Understanding Credit Cards

What is a credit card?

• A credit card is a type of debit card that allows the cardholder to withdraw cash from an ATM.

• A credit card is a form of identification used to access personal bank accounts.

• A credit card is a prepaid card that can only be used for online purchases.

• A credit card is a plastic card issued by a financial institution that allows the cardholder to borrow funds to make purchases and pay them back later with interest.

What are the benefits of using a credit card?

• Convenience, rewards programs, building credit history, and fraud protection.

• Higher interest rates, limited acceptance, and overspending.

What is the difference between a credit card and a debit card?

• A credit card allows you to borrow money from the bank to make purchases, while a debit card allows you to spend money directly from your bank account.

• A credit card and a debit card can only be used for online purchases.

• A credit card allows you to spend money directly from your bank account, while a debit card allows you to borrow money from the bank.

• A credit card and a debit card are the same thing.

What is an APR (Annual Percentage Rate) on a credit card?

• The APR on a credit card is the annualized interest rate charged to the cardholder.

• The APR on a credit card is the reward points you earn for using the card.

• The APR on a credit card is the maximum amount of money you can spend on the card.

• The APR on a credit card is the fee charged for using the card.

What is a credit limit?

• The average amount of money that a lender is willing to lend to a borrower.

• The interest rate charged on a loan.

• The minimum amount of money that a lender is willing to lend to a borrower.

• The maximum amount of money that a lender is willing to lend to a borrower.

What is a minimum payment on a credit card?

• The minimum payment on a credit card is the largest amount of money that a cardholder must pay each month to keep their account in good standing.

• The minimum payment on a credit card is a one-time payment made at the end of the billing cycle.

• The minimum payment on a credit card is the total amount of money owed on the card.

• The minimum payment on a credit card is the smallest amount of money that a cardholder must pay each month to keep their account in good standing.

What are the consequences of missing a credit card payment?

• Increased credit limit, waived late fees, improved credit score, no legal action

• Late fees, increased interest rates, damage to credit score, potential legal action

• No consequences, lower interest rates, improved credit score, no legal action

• Decreased credit limit, waived late fees, improved credit score, no legal action

What is a credit score and why is it important?

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What are some common fees associated with credit cards?

• annual fees, late payment fees, balance transfer fees, cash advance fees, and foreign transaction fees

• rewards fees

• overlimit fees

• interest fees

What are some tips for responsible credit card usage?

• Maxing out your credit card is a great way to build credit

• Some tips for responsible credit card usage include paying your bill on time, keeping your credit utilization low, avoiding unnecessary debt, monitoring your credit card statements regularly, and protecting your card from fraud.

• Ignoring your credit card statements is not a big deal

• Using your credit card for impulse purchases is a smart financial move