Practice Test GeeksCCDS - Certified Consumer Debt Specialist Practice Test
← All CCDS Flashcard Decks

Consumer Debt Products & Interest Calculations Flashcards

7 cards from real CCDS practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Consumer Debt Products & Interest Calculations flashcards as text

  1. Which of the following best describes a home equity line of credit (HELOC)?

    Answer: A revolving credit line secured by the borrower's home equity

    A HELOC is a revolving credit facility secured by the borrower's home equity, allowing draws up to a set limit during the draw period.

  2. A consumer's credit utilization ratio is calculated as:

    Answer: Total revolving balances divided by total revolving credit limits

    Credit utilization = total revolving balances ÷ total revolving credit limits, expressed as a percentage, and significantly impacts credit scores.

  3. Under the CARD Act, how much advance notice must a credit card issuer provide before increasing a cardholder's interest rate?

    Answer: 45 days

    The Credit CARD Act requires issuers to provide at least 45 days advance notice before increasing the APR on future purchases.

  4. A consumer owes $8,000 on a credit card with 20% APR and makes only the minimum payment of 2% of the balance each month. The primary risk is:

    Answer: The consumer will pay far more than $8,000 in total due to interest accumulation

    Minimum-only payments on high-APR balances extend repayment for decades and multiply the total interest paid, often several times the original principal.

  5. Which type of student loan carries a fixed interest rate set by Congress and is not based on the borrower's credit history?

    Answer: Federal Direct Loan

    Federal Direct Loans have congressionally set fixed rates and require no credit check, unlike private student loans that are credit-based.

  6. A balloon loan is characterized by:

    Answer: A large lump-sum payment due at the end of the loan term

    Balloon loans feature relatively small periodic payments followed by one large 'balloon' payment of the remaining principal at maturity.

  7. When a creditor 'charges off' a consumer debt, it means the creditor has:

    Answer: Written the balance off as a loss for accounting purposes, but the debt remains legally owed

    A charge-off is an accounting entry where the creditor declares the debt uncollectible for bookkeeping purposes; the consumer still legally owes the balance.