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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) Gamble to win money
B) Ignore the debt
C) Create a budget
D) Apply for more credit cards
  • 2. What is the 'snowball method' for debt repayment?
A) Paying off accounts randomly
B) Paying off the smallest balance first
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) Paying off accounts alphabetically
B) Ignoring interest rates
C) Paying off the highest interest rate balance first
D) Paying off the lowest interest rate balance first
  • 4. What is a balance transfer?
A) Paying off all your debt immediately
B) Ignoring your debt
C) Spending more than you earn
D) Moving debt from one card to another
  • 5. What is a debt consolidation loan?
A) Adding more debt to your credit cards
B) Filing for bankruptcy
C) Combining multiple debts into one loan
D) Canceling all your credit cards
  • 6. Why is it important to stop using your credit cards while paying down debt?
A) To prevent accumulating more debt
B) To improve your credit score immediately
C) To avoid paying annual fees
D) To punish yourself
  • 7. What is the advantage of a lower interest rate?
A) Having a higher credit limit
B) Paying less in interest charges
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) 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 complete forgiveness of your debt
B) Temporary assistance for financial difficulties
C) A free vacation
D) A permanent increase in your credit limit
  • 10. What is a debt management plan?
A) A plan to avoid all payments
B) A plan managed by a credit counseling agency
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 improves your credit score instantly
C) It saves you money in the long run
D) It takes longer and costs more in interest
  • 13. What is a good percentage of your income to allocate towards debt repayment?
A) 5%
B) 0%
C) 15-20%
D) 50% (if you're struggling to meet other expenses)
  • 14. How does your credit utilization ratio affect your credit score?
A) Lower utilization is better
B) Higher utilization is better
C) Utilization only matters if you have late payments
D) Utilization has no impact on credit score
  • 15. What is a credit utilization ratio?
A) The total amount of debt you owe
B) The amount of credit used vs. available credit
C) The number of credit cards you own
D) Your interest rate on your credit card
  • 16. What does 'APR' stand for?
A) Annual Percentage Rate
B) Annual Payment Reduction
C) Automated Payment Reminder
D) Approved Payment Request
  • 17. What is the danger of using credit cards for cash advances?
A) Earning extra rewards points
B) No fees charged
C) Lower interest rates than purchases
D) High fees and interest rates
  • 18. Which of the following is NOT a way to free up money for debt repayment?
A) Reducing discretionary spending
B) Finding a higher-paying job
C) Increasing spending
D) Selling unwanted items
  • 19. What is a potential consequence of defaulting on your credit card debt?
A) Automatic debt forgiveness
B) Damaged credit score
C) Free money from the credit card company
D) Increased credit limit
  • 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) 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) Blame your family members
B) Contact your credit card company
C) Ignore the charges
D) Pay the fraudulent charges
  • 23. What is the effect of closing a credit card account on your credit score?
A) Automatically forgives your debt
B) May lower your credit score
C) Has no effect on 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) It doesn't matter how much you pay
D) Yes, to pay off the debt faster and save on interest
  • 25. What is the primary goal of reducing credit card debt?
A) Achieve financial freedom
B) Accumulate more rewards points
C) Impress your friends
D) Buy expensive things
  • 26. Which strategy involves making extra payments throughout the month?
A) The Quantum Leap
B) The Moon Landing
C) Micro-payments
D) The Time Warp
  • 27. What is a 'grace period' on a credit card?
A) A period where the card company forgets your debt
B) A period where you can spend without limit
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) Increase your credit limit immediately
B) Earn bonus rewards points
C) Lower your interest rate automatically
D) Avoid late fees and missed payments
  • 29. How can improving your credit score help with debt repayment?
A) Automatically erase your debt
B) Eliminate the need to budget
C) Increase your credit card limit
D) Qualify for lower interest rates
  • 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
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