Question

john missed a payment on his credit card. a collection agency calls daily, but he ignores it. which of the following is a likely next step?
the lender cannot do anything beyond calling
the account may be sent to collections, impacting his credit score
the lender will forgive the debt after 30 days
john can increase his credit limit to cover the missed payment

which action helps reduce unnecessary credit costs?
always carrying a balance
increasing purchases when income rises
paying bills early
using all available credit offers

Explanation:

First Question (John missed a payment...):

• "The lender cannot do anything beyond calling" is incorrect as lenders/collection agencies can take further actions like sending to collections.
• "The account may be sent to collections, impacting his credit score" is correct. When a payment is missed and ignored, the account can be sent to collections, and this negatively affects the credit score.
• "The lender will forgive the debt after 30 days" is incorrect; lenders don't typically forgive debts just for missing a payment, especially if ignored.
• "John can increase his credit limit to cover the missed payment" is incorrect as increasing credit limit doesn't cover a missed payment (it's about available credit for future, not paying past due).

• "Always carrying a balance" increases costs (interest on balance).
• "Increasing purchases when income rises" can increase costs if not managed, not reduce.
• "Paying bills early" is correct. Paying early (especially credit card bills) avoids interest charges (if paid in full by due date, but even early payment reduces the time interest could accrue, or avoids late fees, thus reducing unnecessary costs).
• "Using all available credit offers" can lead to more debt and costs (fees, interest if not paid).

Answer:

The account may be sent to collections, impacting his credit score

Second Question (Which action helps reduce unnecessary credit costs?):