U2 P7 & P8 Credit Cards

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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, with the obligation to repay the borrowed amount plus any applicable interest.

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

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A credit card allows you to borrow money up to a certain limit, while a debit card withdraws money directly from your bank account.

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What is the concept of credit limit?

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The credit limit is the maximum amount of credit that a financial institution extends to a client on a credit card.

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What is APR in relation to credit cards?

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APR stands for Annual Percentage Rate, which is the interest rate charged on borrowed money, expressed as a yearly rate.

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What is a minimum payment on a credit card?

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The minimum payment is the smallest amount of money that must be paid on a credit card bill to keep the account in good standing.

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What happens if you only make the minimum payment on your credit card?

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If you only make the minimum payment, you will incur interest on the remaining balance, which can lead to long-term debt.

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What is a grace period in credit cards?

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A grace period is the time during which you can pay your balance in full without incurring interest charges.

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What is a cash advance on a credit card?

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A cash advance is a service provided by credit card issuers that allows cardholders to withdraw cash, usually at a high-interest rate.

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What is the impact of late payments on credit cards?

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Late payments can result in late fees, increased interest rates, and a negative impact on your credit score.

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What is a credit score?

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A credit score is a numerical representation of a person's creditworthiness, based on their credit history.