Section 3: Debt Management

1: What is debt?

A form of income

Money you owe to others

Money you saved in a bank account

A type of investment

2: What does APR stand for?

Average Personal Revenue

Annual Percentage Rate

Advanced Payment Ratio

All Purpose Rate

3: Which strategy can help reduce debt faster?

Making only the minimum payments

Ignoring debt entirely

Paying off the highest interest rate debts first

Borrowing more money

4: What is a common reason to take on debt?

To fund vacations and luxury items

To increase personal savings

To invest in education or a home

To give money away to friends

5: How does leveraging debt work?

It involves avoiding all forms of debt

Borrowing money to make investments that could potentially yield higher returns

Paying off all debts in one lump sum

Using debt to buy unnecessary items

6: What is a possible consequence of not repaying debt on time?

Improved credit score

Lower interest rates

Late fees and a negative impact on credit score

Debt forgiveness

7: Which debt is generally considered “good debt”?

High-interest credit card debt

Unpaid medical bills

Mortgage for a home

Personal loans for vacations

8: Which type of interest remains constant throughout the life of a loan?

Variable interest

Fixed interest

Fluctuating interest

Accrued interest

9: How does a grace period on a credit card work?

It’s a period during which no interest is charged on new purchases

It’s a time when credit card payments are doubled

It’s the time after the credit card due date when no payments are accepted

It’s the time during which credit card interest rates increase

10: Which debt repayment strategy involves combining multiple debts into a single monthly payment?

Debt consolidation

Debt acceleration

Debt forgiveness

Debt diversification