Revolving Credit Vocabulary/Knowledge Check

What is the advantage of having a major credit card account?

• Allows you to make purchases online and/or make reservations

• Allows you to withdraw cash from an ATM

• Allows you to transfer money to another bank account

• Allows you to pay bills directly from your checking account

What does revolving credit mean?

• You can spend up to your credit limit and pay off amounts borrowed

• You can only make one purchase and then the account is closed

• You can only use the credit card for online purchases

• You can only make reservations for lodging and plane fare

What is the minimum payment on a credit card?

• The smallest amount you can pay each month

• The total balance on the last day of the billing cycle

• The interest rate expressed in a yearly amount

• The maximum dollar amount you can charge on your account

What is the billing cycle?

• The time you have between making purchases on a credit card and receiving the statement

• The due date on your credit card bill

• The time between the end of a billing cycle and when your bill is due

• The interest rate, expressed in a yearly amount

What is the grace period?

• The smallest amount you can pay each month

• The total balance on the last day of the billing cycle

• The time between a purchase on a credit card and the statement

• The time between the end of a billing cycle and when your bill is due

Tags

CCSS.RI.11-12.4

What is the annual percentage rate or APR?

• Your interest rate expressed as a yearly percentage

• A fee charged each year to use the credit card

• Your minimum payment amount

• The maximum dollar amount you can charge on your account

What happens if you pay after the due date?

• You will be charged an annual fee

• You will be charged a late fee

• Your interest rate will change

• Your credit line will decrease

What happens to introductory interest rates for credit cards after the introductory period is over?

• They remain the same while you have the credit card

• They go up after the introductory period is over

• They go down after the introductory period is over

• They are not applicable for credit cards

What is the interest rate for credit cards compared to other types of loans?

• Lower

• Higher

• The same

• Depends on the credit card company

Why should credit card balances be paid off as soon as possible?

• To avoid late payment fees

• To increase the credit line

• To earn rewards points

• To improve credit score