionary spending
D) Increasing spending
  • 19. What is a potential consequence of defaulting on your credit card debt?
A) Automatic debt forgiveness
B) Increased credit limit
C) Damaged credit score
D) Free money from the credit card company
  • 20. How often should you review your credit report?
A) Every day
B) Never
C) Once a decade
D) At least once a year
  • 21. What should you look for on your credit report?
A) Coupons and discounts
B) Funny jokes
C) Errors and unauthorized accounts
D) Recipes and cooking tips
  • 22. What is the first thing you should do if you suspect credit card fraud?
A) Contact your credit card company
B) Ignore the charges
C) Blame your family members
D) Pay the fraudulent charges
  • 23. What is the effect of closing a credit card account on your credit score?
A) Has no effect on your credit score
B) May lower your credit score
C) Always improves your credit score
D) Automatically forgives your debt
  • 24. Is it better to pay more than the minimum payment on your credit card?
A) No, the minimum payment is sufficient
B) Yes, to pay off the debt faster and save on interest
C) Only pay when you feel like it
D) It doesn't matter how much you pay
  • 25. What is the primary goal of reducing credit card debt?
A) Buy expensive things
B) Impress your friends
C) Accumulate more rewards points
D) Achieve financial freedom
  • 26. Which strategy involves making extra payments throughout the month?
A) The Quantum Leap
B) The Time Warp
C) Micro-payments
D) The Moon Landing
  • 27. What is a 'grace period' on a credit card?
A) A period where the card company forgets your debt
B) A period where you can spend without limit
C) A period to pay your balance without interest
D) A period to accumulate more debt
  • 28. What is the benefit of automating credit card payments?
A) Earn bonus rewards points
B) Increase your credit limit immediately
C) Avoid late fees and missed payments
D) Lower your interest rate automatically
  • 29. How can improving your credit score help with debt repayment?
A) Automatically erase your debt
B) Increase your credit card limit
C) Qualify for lower interest rates
D) Eliminate the need to budget
  • 30. What's the impact of late payments on your credit score?
A) No impact
B) Causes free money to be issued
C) Negative impact
D) Positive impact
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