Question

1. under the credit card act of 2009, overdraft fees cannot

a) exceed $20
b) exceed 5% of the total balance on the card
c) exceed the amount of the purchase that caused the overdraft
d) be charged for overdrafts under $100

1. many credit card companies charge an annual fee of between $20 and $70 for

a) the privilege of using the card
b) a single overdraft
c) a cash advance
d) the privilege of setting up a card for an additional user

1. credit cards offer a grace period of at least 21 days from the time the statement is closed and the bill

is calculated. if you pay your full balance within this grace period, you will not be charged
a) any overdraft fees
b) any cash advance fees
c) any balance transfer fees
d) any interest on your purchases

1. most credit cards charge interest rates of

a) 3% to 7%
b) 7% to 12%
c) 12% to 15%
d) 15% to 22%

1. sheyanne received her first credit card last month. she has a credit limit of $500, and will be charged

$5 for each cash advance she makes. she also has overdraft protection at a cost of $30 per transaction
over her credit limit. in her first week with the card, sheyanne made two cash advances, each for $120.
she also purchased $255 worth of clothes and shoes at a department store using her credit card. how
much will sheyanne be charged on her first bill?

1. radhas family owns a small gift shop that accepts credit cards. however, radhas family must pay

3% of all credit card purchases to the issuing credit card company. if a customer buys a total of $120
worth of merchandise with a credit card, how much will radhas family have to pay the credit card
company?

1. which of the following is necessary to pay off debt?

a) a low interest rate
b) debt consolidation
c) a credit check
d) a greater cash inflow than outflow

Explanation:

Question 16

Step1: Calculate cash - advance fees

She made 2 cash advances, each with a $5 fee. So the cash - advance fee is \(2\times5=\$10\).

Step2: Check for overdraft

Her credit limit is $500. She made two cash advances of $120 each (\(2\times120 = 240\)) and a purchase of $255. The total amount is \(240 + 255=\$495\). Since \(495<500\), there is no overdraft fee.

Step3: Calculate total charges

The total charges are just the cash - advance fees.

Step1: Use the percentage formula

The formula for finding a percentage of a number is \(A = P\times B\), where \(P\) is the percentage (in decimal form) and \(B\) is the base amount. Here, \(P = 0.03\) (since \(3\%=3\div100 = 0.03\)) and \(B=\$120\).

Step2: Calculate the amount

\(A=0.03\times120\)

• A low interest rate (A) can help, but it's not a necessity. Debt consolidation (B) is a strategy, not a necessity. A credit check (C) is for assessing creditworthiness, not for paying off debt.
• To pay off debt, you need more money coming in (cash inflow) than going out (cash outflow). If cash inflow > cash outflow, the excess can be used to pay down debt.

Answer:

\(\$10\)

Question 17