What is a Credit Card

Multiple Choice

What is a credit card?

• A card that allows consumers to pay bills online

• A card that allows consumers to withdraw cash from ATMs

• A card that allows consumers to transfer money to other people

• A card that allows consumers to purchase goods and services

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How can you get a credit card?

• By applying for a credit card through a bank or financial services company

• By requesting a credit card from a friend or family member

• By winning a credit card in a lottery

• By finding a credit card on the street

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What is a credit limit?

• The minimum amount a person can borrow on a credit card

• The fee charged for using a credit card

• The interest rate charged on a credit card

• The maximum amount a person can borrow on a credit card

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What happens when you use your credit card?

• You have to pay the full amount immediately

• You earn reward points for every purchase made

• You receive cash back for every purchase made

• You authorize the credit card company to pay the purchase on your behalf

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What is the consequence of not paying the credit card bill in full?

• Accrued interest and additional charges

• The credit card company will increase your credit limit

• No consequences, the credit card company will forgive the debt

• The credit card will be canceled and you will not be able to use it again

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What does the interest rate on a credit card depend on?

• The number of purchases made with the credit card

• Credit history and income

• The amount of money in your bank account

• The number of credit cards you own

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What are the advantages of using credit cards?

• Quick access to money, ability to shop in store or online, and potential rewards

• Ability to pay bills online, ability to earn interest on the credit balance, and no fees

• Ability to invest in stocks and bonds, ability to get a mortgage, and high credit limits

• Ability to withdraw cash from ATMs, ability to transfer money to other people, and low interest rates

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What are the costs of using credit cards?

• No costs, credit cards are completely free to use

• Low interest rates and no fees, potential credit score improvement

• High interest rates and fees, potential overspending and debt

• No costs, credit card companies pay you to use their cards

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How should credit cards be used to reap the benefits?

• Smartly, cautiously, and carefully to avoid overspending

• Frequently and for all purchases to maximize rewards

• For emergency purposes only, not for regular shopping

• To borrow as much money as possible and delay repayment

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What should you watch out for when using credit cards?

• Using the credit card only for cash withdrawals

• Overspending and taking on too much debt

• Not using the credit card at all

• Paying the credit card bill in full every month