Check-In #12: Select a Credit Card

Joyce sees a credit card offer, advertising 0% APR. Which of the following is least likely true?

• 0% offer is introductory and lasts only 6 months.

• 0% offer is only available to those with high credit scores.

• 0% offer is good on new purchases only, not cash advances.

• 0% offer lasts indefinitely, as long as you always make at least your minimum monthly payment.

Mia doesn't have any credit history, so she's going to open a secured credit card to begin building her credit. She puts down an $800 security deposit. What feature of an unsecured credit card is Mia's security deposit most like?

• the APR

• the term

• the credit limit

• the annual fee

Kurt is a college student, living on campus, who wants to open a credit card in order to start building his credit history. He plans to charge no more than $100 per month, and he will pay it off every month using his part-time job income. Which card offer makes the MOST sense for Kurt?

• A card offering 5% cash back with an annual fee of $100.

• A card offering 1 airline mile for every dollar charged. A free flight costs 35,000 miles.

• A card offering 2% cash back with no annual fee.

• A card offering free balance transfers and 0% interest for the first 6 months.

Omar is about to start his final semester of college, and he doesn't have enough money saved to afford the $750 he needs in books. He's 21, so he's going to open his own credit card to pay for the books, and then not use it again. His plan is to pay $100 per month toward his bill, until it's paid off. Which credit card offer is the best offer for Omar?

• Free balance transfers, APR of 12.99% with $150 annual fee

• 0% APR for the first 6 months, then an APR of 20.99%, with no annual fee

• Free balance transfers, APR of 13.99% with no annual fee

• 0% APR for the first 6 months, then an APR of 14.99%, with no annual fee.

Select the choice that accurately completes the following sentence: If a credit card advertises 1% cashback on all purchases…

• you will receive 1% of your transaction back, in cash, at the store.

• 1% worth of your credit card transactions will be transferred directly to your savings account for your convenience.

• you will receive 1% of the total value of your transactions at the end of each year.

• 1% worth of your monthly credit card will be available for your bill or other purchases when each bill becomes due.

Which of the following is one potential danger of taking advantage of a "0% APR for 1 year" deal?

• After the first year you will no longer be able to use the card

• Having such a low rate for so long might decrease your credit score

• One late payment may cancel the 0% introductory rate

• After the first year you will pay interest on every purchase, even if you pay them off right away

Kelsey wants to open a credit card and has narrowed her choice down to three possible options. Which factor is MOST important in determining which card she should get?

• Which card does her best friend have?

• Is there an annual fee with each card?

• Is each card FDIC insured?

• Which card has the most recognizable brand?

Carson is a college freshman and wants to build his credit score so that, when he graduates at age 22, it's easier for him to rent an apartment and take out a car loan. Which strategy would likely result in the HIGHEST credit score?

• Have his mom co-sign for a credit card this year, and then Carson pays all of bills on-time and in full every month

• Wait until he turns 21 at the start of senior year and open his own credit card then, which he'll pay off every month

• Use his debit card responsibly all four years, but every time the cashier asks, "Debit or credit?" choose "credit" so it goes toward his score.

• After proving he can be responsible freshman and sophomore years, become an authorized user on his mom's credit card during junior year

Which statement best distinguishes the difference between a secured credit card and a prepaid card?

• A secured card is for people with bad credit, and a prepaid card is for people with no credit.

• A secured card requires a deposit, but the user still pays monthly; a prepaid card requires a deposit onto the card, which the user then spends from.

• A secured card is accepted at far more locations than a prepaid card.

• A secured credit card and a prepaid card are two words for the same thing.

When signing up for a new card, a low APR would be an important factor to consider for each of the following EXCEPT:

Based on the sentences above, each of the following statements is true, EXCEPT:

• Rupa, who is charging many of her day-to-day purchases, and paying her monthly minimum, until she can find a job.

• Christopher, who is transferring balances from his 3 other cards in order to simplify his payments each month.

• Carlos, who is opening the card to receive the 50,000 bonus points for signing up and then using/paying off the card only once.

• Maggie, who is buying a new laptop, 2 weeks worth of professional attire and shoes, and a new haircut so she can start her first job out of college.