Credit and Financial Concepts Flashcard

Front

What is a credit card?

Back

A card issued by a financial institution that allows the cardholder to borrow funds to pay for goods and services with a promise to repay the borrowed amount, often with interest.

Front

What is a secured credit card?

Back

A credit card backed by a cash deposit, which serves as collateral and determines the card's credit limit.

Front

What is an unsecured credit card?

Back

A credit card that doesn’t require collateral, relying solely on the cardholder’s creditworthiness.

Front

Which of the following is a feature of a secured credit card?
Options:
It offers a higher credit limit without any deposit.
It requires a cash deposit as collateral.
It is only available to students.
It has no interest charges.

Back

It requires a cash deposit as collateral.

Front

What determines the credit limit of a secured credit card?

Back

The amount of cash deposit provided as collateral.

Front

Which type of credit card relies on the cardholder’s creditworthiness? Options: Secured credit card, Unsecured credit card, Prepaid credit card, Business credit card

Back

Unsecured credit card

Front

What is the primary benefit of using a credit card?

Back

It provides a way to borrow funds for purchases with a promise to repay later.

Front

Which of the following is NOT a characteristic of a credit card?
Options:
It allows for deferred payment of purchases.
It requires immediate payment of the full balance.
It may charge interest on unpaid balances.
It can help build credit history.

Back

It requires immediate payment of the full balance.

Front

What is the main difference between secured and unsecured credit cards?

Back

Secured cards require collateral, while unsecured cards do not.

Front

Which of the following is a potential disadvantage of using a credit card? It may lead to debt if not managed properly. It provides purchase protection. It offers rewards and cash back. It helps build credit history.

Back

It may lead to debt if not managed properly.