PFIN 6.03

Sarah will turn 18 next month. She plans to apply for a credit card. Which statement is true?

• Sarah cannot obtain a credit card until she turns 21.
• Sarah will need to use a special application since she is under 25.
• Sarah can only obtain a credit card if she has a co-signer or proof of sufficient income to make therequired payments.
• Sarah can obtain a credit card by filling out an application as long as she waits until after her 18thbirthday.

Paying the minimum payment on a credit card every month will:

• pay a large percentage of the total balance owed every month
• make the final amount paid substantially higher than the amount initially charged to the card
• help the cardholder create a plan for paying of a credit card in a decent amount of time
• allow the cardholder to avoid paying any interest charges

Megan’s credit card statement indicates that she is now paying a Penalty APR. Which scenario best describes what may have happened?

• Megan’s missed making her January and February credit card payments while she was participating inher college’s Study Abroad program when the friend she left in charge of sending the payments in forgot.
• Megan’s credit card payment has been paid in full each of the last 6 months.
• Megan’s card had a lower introductory interest rate for the first year and now the interest rate hasincreased, as stated on her contract.
• The new computer Megan purchased made her account go over the credit limit for 1 week, until the creditcard company processed her credit card statement.

Tyler is trying to be responsible in using his new credit card and has heard there is a way to avoid paying interest on the things he charges. How can he LEGALLY avoid paying interest when using his credit card?

• Tyler needs to make sure he pays the minimum balance every month before the due date on the creditcard statement.
• Tyler needs to pay the credit card balance in full every month before the due date listed on the credit card statement.
• Tyler needs to limit the use of his credit cards to balance transfers only.
• Tyler needs to understand that the use of a credit card requires paying interest. There is not legal way forhim to avoid paying interest if he uses his card during the billing cycle.