PRE-TEST Using a Credit Card

If a payment is directly deducted from your account, which type of card are you using?

• credit card

• debit card

• charge card

Which describes how you need to pay a charge card bill?

• pay the full balance when you receive your monthly statement

• pay a part of the balance when you receive your monthly statement

• pay whenever you use your card

Which description defines the term APR?

• It is the yearly rate of interest that you pay for credit card use.

• It is the monthly rate of interest that you pay for credit card use.

• It is the daily rate of interest that you pay for credit card use.

Which is an advantage of using a credit card?

• You can make purchases even when you don't have cash.

• You don't indulge in impulse buying.

• You don't have to pay interest.

What is the total account debt as of the statement date called?

• APR

• balance

• finance charges

Calculate the monthly finance charge if the average daily balance is $20, the daily periodic rate is 0.05%, and the number of days in the cycle is 30.

• 30 ¢

• 31 ¢

• 50 ¢

How do you calculate the daily periodic rate?

• multiply the APR by 365

• divide the APR by 365

• add 365 to the APR

Which is a disadvantage of using credit?

• You make fewer purchases.

• You can build your credit history.

• You pay more because of fees.

Which of the following is recommended when paying a credit card bill?

• Pay the minimum amount every month.

• Pay exactly half the minimum amount every month.

• Pay less than the minimum amount every month.

• Pay more than the minimum amount every month.

Credit cards and charge cards differ in two important ways. One is the method of payment. What is the other difference?

• You earn interest when you use a charge card but not a credit card.

• You have to pay interest on charge cards but not on credit cards.

• You have to pay interest on credit cards but not on charge cards.

• You earn interest when you use a credit card but not a charge card.