Subject: Business    / Finance

Directions: Using Microsoft® Word to save and submit your work, please provide detailed and
elaborate responses to the following questions. Your responses should include examples from
the reading assignments.
1. Define consumer credit and explain its advantages and disadvantages.
2. What are the two general rules of measuring credit capacity?
3. A friend comes to you for advice about improving his or her credit score. What advice
would you give to this friend? Make sure to include the five steps for improving your
credit score.
4. What are two key concepts to keep in mind as you shop for credit?
5. Explain the Rule of 78s.
6. Explain choices available in declaring bankruptcy.
7. What are the two basic types of credit? Give examples of both.
8. What are the three most common types of closed-end credit?
9. What is revolving check credit?
10. How can you protect yourself against debit/credit card fraud?
11. What are a few things to consider before you cosign a loan?
12. In what ways can you lower the risk to your lender in order to reduce your borrowing
13. Explain the concept of “float.”
14. Explain simple interest.
15. What can you do if you are unable to meet your credit obligations?
16. In open-end credit, what are the various systems creditors use to calculate the balance on
which they assess finance charges?
17. What are the various methods used to calculate interest?
Progress Problem (continuation from Module 2)
Obtaining Credit (p. 210)
Life Situation
Age: 23
No dependents
Graduate and Engaged Financial Data
Monthly Income: $1,750
Living Expenses: $1,210
Personal Property: $7,300
Savings: $5,000
Student Loan: $4,200
Credit Card Debt: $4,600 Shelby has now been out of college for about a year and has continued to work at the pet store
full time. She recently got engaged to Mark Lawrence. After the last year of saving, she now [INSERT TITLE HERE] 3
has an adequate emergency fund. However, in the last year, she and Mark both have used credit
cards to make many of their purchases. They used cards (they each have several) when they ran
out of money near the end of each month. They also used credit to fund a vacation to the beach.
Shelby justified the trip and many of her purchases because both of the cards she uses have
rewards programs. Both Shelby and Mark almost always make their payments on time, but have
been unable to pay off more than the minimum balance every month, leaving them with credit
card debt. Shelby and Mark would like to get married soon and possibly even buy a condo, but
are not sure how to finance these things while also starting Shelby’s Pet Salon.
Directions: Write a 1-page, double-spaced paper in 12 pt. font answering the following
questions. Please use APA format.
1. Given her current situation, list some suggestions on how Shelby can reduce her credit
card debt.
2. What is the best way for Shelby and Mark to become more aware of the effect of credit
card debt on their current and long-term financial situation?

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