PFL FP Post-Test Mod 6

Which answer best describes a credit card?

• A credit card is a cheap way to borrow money

• A credit card is a convenient way to pay for things sometimes and also allows you to spend like you're a millionaire.

• A credit card is a very expensive way to borrow money

• A credit card gives you unlimited spending

With a debit or ATM card, you are spending your own money. With a credit card, you are always borrowing money

• True

• False

Which of these choices shows the smartest thinking?

• I use my credit card very carefully and I always pay my credit card bill the minute I get it.

• I use my credit card very carefully and I always pay my credit card bill the day it is due

• I use my credit card for impulse shopping.

• I use my credit card to help my friends buy stuff they cannot afford.

Which of these choices shows the smartest thinking?

• I always use my credit card to finance purchases.

• I use my credit card to build my credit and for convenience. But I try to never finance purchases with it. If I really do need to finance an important purchase, I go to my credit union or bank and try to get a loan that is much cheaper than financing on my credit card.

• I use my credit card to finance my vacations and pay for the vacation monthly

• I use my credit card when I really want something, even though I don't need it, and am short of cash.

Which answer defines a credit card's "grace period"?

• If I pay off my entire credit card bill before the grace period ends, I don't have to pay interest on the money I've borrowed from the credit card company every time I've charged something.

• If my payment isn't credited before this date, my payment will be late.

• A credit card's grace period is a very expensive way to borrow money.

• If I act "gracefully" when I pay my bill I will not be charged interest on my credit card

Select the correct statement:

• I should never, ever, be late on a credit card payment

• I should always try to pay off my credit card bill in full each month.

• If I can't pay my credit card balance off in full each month, I should pay as much as I can.

• All of the above

What should I do if I cannot pay off my credit card bill in full?

• I should get a cash advance on another credit card and pay the bill

• I should stop using my credit card until I can pay off the bill.

• What's to worry about? I'm going to charge just a little bit more and worry about it next month.

• None of the above.

Which defines a "credit limit"?

• The total amount you are authorized to charge on a credit card. For instance, if your credit limit is $1,000, you could charge up to $1,000.

• How much you owe on your statement each month.

• The amount of time before your credit expires

• The amount of cash you can borrow on your credit card.

You pay off your full credit card bill every month. Should you ever borrow up to your credit limit? Choose the best answer.

• Sure. That's why they gave it to me.

• Smart people never borrow more than 80% percent of their credit limit, even if they are paying off their credit card bill in full each month.

• Sure! I can always pay it off later when I get the money

• Yep...Because that is what all my friends do and they have cool stuff.

You have a credit card with a $1,000 limit. You plan to always pay your card off in full each month. What is the amount you can safely owe on your card?

• $200

• $400

• $800

• $1,000