EPF Lesson 12.03 CC - Credit Cards

Which of the following is true about credit cards?

(All of these are true.)

• They come with rewards (i.e. free money)

• They are a great way to build a credit score

• Most require a credit score of 600, unless you're a student, in which case the requirement is waived

As long as you pay off your credit card balance in full by the monthly due date, you won't be charged interest.

(a)  

Which of the following statements about cosigners and authorized users is true?

• When you're an authorized user, you aren't responsible for any missed payments.

• Cosigning allows you to build your own credit history, whereas being an authorized user only allows you to piggyback off someone else's.

Your friend is a college student with no credit history and is thinking about getting a credit card. However, she's not sure she meets the requirements to get one. What do you tell her?

• You're right. Your lack of credit history makes it impossible to get a credit card

• Why bother? Debit cards are superior in every way.

• Don't worry. Student credit cards are designed for people with no credit history.

Your friend is thinking about getting a credit card but is on the fence about it. What do you recommend to her?

• Don't get a credit card. Instead, just keep using your debit card.

• Get a credit card. They are a great way to earn free money and build a credit score.

• Don't get a credit card or a debit card. Instead, use cash for all your transactions

Your friend has two choices. Become an authorized user on his mother's card or get his own (cosigned) credit card. Your friend wants to build his own credit history. What do you recommend?

• Get a cosigned card

• Become an authorized user

• Honestly, it doesn't matter. There's no major difference between the two.

Match the following

• money is removed from the customer’s checking account as soon as the transaction clears

• Debit card purchase

• charged when someone writes a check for more than they have in their checking account

• Overdrawn account

• this happens when the card user does not pay the full amount of their bill during a billing period

• Carry a balance

• a fee charged to possess a specific credit card, whether the consumer uses it or not

• Returned check fee

• an overdraft fee charged when the amount of money in an account is < the amount of a purchase

• Annual fee

True (T) or False (F): Examples of transaction fees are over-limit fees, late-payment fees, and cash advance fees.

(a)  

True (T) or False (F): Finance charges always include a yearly fee charged for having credit cards.

(a)  

True (T) or False (F): Consumer credit applies to people buying products or services that are not investments.

(a)