Intro to Credit (FL7)

Credit is the most commonly used method of purchase in the United States.

• True

• False

Which situation involves the use of credit?

• borrowing money from a friend

• using a credit card

• taking out a loan from a bank

• All answers are correct

You borrowed $30,000 from the bank to buy a car. When you make your monthly loan payment, you're paying what?

• principal

• interest

• both principal and interest

• neither principal or interest

Which is an advantage of using credit?

• Credit can expand your purchasing power

• Using credit will save you a lot of money

• Using credit now guarantees a good credit score when you are older

• All answers are correct

When traveling, which is a safer payment method?

• cash

• credit card

Which is an example of revolving credit?

• auto loan

• mortgage

• student loan

• credit card

You are purchasing $200 worth of groceries from the store today. If you pay with a credit card, you might end up paying more than $200 for the groceries.

• True

• False

How do credit card companies make a profit?

• interest

• annual fees

• over-the-limit fees

• All answers are correct

Most credit cards allow you to carry a balanced from month to month.

• True

• False

What does it mean to carry a balance on a credit card?

• To pay off the full amount owed that month

• To pay off only part of the full amount owed that month