Money and Credit Grade 5

What is a credit card?

• A type of fruit used for making payments

• A tool for cutting paper

• A type of currency used in ancient times

• A plastic card issued by a financial institution that allows the cardholder to borrow funds to make purchases.

Explain the concept of credit limit on a credit card.

• The credit limit is the maximum amount of money that a cardholder is required to pay back on the card.

• The credit limit is the maximum amount of money that a cardholder is allowed to borrow on the card.

• The credit limit is the minimum amount of money that a cardholder is allowed to borrow on the card.

• The credit limit is the maximum amount of money that a cardholder can earn from using the card.

What are the consequences of exceeding the credit limit on a credit card?

• Receiving a lower interest rate

• Incurring over-limit fees, damaging credit score, and potentially facing higher interest rates

• Improving credit score

• Getting a cash reward

How does interest work on credit card purchases?

• Interest is only charged if the credit card is used internationally

• Interest is calculated based on the outstanding balance and the annual percentage rate (APR) of the credit card.

• Interest is calculated based on the number of credit card transactions

• Interest is fixed and does not change

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

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

• A credit card allows you to borrow money, while a debit card allows you to spend only the money you have.

• A credit card allows you to withdraw cash, while a debit card allows you to borrow money.

• A credit card has a higher interest rate than a debit card.

Explain the concept of minimum payment on a credit card.

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

• The minimum payment is the amount of money that a cardholder must pay on their credit card balance each year.

• The minimum payment is not required on a credit card.

• The minimum payment is the largest amount of money that a cardholder must pay on their credit card balance each month.

What are some potential risks of using a credit card?

• High interest rates, overspending, identity theft, and fees

• Low interest rates, saving money, increased security, no fees

• No chance of overspending, guaranteed financial security, no possibility of identity theft, no fees

• No risk at all, free money, no need to pay back, no consequences

How can someone build a good credit history using a credit card?

• By applying for multiple credit cards at the same time

• By ignoring the credit card statements and not checking for errors

• By maxing out the credit card and making minimum payments

• By making timely payments, keeping credit utilization low, and avoiding opening too many new accounts.

What are some responsible ways to use a credit card?

• Maxing out the credit limit every month

• Making only the minimum payment each month

• Paying off the balance in full each month, keeping track of spending, and avoiding unnecessary purchases

• Ignoring the monthly statements

Explain the concept of credit card fraud and how to protect against it.

• Keep your credit card in an easily accessible place

• Share your credit card information with strangers

• Regularly monitor your credit card statements, keep your card information secure, and report any suspicious activity to your credit card company.

• Ignore any unusual charges on your credit card statement