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