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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 largest balance first
C) Paying off the smallest balance first
D) Paying off accounts randomly
  • 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) 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) Filing for bankruptcy
B) Adding more debt to your credit cards
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 prevent accumulating more debt
C) To improve your credit score immediately
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) Having a higher credit limit
D) Paying less in interest charges
  • 8. How can you negotiate a lower interest rate with your credit card company?
A) Threaten to close your account without asking
B) Call and ask for a lower rate
C) Ignore your credit card statements
D) Refuse to pay your bill
  • 9. What is a hardship program offered by credit card companies?
A) Temporary assistance for financial difficulties
B) A permanent increase in your credit limit
C) A complete forgiveness of your debt
D) A free vacation
  • 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) Always lowers your interest rate
B) Requires no payments
C) Automatically improves your credit score
D) May require collateral
  • 12. What is the impact of making only minimum payments on credit card debt?
A) It has no impact on the total cost
B) It takes longer and costs more in interest
C) It improves your credit score instantly
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) Utilization only matters if you have late payments
B) Higher utilization is better
C) Lower utilization is better
D) Utilization has no impact on credit score
  • 15. What is a credit utilization ratio?
A) The number of credit cards you own
B) Your interest rate on your credit card
C) The total amount of debt you owe
D) The amount of credit used vs. available credit
  • 16. What does 'APR' stand for?
A) Annual Percentage Rate
B) Approved Payment Request
C) Automated Payment Reminder
D) Annual Payment Reduction
  • 17. What is the danger of using credit cards for cash advances?
A) No fees charged
B) Lower interest rates than purchases
C) High fees and interest rates
D) Earning extra rewards points
  • 18. Which of the following is NOT a way to free up money for debt repayment?
A) Selling unwanted items
B) Reducing discretionary spending
C) Finding a higher-paying job
D) Increasing spending
  • 19. What is a potential consequence of defaulting on your credit card debt?
A) Automatic debt forgiveness
B) Free money from the credit card company
C) Increased credit limit
D) Damaged credit score
  • 20. How often should you review your credit report?
A) Never
B) At least once a year
C) Once a decade
D) Every day
  • 21. What should you look for on your credit report?
A) Funny jokes
B) Recipes and cooking tips
C) Errors and unauthorized accounts
D) Coupons and discounts
  • 22. What is the first thing you should do if you suspect credit card fraud?
A) Pay the fraudulent charges
B) Contact your credit card company
C) Ignore the 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) Automatically forgives your debt
C) Always improves 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) No, the minimum payment is sufficient
C) It doesn't matter how much you pay
D) Only pay when you feel like it
  • 25. What is the primary goal of reducing credit card debt?
A) Accumulate more rewards points
B) Buy expensive things
C) Achieve financial freedom
D) Impress your friends
  • 26. Which strategy involves making extra payments throughout the month?
A) The Quantum Leap
B) The Moon Landing
C) The Time Warp
D) Micro-payments
  • 27. What is a 'grace period' on a credit card?
A) A period to accumulate more debt
B) A period where you can spend without limit
C) A period where the card company forgets your 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) Earn bonus rewards points
C) Increase your credit limit immediately
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) Eliminate the need to budget
D) Qualify for lower interest rates
  • 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
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