Finanacial Literacy

Front

When you use a debit card, money is pulled directly from of your checking account.

Back

True

Answer explanation

True. A debit card directly withdraws money from your checking account when you make a purchase, unlike a credit card which borrows funds.

Front

Cash is safer and more convenient than using a debit or credit card.

Back

False

Answer explanation

Using cash can be risky due to theft or loss, while debit and credit cards offer fraud protection and convenience. Therefore, the statement that cash is safer and more convenient is false.

Front

When you use credit for payment, you borrow money and pay back in smaller amounts over time.

Back

True

Answer explanation

True. Using credit means you borrow money to make a purchase and agree to pay it back in smaller installments over time, which is the essence of credit transactions.

Front

You visit an ATM and withdraw $150 from your checking account. Is this an example of using debit or credit?

Back

debit

Answer explanation

Withdrawing $150 from your checking account uses your own funds directly, which is a debit transaction. In contrast, credit involves borrowing money. Therefore, this is an example of using debit.

Front

You visit a mechanic and discover your car needs new brake pads. You pay for the service with a card. The service then shows up on a monthly bill for the card. Is this an example of using debit or credit?

Back

credit

Answer explanation

This is an example of using credit because the service charge appears on a monthly bill for the card, indicating that you borrowed money to pay for the brake pads, which you will pay back later.

Front

If you forget to pay your monthly credit card bill by its due date, the bank won't care and there will be no extra fees to pay.

Back

False

Answer explanation

The statement is false. If you forget to pay your credit card bill by the due date, the bank typically charges late fees and may affect your credit score.

Front

One benefit to using credit is it allows you to purchase BIG items like a house or car. You can then make smaller monthly payments and pay it off over a longer period of time.

Back

True

Answer explanation

True. Using credit allows you to buy large items like a house or car, enabling you to make smaller monthly payments over time, making these purchases more manageable.

Front

Your mom takes the family dog to the vet for shots and minor surgery. The cost of the vet visit shows up on a monthly bill and must be repaid in full by the end of the month to avoid paying interest. Did your mom pay using debit or credit?

Back

credit

Answer explanation

Your mom likely used credit because the vet bill must be repaid in full by the end of the month to avoid interest, indicating she financed the payment rather than using available funds directly from her bank account.

Front

Your older brother visits the bank to take out a loan to buy a new camper. Is this an example of using debit or credit?

Back

credit

Answer explanation

Taking out a loan to buy a camper is an example of using credit, as your brother is borrowing money from the bank that he will need to pay back later, rather than using his own funds directly.

Front

One benefit to using credit is it can be used as a back-up payment option should your debit card get denied.

Back

True

Answer explanation

True. Using credit as a back-up payment option is beneficial because it allows you to complete a transaction if your debit card is denied, providing financial flexibility in emergencies.