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) Create a budget
B) Apply for more credit cards
C) Ignore the debt
D) Gamble to win money
  • 2. What is the 'snowball method' for debt repayment?
A) Paying only the minimum on all accounts
B) Paying off the smallest balance first
C) Paying off accounts randomly
D) Paying off the largest balance first
  • 3. What is the 'avalanche method' for debt repayment?
A) Paying off accounts alphabetically
B) Paying off the lowest interest rate balance first
C) Paying off the highest interest rate balance first
D) Ignoring interest rates
  • 4. What is a balance transfer?
A) Spending more than you earn
B) Paying off all your debt immediately
C) Ignoring your debt
D) Moving debt from one card to another
  • 5. What is a debt consolidation loan?
A) Filing for bankruptcy
B) Canceling all your credit cards
C) Adding more debt to 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) Earning more rewards points
B) Having a higher credit limit
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) Call and ask for a lower rate
B) Threaten to close your account without asking
C) Ignore your credit card statements
D) Refuse to pay your bill
  • 9. What is a hardship program offered by credit card companies?
A) A complete forgiveness of your debt
B) A free vacation
C) A permanent increase in your credit limit
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 ignore your creditors
C) A plan to accumulate more debt
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) Always lowers your interest rate
D) Requires no payments
  • 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) 15-20%
B) 0%
C) 50% (if you're struggling to meet other expenses)
D) 5%
  • 14. How does your credit utilization ratio affect your credit score?
A) Utilization has no impact on credit score
B) Lower utilization is better
C) Utilization only matters if you have late payments
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 number of credit cards you own
D) The total amount of debt you owe
  • 16. What does 'APR' stand for?
A) Annual Percentage Rate
B) Annual Payment Reduction
C) Approved Payment Request
D) Automated Payment Reminder
  • 17. What is the danger of using credit cards for cash advances?
A) Earning extra rewards points
B) Lower interest rates than purchases
C) No fees charged
D) High fees and interest rates
  • 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) Increased credit limit
B) Automatic debt forgiveness
C) Free money from the credit card company
D) Damaged credit score
  • 20. How often should you review your credit report?
A) Every day
B) Once a decade
C) Never
D) At least once a year
  • 21. What should you look for on your credit report?
A) Errors and unauthorized accounts
B) Funny jokes
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) 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) Automatically forgives your debt
B) Has no effect on your credit score
C) May lower your credit score
D) Always improves your credit score
  • 24. Is it better to pay more than the minimum payment on your credit card?
A) No, the minimum payment is sufficient
B) Only pay when you feel like it
C) Yes, to pay off the debt faster and save on interest
D) It doesn't matter how much you pay
  • 25. What is the primary goal of reducing credit card debt?
A) Accumulate more rewards points
B) Impress your friends
C) Achieve financial freedom
D) Buy expensive things
  • 26. Which strategy involves making extra payments throughout the month?
A) The Time Warp
B) Micro-payments
C) The Quantum Leap
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 to accumulate more debt
C) A period to pay your balance without interest
D) A period where the card company forgets your debt
  • 28. What is the benefit of automating credit card payments?
A) Lower your interest rate automatically
B) Avoid late fees and missed payments
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) Increase your credit card limit
C) Automatically erase your debt
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
Created with That Quiz — the site for test creation and grading in math and other subjects.