Understanding Credit Cards: A Beginner's Guide

What is the primary function of a credit card?

• To transfer money to others

• To save money

• To borrow money from the bank to make purchases

• To withdraw cash from your bank account

Why should you avoid credit cards with annual fees as your first credit card?

• They have lower interest rates

• They are easier to obtain

• They can negatively impact your credit score if you decide to close them

• They offer better rewards

What does APR stand for and why is it important?

• Annual Percentage Rate, it's the interest charged if you don't pay the full balance

• Annual Payment Requirement, it's the minimum you need to pay yearly

• Approved Purchase Rate, it's the limit of what you can spend

• Annual Percentage Return, it's the rewards percentage you earn

What is a foreign transaction fee?

• A mandatory tip for foreign services

• A tax imposed by the government on foreign purchases

• A fee for transactions made in foreign currencies

• A discount on purchases made abroad

Which banks are considered 'A tier' for their credit card services?

• All major banks

• Credit One and Capital One

• Only American Express

• Discover, American Express, and Chase

Which type of credit card is generally targeted towards individuals with no credit history?

• Travel credit cards

• Business credit cards

• Secured credit cards

• Rewards credit cards

What should you automatically set up with your bank once you receive and activate your credit card?

• A process to minimize your credit limit

• A direct deposit to the credit card company

• Automatic full payment of the statement balance each month

• An alert system for each transaction made

What is the consequence of not paying your credit card balance in full each month?

• You will be charged a high interest rate on the remaining balance

• You will receive cash back

• Your credit limit will increase

• You will earn more rewards

How does a billing cycle on a credit card typically function?

• There is no set cycle; it varies per transaction

• You must pay each purchase off immediately

• You receive a monthly statement of purchases to be paid by a due date

• You are billed yearly for all purchases

What should you do if you are denied a credit card?

• Stop applying for credit cards

• Apply for the same card again immediately

• Look for other credit card options suitable for your situation

• Immediately call the bank and demand approval