Getting a Credit Card Lesson 8

Why is it a poor financial decision to pay only the minimum payment on your credit card?

• Because it helps you build credit faster

• Because it increases the total interest you pay over time

• Because it reduces your credit limit

• Because it eliminates your debt quickly

A Credit Card allows you to borrow money up to a certain limit, while a Debit Card lets you spend money from your own bank account. Which of the following best explains the difference between a Credit Card and a Debit Card?

• A Credit Card uses borrowed money; a Debit Card uses your own money.

• A Credit Card is only for online purchases; a Debit Card is for in-store purchases.

• A Credit Card requires a PIN for every transaction; a Debit Card does not.

• A Credit Card cannot be used internationally; a Debit Card can.

What is Revolving Credit?

• A type of loan that allows repeated borrowing up to a set limit

• A one-time loan paid back in installments

• A loan for purchasing a home

• A loan that must be paid back in full immediately

A credit card statement includes which of the following types of information?

• Personal identification number (PIN)

• List of transactions, payment due date, and total balance

• Bank account number only

• Social security number

What is a Credit Card Grace Period?

• A period when your credit card is blocked.

• A period during which you can pay your credit card bill without incurring interest charges.

• A time when you receive extra rewards on your credit card.

• A period when you cannot use your credit card.

A Credit Limit is:

• The maximum amount that can be borrowed on a credit account.

• The minimum payment required each month.

• The interest rate charged on a loan.

• The total amount spent in a year.

Which item is important to consider when selecting a credit card?

• Annual Percentage Rate (APR)

• Fees

• The look of the credit card

• Both APR and fees

An arrangement to receive cash, goods, or services now and pay for them in the future.

• Credit

• Asset

• Interest

• APR

What is a Billing Period?

• The time between two credit card statements

• The period that your charges are applied to your credit card

• The time it takes to process a credit card application

• The period during which interest is not charged

Credit is _____

• money you are given, and promise to pay back later.

• money you borrow and promise to pay back later.

• money you borrow and don't have to pay back later.

• None of the above.