Credit card companies make a profit in all the following ways except by:

Credit card companies make a profit in all the following ways except by
 A) collecting fees for cash advances, balance transfers, and late payments.
  B) collecting fees from stores for accepting credit card transactions.
  C) collecting fees for processing new cardholder applications.
  D) collecting finance charges on any unpaid balances or cash advances.

Q. 2

A persons debt-to-income ratio is the percent of income spent on housing and other debts and is calculated by
 A) dividing the total of all debt payments by net income.
  B) dividing the total of all debt payments by gross income.
  C) dividing gross income by the total of all debt payments.
  D) dividing the total of all credit card payments by gross income.

Q. 3

Which of the following is NOT a strategy for managing or reducing debt?
 A) Use a debit card instead of cash.
  B) Transfer high interest credit card balances to lower interest accounts.
  C) Pay more than the minimum payment on credit cards.
  D) Pay off credit cards with the highest interest rates first.

Q. 4

Which of the following reasons might be used to discourage a friend from getting a cash advance on a credit card?
 A) interest charges begin accumulating immediately
  B) payments are applied to any purchase balance before the cash advance balance creating higher finance charges
  C) the interest rate for cash advances is higher than for purchases
  D) all of the above

Q. 5

Which method for calculating finance charges will result in lower finance charges if you pay your bill earlier in the billing cycle?
 A) adjusted balance method
  B) average daily balance method
  C) previous balance method
  D) none of the above