Module 7
1.! Pick examples of “debt that may be necessary” for most people from the choices
below. Answer _____
a.
!
A mortgage to purchase a home.
b.
!
Reasonable student loans to complete a college education.
2.! Why is carrying a balance on a credit card considered a “debt to avoid”
Answer _____
a.
!
Because of the high interest rate.
b.
!
Because if you make a late payment, the credit card company may raise your
interest rate to around 30% APR.
c.
!
Because the credit card company would be able to repossess your car if you
stopped making payments on your credit card.
d.
!
A and b above
3.! Why are Rent-to-Own contracts, Auto Title Loans, and Payday Loans “debts to
avoid”. Answer ____
a.
!
Because the business locations are sometimes hard to find.
b.
!
Because they are very expensive.
c.
!
Because the loan activity is not reported to the credit reporting agencies.
d.
!
B and c above are correct.
!
Name _____________________ WSUID______________________
!