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