Understanding Debt and Credit Cards

What is debt?

• A type of savings account

• An investment in stocks

• Money that is owed to someone else

• A credit card with no limit

What does it mean if you are 'in debt'?

• You owe money to another person or entity

• You have saved enough money

• You have a high credit score

• You own a valuable asset

Why is it risky to be late on a credit card payment?

• It can increase your credit score

• It may lead to penalty fees and affect your credit history

• It automatically pays off your debt

• It decreases the interest rate

What is a common consequence of accumulating credit card debt in college?

• Immediate debt repayment

• Long-term financial struggles

• Decreased spending on entertainment

• Increased savings

What is the national debt?

• The amount a government owes in loans

• The total amount owed to bondholders by the government

• A record of all personal debts in a country

• The total savings of a country

How does a credit card transaction work at a store?

• The store requests payment at a later date

• The customer pays the store in cash

• The credit provider pays the store directly

• The store pays the credit card company

What happens if you don't pay the full balance on your credit card?

• The balance is forgiven

• You receive a reward

• The remaining amount is carried over with interest

• Your credit limit increases

What is the consequence of making late payments on a credit card?

• Immediate debt cancellation

• Higher interest rates and late fees

• Increased credit limit

• Lower interest rates

Why should you avoid spending money you don't have on a credit card?

• It can lead to unmanageable debt and bad credit history

• It increases your credit score

• It decreases the amount you owe

• It is considered an investment

What might happen if you have a bad credit history?

• Easier loan approvals

• Lower interest rates on new loans

• Difficulty in getting approved for loans

• Unlimited credit offers