Understanding Credit Card Basics

Front

What is the primary function of a credit card?

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To borrow money for purchases and pay back over time

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What is an "Annual Fee" in terms of a credit card?

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A yearly charge by the credit card company for using the card.

Front

Which of the following best defines "Credit Limit"?

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The maximum amount you can charge on a credit card.

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How does a debit card differ from a credit card?

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It deducts money directly from your checking account.

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What is the purpose of the "Verification Number" on a credit card?

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To prevent unauthorized transactions online or by phone

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What happens if you only pay the "Minimum Payment" on your credit card bill?

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You keep the card active but incur interest on the remaining balance.

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What does "Interest Rate" refer to on a credit card?

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The percentage of the balance charged if not paid in full.

Front

Which part of a credit card helps prevent it from being counterfeited?

Back

Hologram

Front

What is the "Due Date" on a credit card statement?

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The date your payment is due to avoid a late fee.

Front

What is a "Late Payment Fee"?

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A fee for not paying your bill by the due date.