Understanding Loans and Credit Cards

What is the primary purpose of a credit card?

• To earn interest on savings

• To borrow money for purchases

• To invest in stocks

• To pay off a mortgage

Which of the following is a common feature of an auto loan?

• No interest rate

• Fixed monthly payments

• Unlimited borrowing limit

• No credit check required

What is the term used to describe the cost of borrowing money on a loan or credit card?

• Principal

• Interest

• Dividend

• Equity

Which of the following is a benefit of paying off your credit card balance in full each month?

• Higher interest charges

• Improved credit score

• Increased credit limit

• Longer repayment period

What is the term for the initial amount of money borrowed on a loan?

• Interest

• Principal

• Dividend

• Premium

Which of the following factors can affect your credit score?

• The color of your car

• Your payment history

• The number of siblings you have

• Your favorite food

What is the grace period on a credit card?

• The time between billing cycles

• The time you have to pay your bill without incurring interest

• The time it takes to receive your card after applying

• The time before your credit limit is increased

Which of the following is a disadvantage of using a credit card?

• Building a credit history

• Earning rewards points

• Potential for high-interest debt

• Convenience in making purchases

What is an Annual Fee in the context of credit cards?

• A. A one-time charge for opening a credit card account

• B. A monthly charge for using a credit card

• C. A bank charge for use of a credit card levied each year, billed to the customer's monthly statement

• D. A fee charged for late payments on a credit card

What is the table that defines all of the features of a credit card?

• Schumer Box

• Terms and Conditions

• Application Details