Understanding Family Expenses and Credit

Front

Which of the following is an example of a planned expenditure that is typically paid monthly? Car insurance premium, College tuition, Electricity bill, Magazine subscription

Back

Electricity bill

Front

What is the main difference between a debit card and a credit card?

Back

Debit card purchases are deducted immediately from your bank account, while credit card purchases are billed later.

Front

Which of the following is considered "good debt"? Borrowing money to buy a designer handbag, Taking out a loan to start a small business, Using a credit card to pay for a vacation, Financing a new car with a high-interest loan

Back

Taking out a loan to start a small business

Front

What is the consequence of carrying a balance on a credit card?

Back

You are charged interest on the unpaid balance.

Front

Which type of credit requires a lump-sum payment for the full amount owed? Options: Installment closed-end credit, Revolving open-end credit, Noninstallment credit, Secured credit

Back

Noninstallment credit

Front

What is an annual fee in the context of credit cards?

Back

A yearly fee charged for having certain credit cards.

Front

Which of the following is a potential benefit of using credit? Immediate access to funds for large purchases, No need to repay the borrowed amount, Guaranteed approval for future loans, No interest charges on any balance

Back

Immediate access to funds for large purchases

Front

What is the purpose of an overdraft protection plan?

Back

To allow purchases even if there are insufficient funds in a bank account

Front

Which of the following is an example of an unplanned expense? Monthly internet bill, Annual magazine subscription, Emergency car repair, Quarterly tax payment

Back

Emergency car repair

Front

What is a finance charge in the context of credit?

Back

The total dollar amount paid to use credit