Credit Card Quiz

What is one of the reasons the speaker is excited about getting their 5th credit card?

• Their credit utilization will always be under 10%

• They will have a total credit available of $40,000

• They will be able to maintain a good credit score without much effort

• All of the above

Answer explanation

The speaker is excited about getting their 5th credit card because all of the mentioned reasons contribute to their excitement. Having a credit utilization under 10%, a total credit available of $40,000, and being able to maintain a good credit score without much effort are all benefits that the speaker is looking forward to.

Why should someone new to credit cards or just starting to build credit stay away from credit cards that charge an annual fee?

• There are plenty of credit cards available without annual fees

• Paying for a service that can be obtained for free is unnecessary

• Both are true

Answer explanation

Someone new to credit cards or just starting to build credit should stay away from credit cards that charge an annual fee because there are plenty of credit cards available without annual fees, and paying for a service that can be obtained for free is unnecessary. It's important to minimize costs while building credit, and choosing a card without an annual fee helps achieve that goal.

What is the average interest rate in the U.S. for those with good to excellent credit?

• 12-15%

• 15-18%

• 20-25%

• 25-30%

Answer explanation

The question asks about the average interest rate in the U.S. for those with good to excellent credit. The correct answer is 12-15%. This is because individuals with good to excellent credit scores are typically offered lower interest rates due to their lower risk of defaulting on the loan.

What happens if you make a late payment on a credit card?

• You will be charged a late payment fee

• Your interest rate will be increased to a penalty rate

• Both A and B

• None of the above

Answer explanation

The question asks about the consequences of making a late payment on a credit card. The correct answer is 'Both A and B', which means both 'You will be charged a late payment fee' and 'Your interest rate will be increased to a penalty rate'. These are common penalties imposed by credit card companies for late payments.

What is the grace period for making interest-free payments on a credit card?

• 20 days

• 25 days

• 30 days

• 35 days

Answer explanation

The grace period for making interest-free payments on a credit card is typically 25 days. This is the time between the end of a billing cycle and the due date for payment, during which no interest is charged on the balance. It allows cardholders to pay off their balance without incurring additional costs, promoting responsible credit usage.

What is the purpose of Credit Karma in helping choose a credit card?

• To provide personalized recommendations based on credit profile

• To offer free credit card services

• To help with credit card applications

• All of the above

What is the penalty for carrying over a balance from one billing cycle to the next?

• Higher average daily balance

• Lower interest charges

• No penalty

• None of the above

Answer explanation

The penalty for carrying over a balance from one billing cycle to the next is a higher average daily balance. This means that the interest charges on your credit card will be higher, as the interest is calculated based on the average daily balance. It is important to pay off your balance in full each month to avoid this penalty and keep your interest charges low.

What should someone consider when applying for a new credit card?

• Annual fee

• Interest rate

• Penalty fees

• All of the above

Answer explanation

When applying for a new credit card, it is important to consider all aspects of the card, including the annual fee, interest rate, and penalty fees. Each of these factors can impact the overall cost and benefits of the card, making it essential to evaluate them before making a decision.