Understanding Cash and Credit Purchases

What is one of the main benefits of making cash purchases?

• You can build your credit score.

• You avoid paying interest.

• You can buy more expensive items.

• You get rewards points.

Which of the following is a risk associated with credit purchases?

• You might get a discount.

• You can easily track your spending.

• You may end up paying more due to interest.

• You can build your credit score.

Why is budgeting important for cash purchases?

• It helps you avoid impulse buying.

• It allows you to pay interest.

• It helps you build your credit score.

• It gives you rewards points.

If you buy an item on credit with an interest rate of 10% per year, how much interest will you pay on a $100 purchase after one year?

• $5

• $10

• $15

• $20

Which payment method is generally better for avoiding debt?

• Credit card

• Cash

• Loan

• Installment plan

What is a common consequence of impulse buying?

• Saving more money

• Accumulating debt

• Building a good credit score

• Earning interest

How can interest rates affect the total cost of a credit purchase?

• They decrease the total cost.

• They have no effect on the total cost.

• They increase the total cost.

• They make the total cost unpredictable.

What is one advantage of using cash over credit for purchases?

• You can buy items on sale.

• You avoid interest charges.

• You can build your credit score.

• You get cash back rewards.

Which of the following is a good practice when budgeting for cash purchases?

• Spend all your money at once.

• Keep track of your expenses.

• Ignore your income.

• Use credit for large purchases.

If you have a credit card with an interest rate of 15% per year, how much interest will you pay on a $200 purchase after one year?

• $15

• $20

• $25

• $30