Financial Literacy Flashcard

Front

What is the main difference between credit cards and debit cards?

Back

With debit cards, you're spending your own money at point of sale, but with credit cards, you're getting a loan that you need to pay back later.

Front

What is the average APR for a payday loan?

Back

The average APR for a payday loan is closest to 400%.

Front

If David has a credit card with a $1000 credit limit and an outstanding balance of $800, what is the maximum amount he can spend?

Back

$200.

Front

What can happen if you neglect to pay your federal student loans?

Back

Wages or tax refunds can be garnished.

Front

What is a key characteristic of credit cards regarding payments?

Back

Making full payments on-time every month is the only way to avoid interest charges.

Front

What does APR stand for in financial terms?

Back

Annual Percentage Rate.

Front

What is a consequence of high-interest debt?

Back

It can lead to financial instability and difficulty in making payments.

Front

What is the purpose of a credit score?

Back

A credit score is used to determine a person's creditworthiness.

Front

What is a budget?

Back

A budget is a plan for managing income and expenses.

Front

What is the difference between secured and unsecured loans?

Back

Secured loans are backed by collateral, while unsecured loans are not.