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