Financial Literacy Review

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What is a debit card?

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A debit card is a payment card that deducts money directly from a consumer's checking account to pay for a purchase. It is like a check but comes out of your account automatically, is more convenient than a check, and requires a PIN number for transactions.

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What is a credit card?

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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. The cardholder must repay the borrowed amount, usually with interest, at a later date.

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What is a credit score?

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A credit score is a number assigned to a person that indicates to lenders their capacity to repay a loan. It is based on credit history and other financial behaviors.

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What is the difference between credit and debit?

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Credit allows you to borrow money up to a certain limit to make purchases, while debit uses your own money directly from your bank account.

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What is a credit report?

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A credit report is a detailed report of an individual's credit history, including information about credit accounts, payment history, and outstanding debts.

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What is a credit history?

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Credit history is a record of a borrower's responsible repayment of debts. It includes information about credit accounts, payment history, and any bankruptcies.

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What is a credit bureau?

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A credit bureau is an organization that collects and maintains individual credit information and provides it to lenders to help them assess creditworthiness.

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What does it mean to avoid carrying cash?

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Avoiding carrying cash means using alternative payment methods, such as debit or credit cards, to make purchases without needing physical money.

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What happens when you use a debit card?

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When you use a debit card, the amount of the purchase is deducted directly from your checking account, reducing your available balance.

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What happens when you use a credit card?

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When you use a credit card, you are borrowing money from the credit card issuer to make a purchase, which you will need to repay later.