U7/U4p2 on cars, credit cards, Interest (Real word

Front

What is a credit card?

Back

A credit card is a payment card that allows the cardholder to borrow funds from a pre-approved limit to pay for goods and services, with the obligation to pay back the borrowed amount plus interest if not paid in full by the due date.

Front

What is a debit card?

Back

A debit card is a payment card that deducts money directly from the user's bank account to pay for a transaction, meaning it uses the cardholder's own funds.

Front

What does 'monthly' mean in terms of frequency?

Back

Monthly means occurring 12 times a year.

Front

How do you convert a percentage to a decimal?

Back

To convert a percentage to a decimal, divide the percentage by 100. For example, 4.3% becomes 0.043.

Front

What is the formula for calculating interest?

Back

The formula for calculating interest is I = PRT, where I is the interest, P is the principal amount, R is the rate of interest, and T is the time in years.

Front

What does the 'I' in the interest formula stand for?

Back

The 'I' in the interest formula stands for Interest.

Front

What is the principal in the context of loans and interest?

Back

The principal is the original sum of money borrowed or invested, before interest.

Front

What is the difference between fixed and variable interest rates?

Back

A fixed interest rate remains the same throughout the term of the loan, while a variable interest rate can change based on market conditions.

Front

What is an example of a situation where you would use a credit card?

Back

Using a credit card to make a large purchase, such as electronics, and paying it off over time while managing interest.

Front

What is the impact of not paying a credit card balance in full?

Back

Not paying a credit card balance in full can result in interest charges on the remaining balance, leading to increased debt.