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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) Apply for more credit cards
B) Create a budget
C) Gamble to win money
D) Ignore the debt
  • 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 accounts randomly
D) Paying off the smallest balance first
  • 3. What is the 'avalanche method' for debt repayment?
A) Paying off accounts alphabetically
B) Paying off the highest interest rate balance first
C) Paying off the lowest interest rate balance first
D) Ignoring interest rates
  • 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) Combining multiple debts into one loan
B) Canceling all your credit cards
C) Filing for bankruptcy
D) Adding more debt to 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 punish yourself
C) To improve your credit score immediately
D) To prevent accumulating more debt
  • 7. What is the advantage of a lower interest rate?
A) Earning more rewards points
B) Having a higher credit limit
C) Paying more in interest charges
D) Paying less in interest charges
  • 8. How can you negotiate a lower interest rate with your credit card company?
A) Ignore your credit card statements
B) Call and ask for a lower rate
C) Threaten to close your account without asking
D) Refuse to pay your bill
  • 9. What is a hardship program offered by credit card companies?
A) A permanent increase in your credit limit
B) Temporary assistance for financial difficulties
C) A complete forgiveness of your debt
D) A free vacation
  • 10. What is a debt management plan?
A) A plan to ignore your creditors
B) A plan to accumulate more debt
C) A plan to avoid all payments
D) A plan managed by a credit counseling agency
  • 11. What is a potential downside of a debt consolidation loan?
A) Requires no payments
B) Automatically improves your credit score
C) May require collateral
D) Always lowers your interest rate
  • 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) 15-20%
B) 5%
C) 50% (if you're struggling to meet other expenses)
D) 0%
  • 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) Your interest rate on your credit card
B) The total amount of debt you owe
C) The number of credit cards you own
D) The amount of credit used vs. available credit
  • 16. What does 'APR' stand for?
A) Approved Payment Request
B) Annual Payment Reduction
C) Annual Percentage Rate
D) Automated Payment Reminder
  • 17. What is the danger of using credit cards for cash advances?
A) Earning extra rewards points
B) High fees and interest rates
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) Finding a higher-paying job
B) Selling unwanted items
C) Increasing spending
D) Reducing discretionary spending
  • 19. What is a potential consequence of defaulting on your credit card debt?
A) Free money from the credit card company
B) Increased credit limit
C) Damaged credit score
D) Automatic debt forgiveness
  • 20. How often should you review your credit report?
A) At least once a year
B) Every day
C) Never
D) Once a decade
  • 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) Ignore the charges
C) Blame your family members
D) Contact your credit card company
  • 23. What is the effect of closing a credit card account on your credit score?
A) Has no effect on your credit score
B) Always improves your credit score
C) May lower your credit score
D) Automatically forgives your debt
  • 24. Is it better to pay more than the minimum payment on your credit card?
A) Only pay when you feel like it
B) No, the minimum payment is sufficient
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) Impress your friends
B) Buy expensive things
C) Accumulate more rewards points
D) Achieve financial freedom
  • 26. Which strategy involves making extra payments throughout the month?
A) The Time Warp
B) The Moon Landing
C) Micro-payments
D) The Quantum Leap
  • 27. What is a 'grace period' on a credit card?
A) A period to pay your balance without interest
B) A period where you can spend without limit
C) A period where the card company forgets your debt
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) Earn bonus rewards points
D) Lower your interest rate automatically
  • 29. How can improving your credit score help with debt repayment?
A) Eliminate the need to budget
B) Increase your credit card limit
C) Automatically erase your debt
D) Qualify for lower interest rates
  • 30. What's the impact of late payments on your credit score?
A) Negative impact
B) No impact
C) Positive impact
D) Causes free money to be issued
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